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Your residency status depends on your residential ties to Canada, not just your citizenship or where you spend time. You're generally considered a non-resident if you've severed your primary residential ties (home, spouse/partner, dependents) and normally live in another country. However, the 183-day rule can make you a deemed resident if you spend 183+ days in Canada in a year without being a treaty resident elsewhere. Secondary ties like Canadian bank accounts or a driver's license support but don't determine residency on their own. If you have ties to multiple countries, tax treaties provide tiebreaker rules to determine your residency for tax purposes.

While not legally required, obtaining a Section 116 certificate is highly recommended to avoid excessive withholding. Without this certificate, buyers must withhold 25% of the gross sale price (often far exceeding your actual tax). With a Section 116 certificate, withholding is calculated on your estimated capital gain rather than gross proceeds, significantly improving your cash flow at closing. You'll need to file Form T2062 with supporting documents like purchase agreements, improvement receipts, and selling costs. Apply early—ideally soon after signing your sale agreement—as processing takes time and you'll need the certificate before closing.

Yes, you have two main options to reduce withholding on rental income. First, file Form NR6 early each year to request reduced withholding based on your estimated net rental income (after expenses) rather than gross rent. If approved, withholding drops to 25% of your estimated net income instead of gross rent. Second, make a Section 216 election when filing your tax return to be taxed on net rental income rather than gross. You can deduct reasonable expenses like mortgage interest, property taxes, insurance, repairs, management fees, and utilities. This often results in significant tax savings and potential refunds.

Tax treaties between Canada and your country of residence can significantly reduce your Canadian tax burden through lower withholding rates and prevention of double taxation. For example, U.S. residents often have Canadian dividend withholding reduced from 25% to 15%, and certain interest payments may be exempt entirely. Treaties also provide residency tiebreakers when you have connections to both countries and establish rules for claiming foreign tax credits to avoid paying tax twice on the same income. To access treaty benefits, you'll need to provide residency certification forms (like NR301 series) to Canadian payers and may need to coordinate filing in both countries to optimize your overall tax position.

Yes, as a U.S. citizen or green card holder, you must file annual U.S. tax returns on your worldwide income regardless of where you live. This is due to the U.S. citizenship-based taxation system. Additionally, as a Canadian resident, you're required to file Canadian tax returns on your worldwide income. However, the U.S.-Canada Tax Treaty helps prevent double taxation through mechanisms like the Foreign Tax Credit (FTC), which allows you to offset U.S. tax liability with Canadian taxes paid on the same income.

FBAR (FinCEN 114) is a Treasury form required if your foreign accounts have an aggregate highest balance exceeding USD $10,000 at any time during the year. It's due April 15 with an automatic extension to October 15. Form 8938 (FATCA) is an IRS form that attaches to your tax return and reports specified foreign financial assets when thresholds are met (higher thresholds apply to expats - typically $200,000 year-end or $300,000 peak for singles living abroad). You may need to file both since they cover different types of assets and have different reporting requirements.

For most US expats in Canada, the Foreign Tax Credit (FTC) is generally more beneficial than the Foreign Earned Income Exclusion (FEIE). This is because Canadian tax rates on employment income are typically higher than US rates, meaning the FTC can fully offset your US tax liability while preserving eligibility for US credits and Social Security benefits. The FTC also allows you to carry forward excess credits for up to ten years, providing additional flexibility for tax planning.

RRSPs can receive U.S. tax deferral if you make the annual treaty election, allowing growth to remain untaxed until distribution. You must file this election each year and keep proper documentation. For 401(k)/IRA accounts, distributions are typically taxed in your country of residence with credits available under the treaty. However, contributing to these accounts while a Canadian resident may be limited, so assess your employer's Canadian plan options. It's crucial to coordinate these elections and maintain proper records for both tax systems.

Passive Foreign Investment Companies (PFICs) are foreign investment vehicles that face punitive US tax treatment. Many Canadian mutual funds and ETFs are classified as PFICs for US tax purposes, requiring complex Form 8621 reporting and potentially resulting in higher tax rates and interest charges. To avoid PFIC complications, consider using US-domiciled funds in your taxable accounts. If you hold Canadian funds, you'll need to make special elections (QEF or mark-to-market) and maintain detailed records, which can be costly and complex to manage.

