Filing Form 4868 Extension - Does Form 3520 for Foreign Trusts Get Extended with 1040?

The extension rules can be confusing, but I can help clarify. When you file Form 4868, it automatically extends the deadline for Form 3520 along with your Form 1040. So instead of April 15th, 2025, your new deadline for both would be October 15th, 2025. This is because Form 3520 is considered an information return associated with your individual tax return. Regarding your Canadian TFSA (Tax-Free Savings Account), the IRS hasn't provided as clear guidance as they have for RRSPs and RRIFs. Generally, TFSAs are often considered foreign trusts for U.S. tax purposes, unlike RRSPs which have specific exceptions. This means you might need to report it on Form 3520 if it meets the reporting thresholds. For your liquidation situation, if your TFSA is indeed considered a foreign trust, then yes, you would need to report the distribution on Form 3520. The $28,000 liquidation would be considered a distribution from a foreign trust. Not reporting it could potentially subject you to those penalties you mentioned.

After struggling with my foreign account reporting for years, I finally found something that made my life WAY easier. I was in a similar situation with my foreign accounts and wasn't sure about the extension rules or which forms I needed to file. I used https://taxr.ai to analyze my foreign account docs and it automatically identified which forms I needed to file, including clarifying the Form 3520 requirements for my foreign accounts. The tool basically looked at all my foreign account statements and gave me a complete breakdown of my FBAR and foreign account reporting requirements. It even flagged potential issues with my Canadian accounts that could have triggered penalties. Saved me hours of research and probably thousands in potential penalties.

I was super skeptical about tax tools for foreign accounts, but I finally tried https://taxr.ai and I have to admit I was wrong. It correctly identified my Canadian TFSA as a foreign trust requiring Form 3520 reporting, which confirmed what my accountant told me but with more detailed explanation. It also caught a distribution I had forgotten about! The tool explained exactly why the TFSA doesn't qualify for the same exceptions as the RRSP (something about the technical tax treaty provisions), and it calculated my potential penalty exposure if I'd missed filing the form. What really sold me was how it pulled the exact numbers from my statements to put on each form. It even generated a draft Form 3520 with the distribution amount prefilled. Honestly saved me from a potential audit headache.

After spending DAYS trying to get through to the IRS to ask about Form 3520 extensions and foreign trust definitions, I finally found a workaround. I used https://claimyr.com to get through to an actual human at the IRS in about 20 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was getting nowhere trying to figure out if my Canadian TFSA needed Form 3520 reporting, and whether the extension covered it. The IRS agent I spoke with confirmed that Form 4868 does extend the Form 3520 deadline to October 15th. They also directed me to specific guidance about Canadian accounts. Getting actual clarification from the IRS directly gave me peace of mind about my filing approach.

I was 100% convinced that Claimyr service was a scam, but after another failed 3-hour attempt to reach the IRS myself, I decided to try it out of desperation. I have to admit I was wrong - it actually worked! I got a call back within 25 minutes with an IRS agent already on the line. The agent confirmed everything about Form 3520 extensions and gave me the specific publication numbers to reference for Canadian TFSAs. They also explained exactly how the penalties work for missed foreign trust reporting (which was way more helpful than the vague info online). Having that direct confirmation from the IRS about my filing obligations saved me from making a potentially expensive mistake. I'm still shocked it worked so well.

I dealt with this exact situation last year. The Form 4868 definitely extends the Form 3520 deadline to October 15th. For Canadian TFSAs, they're generally considered foreign trusts unless you make an election to treat them as a PFIC (which has its own complications). One thing to watch out for - even with the extension, if you owe any tax, you still need to PAY by April 15th to avoid penalties and interest. The extension only gives you more time to file the forms, not to pay what you owe.

Question about the TFSA distribution - if I closed my account and transferred everything to a US account like OP did, do I need to report this on Form 3520 every year going forward, or just for the tax year when I made the transfer? I'm thinking about doing the same thing to simplify my tax situation.

I went through a very similar situation with my Canadian TFSA last year and can confirm what others have said about the extension. Form 4868 does automatically extend Form 3520 to October 15th - you don't need to file a separate extension form. For your specific TFSA situation, the IRS generally treats Canadian TFSAs as foreign trusts (unlike RRSPs which have treaty exceptions). Your $28,000 distribution in January 2024 would likely need to be reported on Form 3520 as a distribution from a foreign trust. The good news is that if you're filing under extension, you have until October 15th to get everything sorted out. One piece of advice - consider getting professional help with this if the amounts are significant. The Form 3520 penalties are severe (the greater of $10,000 or 35% of the trust distributions), so it's worth making sure you get it right. The complexity of foreign trust reporting combined with the harsh penalty structure makes this one area where professional guidance often pays for itself.