US Expat Taxes in Canada

Residence and the U.S. filing starting point in Canada

A U.S. citizen or green-card holder generally continues to analyze U.S. worldwide-income filing while living in Canada. Local residence is a separate question. Start a year-by-year timeline that identifies arrival, visa or residence status, days present, homes available, work performed, family location, local registration, and departure or renewal dates. Living near the US-Canada border makes accidental disqualification common. Every day spent in the US counts against the 330-day requirement. Carefully log all cross-border trips including short shopping or family visits. Permanent Resident status (PR card) or a valid work permit strongly supports bona fide residence. Filing Canadian taxes and maintaining a Canadian home, bank accounts, and social ties are key factors. Do not treat a visa label or a local tax number as a substitute for the U.S. return analysis.

FEIE and earned income for Americans in Canada

The Foreign Earned Income Exclusion applies only to qualifying earned income and requires the relevant tax-home and presence or residence test. Salary, self-employment receipts, and services performed abroad need a work-location record. Pensions, Social Security, dividends, interest, rent, and capital gains need separate treatment. Track every trip to the United States, including partial days where the current rules count them, and preserve the residence evidence behind a bona fide claim. Compare the FEIE with the Foreign Tax Credit rather than assuming the exclusion is best.

The Canada local tax system and the U.S. return

Canada taxes residents on worldwide income. Federal progressive rates from 15% to 33%, plus provincial rates varying by province (5.06%-25.75%). The local result may depend on residence, source, remittance, employment, business activity, and the tax year. Preserve the local registration, return, assessment, payment receipt, withholding records, and any refund. A local exemption or reduced rate can change the foreign taxes available for a U.S. credit; it does not generally turn off U.S. citizenship-based reporting.

Treaty and social-security questions for Canada

A U.S.–Canada income-tax treaty, signed in 1980, is in force. Any treaty benefit should be checked against the current treaty text, protocol, saving clause, and residence facts. A U.S.–Canada Social Security totalization agreement is in force. Do not use a treaty headline to decide a pension, employment, self-employment, or state result without identifying the exact article and tax year.

Banks, accounts, and FATCA in Canada

Canadian bank and investment accounts held at Canadian institutions may be reportable on FBAR when the aggregate maximum value of your reportable foreign financial accounts exceeds $10,000. RRSPs and other retirement arrangements can also be reportable depending on structure, and RRSP/RRIF treaty elections are documented (historically Form 8891, now addressed through treaty-based positions). Account definition, ownership, and the applicable exceptions still apply. Canada signed a Model 1 IGA with the US in 2014. Canadian financial institutions report US person account information to the CRA, which shares it with the IRS. US citizens opening Canadian accounts must declare US tax status. Build one account inventory with the legal owner, joint owners, signature authority, institution, account type, currency (CAD), maximum value, year-end value, and closure date. Compare it with the current FBAR and Form 8938 instructions. A foreign bank’s FATCA request is a documentation issue, not automatically an IRS assessment. Keep bank correspondence and secure records separate from the U.S. income calculation.

Income source and work-location records

For an employee, contractor, or business owner in Canada, record where services were physically performed, which entity paid, where the customer or employer is located, and where the work was managed. A Canada payer does not automatically make every item foreign-source, and a U.S. payer does not automatically make services U.S.-source. Keep contracts, invoices, payroll, travel records, foreign withholding, local filings, and entity books. Separate personal income, business income, distributions, and investment returns before applying a credit or exclusion.

Pensions, funds, and savings products from Canada

Ask whether a local pension, insurance policy, mutual fund, ETF, savings plan, or employer account is a pension arrangement, trust, foreign corporation, or another product for U.S. purposes. The local label may not answer the U.S. classification. Preserve plan documents, investment menus, annual statements, distributions, beneficiary records, and any annual information statement. If the product contains foreign pooled funds, screen Form 8621 and PFIC questions. If it is a pension, review treaty and Form 8938 questions separately from current income.

Residence routes and documentation in Canada

Common residence routes in Canada include Permanent Resident Card, Work Permit, Study Permit, CUSMA/TN Work Permit. For each route, preserve the application, approval, renewal, local address, work permission, health coverage, and evidence of actual use. A residence permit may support a bona fide-residence analysis, but the taxpayer’s conduct and full-year facts still matter. If the taxpayer is a digital nomad, retiree, student, contractor, or family member, connect the visa record to the actual income and household timeline rather than relying on a visa marketing description.

Common Canada pitfalls to test before filing

These are screening prompts, not conclusions. For each one, identify the year, owner, transaction, document, and form affected. Add gifts, inheritances, foreign entities, local funds, rental property, state ties, and IRS or bank notices to the same inventory. The country-specific articles on this site can help frame these questions; use them, then check the current primary sources.

• Forgetting to report RRSPs and TFSAs on FBAR and FATCA forms, which carry steep penalties
• Not making the treaty election to defer tax on RRSP/RRIF income (Form 8891 / Form 8833)
• Frequent US border crossings inadvertently breaking the FEIE physical presence test
• Double taxation on Canadian-source capital gains if Foreign Tax Credit is not properly claimed
• Overlooking provincial tax obligations which vary significantly across Canada

A records-first annual workflow for Canada

Collect identity, residence, travel, income, account, pension, entity, local-tax, state, prior-return, and notice records. Classify each item, calculate the federal return, reconcile the foreign tax credit or FEIE, review FBAR and Form 8938 overlap, and compare the U.S. return with the local return. Save the final return, acceptance records, payment evidence, conversion rates, and unresolved issues for next year. Current official source material to check includes the current IRS, Treasury, and local authority sources. A paid consultation can turn the map into a written preparation scope before work begins.