How do I trigger forms 3520 and 3520-A on FreeTaxUSA?

Wolfy
Wolfy Member Posts: 2 Newcomer
edited April 4 in Filing my taxes

Edit reported below**

Hello - wanted to get a sanity-check on IRS reporting obligations for a Canadian TFSA tax event.

I had a TFSA open in Canada before I became a U.S. Resident.
Filing my first U.S. taxes this year. I am filing my 2024 CAN and US taxes this week as a resident alien (as of 01/01/2025).

Some context:

  • TFSA held an High-Interest ETF asset through Dec 29, 2023.
    • High-interest ETF asset was sold Dec 29, 2023
  • There was a Dividend event on Dec 29 that triggered $144CAD dividend payment for Jan 07, 2024
  • I withdrew my TFSA funds on January 02 (the liquidated holdings) and January 09 (dividend)
    • There was a few days wait for settlement, but the trade event happened on Dec 29 during regular market hours.

Anyway, as for my IRS reporting obligations, it looks like I need to do the following:

  • Form 8938 - report the full TFSA account at its max (January 01/02 date) as I meet the rest of the criteria for filing
  • FBAR Form 114 - Report the TFSA account at its max (January 01/02 date)
  • Form 3520 - $144CAD dividend distribution + final withdrawal/closing the account
  • Form 3520-A - Detail the TFSA as a foreign trust/fund
  • Form 1040 - Schedule B - Ordinary dividend $144CAD

How do I go about triggering forms 3520 and 3520-A?
I've been able to report my foreign financial accounts in form 8938 painlessly, but just haven't been able to locate 3520 and 3520-A.

Is there anything I'm missing to ensure that this is cleanly reported to the IRS?

The headache from accidentally receiving a dividend as a resident-alien🤦😅

EDIT

After some further research, it looks like the IRS requires 3520 and 3520-A to be filed via mail, and cannot be e-filed.

I will process these separately from my return, but listing any relations between my 8938 form and 3520 forms in FreeTaxUSA.

Please advise if I'm missing anything :)

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Answers

  • KristineS
    KristineS FreeTaxUSA Agent Posts: 250

    Hi Wolfy,

    We appreciate your additional research into this issue while waiting for a reply.

    As is, FreeTaxUSA doesn't support either Form 3520, Annual Return To Report Transactions With
    Foreign Trusts and Receipt of Certain Foreign Gifts,     or Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner.

    There isn't a way to make a connection between either of those forms and our Form 8938, Statement of Specified Foreign Financial Assets in our software.

    Form 3520/3520-A is filed separately from your personal income tax return. You can find more detailed instructions here.

  • Wolfy
    Wolfy Member Posts: 2 Newcomer

    Thanks so much KristineS!

    Unfortunately, I recently discovered that FreeTaxUSA does not support Form 2555 — necessitating me to look elsewhere this year for my filing needs (I was resident in Canada part-year and my wife received employment income while aboard that she needs to declare in her IRS filing, while claiming a credit against this income) — we've been able to find an alternate software to assist (still yet to file our return).

    If this scenario is actually supported by FreeTaxUSA, please advise and we can switch back from the other software :)

    Thanks so much!

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 581
    edited April 23

    Wolfy,

    Form 2555 is not supported. See this page for Items not supported.

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