Yes, as long as you are a U.S. person. The United States operates on a citizen-based taxation system, which means as a U.S. citizen or green card holder, you must continue filing U.S. federal tax returns and report your worldwide income regardless of where you live. Moving to Canada doesn't end your relationship with the IRS—it simply changes the nature of it. You'll need to file Form 1040 annually as long as you are a U.S. person, just as you did while living in the U.S., but now you'll report income from all sources, including your Canadian salary and investment gains.

Fortunately, no in most instances. The U.S.–Canada Income Tax Treaty is specifically designed to prevent double taxation. The treaty provides two primary mechanisms to avoid paying taxes twice: the Foreign Tax Credit (FTC) and the Foreign Earned Income Exclusion (FEIE). The FTC is the most common method used by Americans in Canada, allowing you to reduce your U.S. income tax liability dollar-for-dollar by the amount of income taxes you've already paid to the Canadian government. Since Canadian tax rates are generally higher than U.S. rates, the FTC often eliminates your U.S. tax liability on Canadian-sourced income entirely.

You must report all your foreign financial accounts to the U.S. if they meet certain thresholds. This includes filing an FBAR (FinCEN Form 114) if the combined value of your foreign accounts exceeds $10,000 at any point during the year. You'll also need to file Form 8938 (FATCA) if your foreign assets exceed $200,000 on the last day of the tax year or $300,000 at any time during the year (thresholds are doubled for married couples). These accounts include Canadian bank accounts, investment accounts, RRSPs, and even company pension plans. The penalties for non-compliance are severe, so meticulous record-keeping is essential.

Yes, most cross-border tax experts strongly advise U.S. citizens against using TFSAs. While a TFSA offers tax-free growth in Canada, it does not for a U.S. person. This means all income and gains earned within the account are taxable in the U.S. each year. The administrative burden and tax implications typically outweigh any benefits, making TFSAs unsuitable for U.S. citizens living in Canada.

Professional guidance is essential for successfully managing dual tax obligations. The cross-border tax world involves conflicting definitions between countries, complex treaty interpretations, ever-changing rules, and currency conversion requirements that can challenge even the most diligent individuals. A cross-border tax professional provides strategic year-round guidance, ensures full compliance with both countries' requirements, optimizes your tax position using treaty provisions, and helps you avoid costly mistakes like missing required elections for retirement accounts. Given the complexity and severe penalties for errors, professional assistance typically pays for itself many times over.

The best visa depends on your profession and long-term goals. For professionals in specific fields like engineering, accounting, or science, the TN visa offers fast processing and renewable three-year terms, though it ties you to one employer. The H-1B visa provides a clearer path to permanent residence but requires navigating the lottery system. If you're transferring from a Canadian company to its U.S. affiliate, the L-1 visa may be ideal, especially for executives seeking green cards. We recommend consulting with an immigration attorney 6-9 months before your planned move to determine the optimal pathway for your situation.

Canada's departure tax is a deemed disposition of certain assets at fair market value when you cease Canadian tax residency, potentially triggering capital gains tax. This affects non-registered investments, shares, and funds, but excludes RRSPs/RRIFs and may have special rules for your principal residence. To minimize impact, consider crystallizing gains strategically before departure to use capital losses, reviewing your principal residence exemption eligibility, and exploring deferral elections in specific cases. Engaging a cross-border tax advisor at least three months before leaving Canada is essential for proper planning and timing.

This decision depends on your tax strategy and investment goals. Selling pre-move provides clean severance of Canadian ties, which helps establish non-residency for tax purposes, and you can potentially use the principal residence exemption. Renting offers diversification and potential appreciation but creates ongoing Canadian tax obligations including non-resident withholding requirements and NR6 elections, plus U.S. reporting of worldwide rental income. Consider current market conditions, your capital gains exposure, and consult with your cross-border tax advisor to determine the best approach for your situation.

RRSPs are generally recognized under the Canada-U.S. Tax Treaty, so you can typically keep them and defer taxation until distribution. TFSAs, however, lose their tax-free status in the U.S. and income may be taxable annually, with potential PFIC (Passive Foreign Investment Company) reporting burdens. Many people choose to collapse TFSAs before becoming U.S. tax residents, though you should consider market conditions and Canadian tax implications. For RESPs, these can become problematic in the U.S. for both tax and grant reasons, so families often transition to U.S. 529 plans for children's education savings.

