US-Canada Cross-Border Tax Filing
The US-Canada cross-border tax situation is one of the most frequently searched and most misunderstood areas of international tax. Whether you're an American who moved to Canada, a Canadian who moved to the US, or someone who lives in one country and works in the other, the interaction of two high-tax systems with a detailed treaty is complex. The TFSA trap, RRSP deferral elections, and the different treatment of Canadian provincial taxes all require expert handling on both the US and Canadian sides.
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What this filing may involve
Every situation is different. The forms below commonly apply — your specific filing may vary.
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- ✓Everything in Standard
- ✓Schedule C & SE for self-employment
- ✓Multiple income sources and currencies
- ✓Everything in Premier
- ✓Foreign Earned Income Exclusion (Form 2555)
- ✓Foreign Tax Credit (Form 1116)
- ✓FBAR filing (FinCEN 114) included
- ✓Everything in Expat
- ✓Schedules D & E for investments and rentals
- ✓Foreign asset reporting (Form 8938)
- ✓FBAR filing (FinCEN 114) included
Frequently asked questions about US-Canada Cross-Border Tax Filing
Is it possible to be taxed in both the US and Canada?
Filing obligations exist in both countries for most cross-border situations, but double taxation is largely prevented by the US-Canada tax treaty and the Foreign Tax Credit. Canada's tax rates are broadly similar to the US, so the credit typically covers most or all of the US liability on Canadian-source income.
I moved from the US to Canada — do I owe 'exit tax' to the US?
If you are giving up your US citizenship or long-term green card status, there may be mark-to-market 'exit tax' implications under Section 877A. However, simply moving to Canada while retaining US citizenship does not trigger an exit tax — you continue with annual US filing obligations.
Which accounts do I report to the US from Canada?
All Canadian financial accounts exceeding $10,000 combined must be reported on FBAR. This includes bank accounts, RRSPs, TFSAs, RESPs, brokerage accounts, and pension accounts. Additionally, accounts above the FATCA thresholds require Form 8938.
I have unused RRSP contribution room — can I use it to reduce my US taxes?
No. RRSP contributions are not deductible on your US return. Under the US-Canada treaty, RRSP earnings are generally deferred for US purposes — meaning you're not taxed on growth annually — but the contributions themselves provide no US deduction.
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