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US Tax for Americans in Canada

The knowledge and expertise that leads to saving on your tax burden

Unlike the US whose taxation is based either on residency or citizenship, Canada’s tax laws are based solely on residency. Like the US however, taxes are imposed on worldwide earnings. This means as a US expat, deeming your residency status in Canada is one of the first important steps. Primarily one who spends more than 183 days in any calendar year is considered to be a Canadian resident. There are other factors that weigh in on this such as frequency of visits to Canada, duration of absence, establishment of domicile in foreign countries as well as maintenance of home and finances in Canada. If you are a resident of both the US and the Canada, then both countries tax you on your worldwide income which means improper tax filing can lead to adverse taxation due to double taxation.


Operating Across Borders

As an international firm with offices in Houston and Toronto, our certified tax professionals can help you with US Tax compliance and tax consultancy for tax savings. We are here to help so contact us now.

How International Tax Treaties Work

Cross-border tax is complicated and always approached on a case-by-case basis. Below is some initial information to get you started. Please contact us ASAP for help.

For Individuals

…or any US resident or citizen living anywhere else in the world, income tax returns need to be filed in the US using the customary Form 1040. This can be filed either separately or jointly (if married).

If you are employed by a US company in Canada, then you fall under the Canada US Income Tax Convention. This means that your employment income is exempt from taxation by Canada unless it is above $10,000 per year. If higher than $10,000, your income is exempt if:

The individual resided in Canada for less than 183 days in any Calendar year
The exemption is not borne by a Canadian citizen or a Canadian resident employer with a fixed base in Canada
If you are self employed US citizen/resident in Canada, aside from filing Form 1040 and Schedule C in the US to declare your worldwide earnings there are other things involved. Based on your current residence, you are required to either pay the US’s self-employment tax (15.3% for incomes up to $118,500) or Canadian Pension Plan (CPP) premiums to cover your social security taxes.

Whether you are considered employed or not in Canada is dependent on whether your primary work place falls under the definition of “Permanent Establishment” as per the Canada-US Tax Treaty.

Preventing Double Taxation

As a proven resident of both countries, you are at risk for double taxation on your worldwide earnings if you are not careful. The Canada US Income Tax Convention provides solutions for this.

FEIE (Foreign Earned Income Exclusion)

As a U.S citizen or resident alien having a tax home in a foreign country (i.e., place of business/employment permanently or indefinitely based in a foreign country) and meeting the criteria of either the Bona Fide Residence Test or Physical presence Test, you can elect “Foreign Earned Income Exclusion”.

Foreign housing cost is also excludable for payments made by an employer either on your behalf or as a reimbursement for incurred housing cost. This amount is taxable foreign earned income. (Availing this may in some cases offset your earned income exclusion).
Foreign Tax Credits (FTC): If you are a US citizen or expat paying foreign income taxes, the same foreign income will become a US tax liability. To alleviate that burden of 2-country double taxation, you are provided with appropriate tax credits on your US tax liability.


Ryan Patton
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I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.

For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my situation.
Ellen Hayes
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I have trusted AKIF CPA to handle my taxes for a couple years now and will continue to do so. There can be a lot to sort through financially as an American living in Canada, and Mohammad's group makes the process as easy as possible.
Laura T
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I was referred to Akif CPA when I was looking for someone to help me with filing my individual Canadian and US taxes. Mohammad was very thorough when explaining my options and helped me understand both tax systems. He was excellent in all aspects, including responsive communication and timely preparing my returns. I would absolutely recommend his services for cross-border tax preparation!
Courtney Bowie
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Mohammad from Akif CPA completed my Canadian and US tax returns. He is really knowledgable and informative about cross-border Canada/US taxes. He also took the time to quickly answer any questions I had, which allowed me to stop worrying about my taxes! Would definitely recommend to anyone with cross-border Canada/US tax needs.