U.S. healthcare is primarily private, so securing coverage quickly is crucial. If you're employed, employer-sponsored plans are often the most cost-effective option—enroll during your initial eligibility window, typically within 30 days of your start date. If not employed, you can use the ACA Marketplace special enrollment period triggered by your move to access plans via Healthcare.gov or state exchanges. Plan types include PPOs (more flexibility, higher cost), HMOs (lower premiums, network restrictions), and high-deductible plans paired with tax-advantaged Health Savings Accounts (HSAs). Prepare required documents early, transfer your medical records from Canada, and schedule initial U.S. primary care visits as soon as possible since wait times can be lengthy.

Your U.S. tax residency status is determined by the Substantial Presence Test. This is a formula based on the number of days you are physically present in the United States over a three-year period. You meet the test if you are in the U.S. for at least 31 days in the current year and a total of 183 days over the last three years (using a weighted calculation). It is crucial to track your days carefully, as exceeding this threshold means the IRS may consider you a U.S. resident for tax purposes.

Form 8840, the "Closer Connection Exception," is an essential tool for Canadian snowbirds who meet the Substantial Presence Test but do not intend to become U.S. residents. By filing this form, you are officially stating to the IRS that your "tax home" and life connections (like family, home, and finances) remain in Canada. This allows you to be treated as a non-resident for U.S. tax purposes, preventing the U.S. from taxing your worldwide income. It must be filed annually by June 15 if you meet the test.

Yes. Any income earned from renting out a U.S. property is considered U.S.-sourced income and is subject to U.S. tax. While the default is a 30% withholding tax on gross rental income, a much better option is to file an election with the IRS. This allows you to be taxed on your net rental income (gross rent minus expenses like property taxes, maintenance, and insurance) by filing a Form 1040-NR tax return. This method almost always results in a lower tax obligation.

No, you will not be taxed twice on the same income. The Canada-U.S. Tax Treaty is designed to prevent double taxation. If you pay tax to the IRS on your U.S.-sourced income, you can claim a Foreign Tax Credit on your Canadian T1 tax return. This credit directly reduces your Canadian tax liability by the amount of tax you paid to the U.S., ensuring your income is not taxed in both countries.

Unlike Canada, the U.S. has an estate tax. For non-residents, this tax applies to U.S. assets, including real estate. The critical issue is that the exemption for non-residents is only $60,000 USD. This means if a Canadian passes away owning a U.S. property valued over $60,000, their estate could face a significant U.S. estate tax bill on the excess value. Proactive cross-border estate planning is essential to manage this risk. If you have questions about your specific situation, we recommend scheduling a consultation with our team.

Yes. The United States taxes its citizens on their worldwide income, regardless of where they live. As a U.S. citizen, you have an annual filing obligation with the IRS. Separately, as a resident of Canada, you must file a tax return with the CRA reporting your worldwide income. While this sounds like you'll be taxed twice, the Canada-U.S. Tax Treaty provides relief. You can typically claim a foreign tax credit on your U.S. return for the taxes you've paid in Canada, which often eliminates any U.S. tax liability. However, the filing obligation itself remains.

These accounts are treated very differently under U.S. tax law. 1. RRSP (Registered Retirement Savings Plan): Thanks to the tax treaty, the tax-deferred growth within your RRSP is generally protected in the U.S., provided you make a specific election on your U.S. tax return each year. However, contributions made while you are a U.S. resident are not deductible on your U.S. return. 2. TFSA (Tax-Free Savings Account): The IRS does not recognize the TFSA as a tax-free retirement account. It is typically treated as a foreign trust, meaning all income and gains earned within it are taxable in the U.S. and require complex annual reporting. Because of this, many individuals choose to liquidate their TFSAs before moving to the U.S.

This is due to the Foreign Investment in Real Property Tax Act (FIRPTA). The U.S. requires a 15% withholding on the gross sales price when a non-resident sells U.S. real estate. This acts as a security deposit to ensure any capital gains tax owed is paid to the IRS. To recover the portion of the withholding that exceeds your actual tax liability, you must file a U.S. Non-Resident tax return (Form 1040-NR) in the following year. It is possible to apply for a withholding certificate before the sale to reduce this amount if you can show your tax will be less than the 15% withholding.

An FBAR (Report of Foreign Bank and Financial Accounts) is an annual report filed with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). A U.S. person (citizen, Green Card holder, or resident) must file an FBAR if the total value of their foreign financial accounts exceeded $10,000 at any point during the calendar year. This includes bank accounts, investment accounts, and even some Canadian pension accounts. The penalties for failing to file can be severe, so it is a critical compliance requirement for Americans living in Canada.

