Tax implications for Canadians living in the US

Image result for us & canada border

The US is only bordering country with Canada and thousands of individuals travel daily across the border for work and other activities. Approximately over a million Canadians live in the US. As a Canadian citizen or permanent resident if you live or work in the US you could become a US resident for tax purposes.

In this situation, tax implications are extremely important and have a significant impact on your tax liability in both countries. If you are a resident of each country based on local tax laws, special tax convention tiebreaker rules will be applied to establish the residence status in each country. This is because of the fact that you can’t be a resident of two countries for tax filing purposes.

Generally, if you live and work in the US, however, either your permanent home is in Canada or your dependents are living in Canada, you will still be treated as a resident of Canada and be liable of taxes on your world income. Tax paid in the US or other jurisdictions could be claimed as a tax credit in Canada. This situation will change if you buy your second home in the US or you dispose of your Canadian home and your dependents start living with you in the US.

Other important factors which need to be considered include;

  • other property and investments in Canada such as commercial property, RRSP, TFSA, securities, etc.
  • using provincial health services and claiming child benefits
  • disposal or renting of Canadian home to an unrelated third party, etc.
  • maintaining Canadian bank accounts & driving license

Disclaimer: This article is for general awareness purpose and is not intended to provide or replace professional advice. The author doesn’t assume any responsibility for actions taken by readers.


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