Joint Accounts Across the Border: Who Reports What on the FBAR, the T1135, and the Estate Return

A joint account is one account with two or more owners, and the two countries look at it differently. The US asks who has a financial interest or signature authority, and requires each US-person owner to report the entire balance. Canada asks who contributed the money, and taxes the income to that person under the attribution rules regardless of whose name is on the account. At death, the US includes the full value of a joint account in the estate of a deceased non-spouse joint owner unless the survivor proves their contribution, and applies a 50% rule for US-citizen spouses only. A cross-border couple's joint account is three reporting problems, each on a different form.

Key takeaways

• FBAR: each US-person joint owner reports the full maximum value of the account, not their share. A US citizen with a Canadian spouse reports the joint Canadian account in full; the Canadian spouse, if not a US person, reports nothing. Spouses can file one FBAR covering jointly held accounts only if all accounts are joint and Form 114a is signed.
• Form 8938: the same full-value rule for a US-person joint owner; married filing jointly reports jointly owned assets once.
• Canada, attribution: income and capital gains on a joint account are taxed to the spouse who contributed the funds, in proportion to contributions; splitting the T5 income 50/50 is not permitted unless contributions were equal. Joint accounts with adult children are treated as belonging to the parent (or the child, depending on intent) for income tax; a transfer into joint names can be a gift with a deemed disposition.
• T1135: a Canadian resident reports their share of a foreign joint account if the total cost of their specified foreign property exceeds $100,000.
• US estate tax: for joint property with right of survivorship between non-spouses, the full value is included in the decedent's estate unless the survivor proves their contribution; between spouses, 50% is included if the survivor is a US citizen, and the contribution rule applies if the survivor is not.
• Canadian estate: a joint account with right of survivorship passes to the survivor outside probate, but a deemed disposition of the deceased's share applies (spousal rollover available).

The FBAR and Form 8938

A US person who is a joint owner of a Canadian account has a financial interest in the whole account. The FBAR reports the account's maximum value for the year in full, with the other owner's identity — the maximum-value rule applies to each account regardless of the number of owners. Two US-person spouses can file a single FBAR if every reportable account is jointly held and the non-filing spouse signs Form 114a; otherwise each files. A US person with a non-US spouse reports the joint accounts alone, in full.

Form 8938 follows the same logic: a US person reports their jointly held foreign financial assets at full value (married filing jointly reports each once; married filing separately, each reports the full value).

Signature authority is broader than ownership: a US person named on a Canadian parent's account under a power of attorney, or with online access and transaction authority, reports it as signature authority even with no ownership.

Canadian attribution

For income tax, a joint account between spouses is taxed to whoever contributed the capital, in proportion to their contributions. If one spouse funded it entirely, all the interest, dividends, and gains are that spouse's, regardless of the T5 being issued in both names. If contributions were 60/40, the income is 60/40. The CRA expects the split to reflect the source of funds and can reassess a 50/50 split with no basis.

A parent who adds an adult child to an account may or may not have made a gift of half: the CRA and the courts look at intent. If it is a gift, the parent has a deemed disposition of half the assets at fair market value (a capital gain on appreciated securities), and the income on the child's half is the child's; if it is a convenience arrangement for the parent's benefit, the parent continues to report all the income and no gift occurred. Documenting the intent matters for both tax and estate purposes.

The T1135

A Canadian resident with a joint foreign account reports their share (based on contribution) on the T1135 if their total specified foreign property exceeds $100,000 at cost. A Canadian spouse who is not a US person and holds a joint US account with a US-person spouse reports their share.

Estate consequences

US. For jointly held property with right of survivorship, the US estate tax rules include the full value in the deceased owner's gross estate unless the survivor proves they contributed part of the consideration (the contribution rule), except that for spouses who are both US citizens, exactly 50% is included. If the surviving spouse is not a US citizen, the contribution rule applies: a Canadian survivor of a US-citizen decedent must prove their share of the contributions, or the whole account is in the US-citizen's estate. The marital deduction for a non-citizen surviving spouse requires a qualified domestic trust, which a joint account does not provide.

Canada. A joint account with right of survivorship passes to the survivor without probate (in most provinces; the presumption of resulting trust can apply to accounts with adult children). The deceased's share is deemed disposed at fair market value; the spousal rollover defers the tax for a surviving spouse.

Worked example

A US citizen and her Canadian husband live in Toronto with a $300,000 joint investment account funded 70% by him, a $40,000 joint chequing account, and her name on her mother's Canadian account as attorney.

• FBAR (hers). Joint investment account at full maximum value; joint chequing at full value; mother's account as signature authority. Form 8938 for the joint accounts.
• Husband. Not a US person; no US reporting.
• Canada. Investment income 70% to him, 30% to her, matching contributions; the T5 in joint names is allocated accordingly.
• US income tax (hers). Her 30% share of the income on the 1040 (married filing separately) with a foreign tax credit; the Canadian mutual funds in the account are PFICs for her share.
• Estate. If she dies first, her US estate includes the portion of the joint account she contributed (30%) under the contribution rule (non-citizen survivor); Canada deems her share disposed with a spousal rollover to him.

Official sources

"A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year." — Financial Crimes Enforcement Network, Report of Foreign Bank and Financial Accounts (FBAR), https://www.fincen.gov/report-foreign-bank-and-financial-accounts

"Canadian resident individuals, corporations, and certain trusts that, at any time during the year, own specified foreign property costing more than $100,000" must file Form T1135. — Canada Revenue Agency, Foreign Income Verification Statement, https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/foreign-income-verification-statement.html

"An executor for a nonresident, not a citizen of the U.S. must file an estate tax return, Form 706-NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States, if the fair market value at death of the decedent's U.S.-situated assets exceeds $60,000." — Internal Revenue Service, Estate tax for nonresidents not citizens of the United States, https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states

Practitioner note

Joint accounts are reported in full by the US person and in proportion by the Canadian, and the two rules are not in conflict; they answer different questions. The trap is the parent-child joint account, which is a gift in Canada if intended as one and a full estate inclusion in the US if the parent was a US person. We ask who put the money in, and we write it down.

See also: Planning a move? Start with the Canada-to-US tax checklist and browse every corridor by city, province, and state.

Next step

Fairlight prepares the FBAR and Form 8938 for joint accounts, the Canadian attribution allocation, and the estate analysis for jointly held cross-border property. See cross-border pricing or book a call.