Thanks for the question. As with many cross border tax questions the answer may depend on a few factors. Whether you need to file 3520/3520-A for your TFSA will depend on whether it’s considered a foreign trust for US tax purposes. Recently some practitioners have attempted to make the argument that TFSAs do not fit the definition of a foreign trust and therefore should not be subject to form 3520/3520A.
Regardless of the strength of the argument, the IRS will have final say on the classification of TFSAs ultimately. At this moment they have not released their official position on whether TFSAs are considered foreign trusts.
We advise our US clients to not maintain active TFSA accounts considering the potential filings risks. If you decide to maintain your TFSA and continue to file 3520/3520A also ensure to properly report the income (dividends, interest, capital gains, etc) from the account on your US tax return as they are not deferred for US tax purposes as they are for Canadian purposes.
The TFSA should also be included on your FBAR form each year e.g. form 114.
Hope that helps and please don’t hesitate to call me if you have any further questions.