Cross-Border Tax Services for the Greater Toronto Area
Canada–U.S. Tax Specialists

Yes. The US taxes its citizens on worldwide income regardless of where they live. You must file a US tax return (Form 1040) and may also need to file FBAR, FATCA (Form 8938), and other information returns for your Canadian accounts, RRSPs, and TFSAs. The good news is that treaty provisions and foreign tax credits can significantly reduce or eliminate your US tax liability.

RRSPs are tax-deferred under the treaty automatically (Form 8891 was eliminated in 2014), but you still report them on FBAR. TFSAs are usually treated as foreign trusts for U.S. purposes and may trigger Form 3520. The IRS Streamlined Filing Compliance Procedures offer a catch-up path if you're behind on prior years.

Canadian residents who earn rental income from US property must file a US tax return (Form 1040-NR) to report this income. You may also need to file state returns depending on the property location. The rental income must also be reported on your Canadian tax return, with a foreign tax credit for US taxes paid.

By default, U.S. tax on rental income is a 30% withholding on gross rent — but you can elect to be taxed on net rental income at graduated rates instead, which is almost always more favorable. If you sell, FIRPTA imposes a 15% withholding on the gross sale price, creditable against your final U.S. tax.

Under the Canada-US Tax Treaty (Article XVIII(7)), the income inside your RRSP is tax-deferred for US tax purposes until you withdraw — the deferral has been automatic since 2014 (Form 8891 was eliminated). You still report the RRSP on FBAR and possibly Form 8938. We coordinate the U.S. and Canadian sides so withdrawals aren't taxed twice.

On withdrawal, Canada applies a 25% non-resident withholding tax on lump-sum RRSP/RRIF distributions to U.S. residents, and 15% on periodic pension payments. RRSPs are exempt from Form 3520 reporting, but TFSAs are not — and may still need to be reported as foreign trusts.

As a Canadian resident, you're taxed on your worldwide income by the CRA. The US company may or may not withhold US taxes depending on the arrangement. We determine your filing obligations in both countries and ensure you're not being double-taxed on this income.

Wages earned by performing services in Canada for a U.S. employer are generally not U.S.-source income. Social Security and Medicare may still apply unless the Canada–U.S. Totalization Agreement assigns coverage to Canada (CPP/EI) instead — typically the case for Canadian-resident employees.