December 1, 2019

CRA: If You Make This TFSA Mistake, the IRS Will Tax You, Too!

If you have a TFSA and contribute dividend incomes to the account from any investments that originate in the U.S., be prepared to owe taxes to the IRS. The U.S., among other countries, are allowed to tax foreign dividends. US investors can expect to pay fifteen percent of their dividends to the IRS. Some account holders find that the capital gains after the fifteen percent is taken is still worth the investment. However, if you have the contribution room, it’s best to keep your U.S.-based dividend stocks in your RRSP where the foreign withholding tax is exempt.

If you make this mistake, you could find yourself paying up to 15% a month on dividends, even in your “tax-free” account.”

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