When you cease to be a tax resident of Canada, the Canada Revenue Agency (CRA) considers you to have sold most of your property at its fair market value on the day you leave. This "deemed disposition" can trigger a capital gain and result in what is commonly called a "departure tax." While certain assets like Canadian real estate and pensions are exempt, it applies to many investments, including stocks and mutual funds. Proper tax planning before your move is essential to manage and potentially minimize this tax liability.

You need an ITIN if you have U.S. tax obligations but aren't eligible for an SSN. An ITIN is specifically for individuals who need to file U.S. tax returns or report U.S.-source income but don't have work authorization in the United States. Unlike an SSN, an ITIN is strictly for tax purposes—it doesn't grant work authorization, provide access to Social Security benefits, or change your immigration status. If you're eligible for an SSN (meaning you have work authorization), you should apply for that instead of an ITIN.

The standard processing time is typically 6-12 weeks after the IRS receives your complete application. However, during peak tax season (January through April), processing times can be longer due to increased volume. Using a Certified Acceptance Agent (CAA) or applying at a Taxpayer Assistance Center (TAC) can often result in more predictable timelines because these methods typically have lower rejection rates. To avoid delays, we recommend starting your application by January if you need your ITIN for the April tax filing deadline.

The most straightforward approach is to use your passport, as it's the only single document that proves both your identity and foreign status. If you don't have a passport, you'll need two documents from the IRS-approved list: one that proves your identity (with photo) and another that proves your foreign status. All documents must be originals or certified copies from the issuing agency—notarized copies are generally not acceptable for passports. If your documents aren't in English, you'll also need certified translations that include the translator's credentials and contact information.

Yes, if you work with a Certified Acceptance Agent (CAA) or visit an IRS Taxpayer Assistance Center (TAC). These authorized agents can verify your documents in person, so you typically don't need to mail your original passport. This is particularly valuable if you need your passport for travel or identification purposes during the processing period. If you apply by mail directly to the IRS, you must send either your original passport or a certified copy from the passport-issuing agency.

If your application is rejected, the IRS will send you a letter explaining the specific issues that need to be addressed. Common rejection reasons include missing tax returns (when no exception applies), mismatched names or dates between documents, or using incorrect document types. The key is to respond promptly—address each issue mentioned in the rejection letter and resubmit your corrected application. Many rejections are easily fixable, and most applicants who address the issues properly receive approval on their second attempt.

Yes, if you are a non-resident alien engaged in a trade or business in the United States, you must file Form 1040NR. This requirement applies even if your income is less than the personal exemption amount, your income is exempt under a tax treaty, or you have no U.S.-sourced income. The filing deadline is April 15 if you received wages subject to U.S. income tax withholding, or June 15 if you did not receive wages.

Effectively Connected Income (ECI) is income earned from a trade or business you conduct within the United States, such as wages or salary from a U.S. employer. ECI is taxed at the same progressive rates that apply to U.S. citizens and residents, and you can claim certain deductions against this income. FDAP Income (Fixed, Determinable, Annual, or Periodical) is generally passive income like interest, dividends, and royalties. FDAP income is taxed at a flat 30% rate with no deductions allowed, unless a tax treaty provides a lower rate. Understanding this distinction is crucial because it determines how your income is taxed and what deductions you can claim.

No, with very few exceptions (related to students and business apprentices from India), non-residents cannot claim the standard deduction. You must itemize deductions on Schedule A of Form 1040NR. However, you can only claim deductions to the extent they are connected with your Effectively Connected Income (ECI). Common itemized deductions include state and local taxes, charitable contributions to qualified U.S. charities, and casualty losses.

Tax treaties between the United States and your home country can significantly reduce your tax burden by providing reduced tax rates or complete exemptions on certain types of income. For example, many treaties reduce the standard 30% tax on dividends to 15%, 5%, or even 0%. Some treaties also offer temporary tax exemptions for students or researchers. To claim treaty benefits beyond simple withholding rate reductions, you may need to file Form 8833 (Treaty-Based Return Position Disclosure) with your return.

Yes, if you have income sourced to a state that has an income tax, you likely need to file a state tax return. This is required even if you file a federal return. Each state has its own forms, rules, and filing thresholds. For example, if you earned income in California, you would file Form 540NR, while income in New York requires Form IT-203. Nine states currently have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. State tax compliance adds complexity to your situation, making it an area where professional assistance can be particularly valuable.