Why was I quoted $1,200 just for TFSA reporting? What should it cost?

Almost every four-figure TFSA quote is pricing the same thing: the preparer plans to treat each TFSA as a foreign trust and file a protective Form 3520 and 3520-A set for every account. For four accounts that’s real work, and $1,200 can be an honest number. Whether it’s the right number for you turns on one question: does your file actually need the trust forms? Small GIC and stock TFSAs often have a defensible path that skips them, and then the TFSA side shrinks to a few income lines and some account disclosure.

What does a TFSA actually add to a US tax return?

Three layers, and only the third one is expensive. First, income. The US never signed on to the TFSA’s tax-free status: Article XVIII of the US-Canada treaty covers pensions and annuities and says nothing about TFSAs, so the interest, dividends, and gains inside the account go on your 1040 like any taxable brokerage account.

Second, disclosure. The account goes on your FBAR (FinCEN Form 114) once you have to file one, and on Form 8938 once you cross that threshold. Rev. Proc. 2020-17 says plainly that nothing about the trust debate changes either of those obligations.

Third, the trust layer. If the file treats your TFSA as a foreign grantor trust, each account generates its own Form 3520 and Form 3520-A. That’s where quotes jump from hundreds to four figures, and it’s the layer worth pressing on before you sign anything.

When do Forms 3520 and 3520-A come into it?

Only when the return takes the position that the TFSA is a foreign trust. Plenty of preparers default to yes for every account, every year, because the downside of guessing wrong is ugly: the IRS Form 3520 instructions set the initial failure-to-file penalty at the greater of $10,000 or 35% of the amount that should have been reported, and the trust’s own annual filing (Form 3520-A) carries its own penalty at 5%. Filing protectively makes that risk go away, and the preparer bills for it.

The forms are also slow to produce. Form 3520-A runs on its own calendar: per the IRS Form 3520-A instructions, it’s due by the 15th day of the 3rd month after the trust’s year end, March 15 for a calendar-year account, a month ahead of the return you’re actually thinking about. No bank in Canada is going to file it for you, so the standard fix is the substitute Form 3520-A, which you complete yourself and attach to your own Form 3520. Multiply that by four accounts and the hours are real.

Whether your file needs any of this is a live position question with defensible answers on both sides. We walk through the whole thing, Rev. Proc. 2020-17 and the 2024 proposed regulations included, in whether you need Forms 3520/3520-A at all.

So is $1,200 a fair quote?

It can be, but only for one specific job. Here’s what a TFSA quote is actually made of:

TFSA line item	When it applies	Effort	The question to ask the preparer
Interest, dividends, and gains on the 1040	Every TFSA, every year, under both positions	Light to medium	”Do you rebuild income from my broker statements, or do I bring a summary?”
FBAR (FinCEN Form 114) account lines	Every TFSA, once you file an FBAR at all	Light	”Is the FBAR inside this price or billed on top?”
Form 8938 line items	Both positions, once you cross the 8938 threshold	Light	”Does my total put me over the 8938 threshold this year?”
Form 3520, filed protectively	Only if the file treats the TFSA as a foreign trust	Heavy	”Which trust position are you taking, and why for my accounts?”
Form 3520-A, usually the substitute	Same, one per account, on its own March deadline	Heavy	”Substitute 3520-A attached to my 3520, or standalone?”

The first three rows are routine. The last two are the money, and account count only multiplies the expensive rows if the file goes protective:

	1 TFSA	4 TFSAs
Income lines on the 1040	One account’s slips	Four accounts’ slips
FBAR and Form 8938 entries	One line each	Four lines each
Trust forms, protective route	One 3520 + 3520-A set	Four full sets
Trust forms, de minimis route	None, if the accounts’ combined value stays within the $50,000 aggregate cap	Still none, same combined cap

So a $1,200 TFSA line is coherent when it’s buying four protective trust-form sets. The same $1,200 attached to two GICs and two small stock accounts, with no itemization and no discussion of position, is a quote you should question before you pay it.

Can you avoid the trust forms entirely?

Sometimes, and lawfully. Rev. Proc. 2020-17 exempts certain tax-favored foreign trusts from the Form 3520 and 3520-A regime, though TFSAs fit its categories awkwardly at best. The stronger development is the 2024 proposed regulations, REG-124850-08. They never name TFSAs, but they create a “tax-favored foreign de minimis savings trust” category, proposed reg. 1.6048-5(b)(4), that a TFSA can fit. The cap is aggregate: your accounts combined have to stay at or under $50,000 at every point in the year, no matter how many accounts the money sits in. Taxpayers can rely on the proposed regs for tax years ending after May 8, 2024.

Neither route is automatic, and choosing between the protective filing and the exemption position is your risk call, with real tradeoffs each way. The sibling guide lays both positions out with the penalty math. What the choice does change is the invoice: skip the trust forms and the TFSA adds income lines, disclosure lines, and little else. FBAR and Form 8938 stay either way.

What should a first-year cross-border return cost all-in?

Priced honestly, it’s the base return plus itemized add-ons: each TFSA’s income reporting, the FBAR, Form 8938 when triggered, and trust forms only when the position calls for them. That’s the build-up we show on how we price cross-border work, and the current floors for every cross-border service sit on what cross-border tax help actually costs. The scenario behind this guide, a first-year filer quoted $600 for the return plus $1,200 for TFSA reporting, splits cleanly along those lines.

What should I do next?

Before you accept any quote, ask for two things: the TFSA line itemized by form, and the trust position the preparer is taking, with a one-sentence reason it fits your accounts. A good preparer answers both in two minutes, and the answer tells you exactly what you’re paying for.

If you’d rather have the position question settled in writing first, the $249 Cross-Border Assessment gets you a CPA-reviewed read on your file before anyone files a form.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.