US Tax for Canadians in the US

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

Just like Canada, the US imposes taxes on non-residents as well. This mean that deeming your residency or citizenship in the US as a Canadian is important yet again. In the US, you are considered a resident if you pass the Green Card or the Substantial Presence Test.

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.

Learn About Cross-Border Tax

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

For Canadians employed in the US by Canadian companies: If you are a Canadian resident who derives an income effectively connected* to any business or trade in the US through your Canadian corporation, that income will be subject to US tax filing and in some cases tax liability. This holds true for both employment and personal services rendered by employees of a Canadian corporation in the US (This is as per Article XV – “Dependent Personal Services”, of the Canada US Income tax treaty).

For self-employed Canadians providing services in the US: As per the US-Canada tax treaty, a Canadian resident earning self-employment income in the US, this income is exempt from US federal taxation (note that this does not mean you are exempt from state taxation). This is strictly under the condition that this income was not generated through a Permanent establishment (PE) in the contracting state.

Preventing Double Taxation

Canadian expats working or living in the US are taxed by both countries on their worldwide income, just like US expats in Canada. Depending on whether your income is derived from a business/trade in the US through a Permanent Establishment (PE) or not, you will be allowed to avail deductions on your US tax liability. Canadian residents are taxable only if their business income has a PE in the US connected to it. If they are deemed to not have a PE, Canadians still have to file their US tax return (including world income) but can claim deductions on their liability as per the Canada-US tax treaty. A Canadian resident is deemed to have a PE in the US if:

1. they spent more than 183 days in the contracting state during which time more than 50% of their gross revenue was as a result of services rendered in that state.

(or)

2. if their services were rendered for more than 183 days during any 12-consecutive month period with respect to a project.

Aside from deductions, Canadian residents can also avail Credit relief (Foreign Tax Credits) on their US earned Income by filing the Canadian T1 return.

Canadian expats working or living in the US are taxed by both countries on their worldwide income, just like US expats in Canada. Depending on whether your income is derived from a business/trade in the US through a Permanent Establishment (PE) or not, you will be allowed to avail deductions on your US tax liability. Canadian residents are taxable only if their business income has a PE in the US connected to it. If they are deemed to not have a PE, Canadians still have to file their US tax return (including world income) but can claim deductions on their liability as per the Canada-US tax treaty. A Canadian resident is deemed to have a PE in the US if:

1. they spent more than 183 days in the contracting state during which time more than 50% of their gross revenue was as a result of services rendered in that state.

(or)

2. if their services were rendered for more than 183 days during any 12-consecutive month period with respect to a project.

Aside from deductions, Canadian residents can also avail Credit relief (Foreign Tax Credits) on their US earned Income by filing the Canadian T1 return.

Note: If you are a resident employer in one of these 2 countries, there are separate tax laws determining your taxable income, deductions and credits related to your business (corporations or pass through entities) outlined by the Tax Treaty. For US expat retirees in Canada, there are programs such as Canada Pension Plan (CPP) and Old Age Security (OAS) that provide retirement relief. Similar programs provide social benefits for Canadian expats.

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If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad Akif.

This tax season year was made easy for me by Mohammad and his team as a working expat in USA. He was able to file cross border taxes for me for both Canada and USA with set of few easy to fill out forms and an easy questionnaire. He was extremely helpful and got the work done quickly and professionally. I highly recommend Mohammad and his team for tax filing as a working Canadian in US as he has expertise in what forms need to be submitted to US tax agency. It made my tax season an easy breeze to use such great service he provides as I spent most of my work time in the field with limited access to internet.

I relocated to the US from Canada to be with my husband and found myself in a complicated cross-border tax situation. My husband and I had filed our US taxes jointly for 2018 and 2019, however, my Canadian taxes were not filed for those years so in turn, it affected the previously filed US taxes. I also had not filed FBAR and had no idea what it was.

I reached out to Mohammad and he provided me with extensive information as he was very knowledgeable about cross-border taxes. Mohammad thoroughly addressed all my concerns as I had a lot of questions. He communicated professionally and is truly an expert in his field. Mohammad was extremely attentive and helped resolve all my tax issues in an efficient and timely manner.

I highly recommend Mohammad and his team at Akif CPA to anyone who needs exceptional cross-border tax services.

My family and I relocated to the US from Canada in 2021, and as such were required to file taxes in both countries. Mohammad and the team at AKIF CPA guided us through this process with expert knowledge and advice. Not only that, but their communication and upfront pricing was clear and consistent throughout the process.