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Navigate Canada Cross-Border Tax with Confidence

From RRSPs to Residency, We Handle it All

Moving between the United States and Canada creates complex tax obligations that require careful attention to the tax laws of both countries. Here are some important things to keep in mind regarding cross-border taxation and the most common questions we get.

  • How to avoid double tax?
  • How do I report my RRSP or TSFA accounts?
  • Should I withdraw from my RRSP or TSFA accounts?
  • How do I inform the CRA if I am no longer a Canadian resident? 
  • Do I still need to file Canadian tax returns?
  • How do I determine if I am a resident or non-resident for US tax purposes?
  • What are some tax deductions or credits that I am eligible for?

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Canada Cross-Border Tax Services

Tax Preparation

We prepare and file tax returns in both the U.S. and Canada, ensuring compliance with dual-country requirements and deadlines. Our team manages the complex reporting of cross-border income, including investment accounts, retirement plans, and business interests. Each return undergoes rigorous review to identify all available deductions and credits under the U.S.-Canada Tax Treaty.

FBAR Reporting

We handle all required foreign account reporting for your Canadian financial accounts, including RRSPs, TFSAs, and investment accounts. Our service includes preparation of FinCEN Form 114 (FBAR), Form 8938 (FATCA reporting), and other required foreign account disclosures. This comprehensive reporting helps prevent substantial penalties for missed or incorrect foreign account filings.

Residency Status Planning

We analyze your specific situation to determine tax residency status under both U.S. and Canadian rules. Our team develops strategies to manage residency transitions, including timing of moves and handling of assets to minimize tax impact. We help structure your affairs to achieve the most tax-efficient residency status possible while maintaining compliance.

RRSP and TSFA Consulting

We provide guidance on managing Canadian retirement accounts from a U.S. tax perspective. Our team helps structure withdrawals, contributions, and investment decisions to minimize tax implications in both countries. We also assist with treaty elections and annual reporting requirements to maintain tax-deferred status where applicable.

Exit Tax Planning

We calculate and plan for exit tax obligations when leaving Canada, including deemed disposition requirements. Our team develops strategies to manage the timing and structure of your departure to minimize tax impact. We help ensure all final filing requirements are met while identifying opportunities to reduce exit tax exposure.

Cross-Border Investments

We review investment portfolios to identify tax-efficient structures for cross-border situations. Our team helps restructure investments to avoid PFIC issues and other tax complications common to cross-border investors. We provide specific recommendations for investment vehicles that work efficiently in both tax systems.

Non-Resident Taxation

We manage ongoing Canadian tax obligations for U.S. residents with Canadian income sources. Our team handles rental income reporting, disposition of Canadian property, and other non-resident filing requirements. We help maintain compliance while ensuring you claim all available deductions and treaty benefits.

Double Tax Prevention

We implement strategies to prevent double taxation on cross-border income through careful planning and treaty application. Our team structures income timing and character to maximize foreign tax credit benefits. We help ensure income is taxed only once at the lowest possible rate.

Treaty Benefit Analysis

We identify and implement available benefits under the U.S.-Canada Tax Treaty. Our team prepares required treaty-based return positions and supporting documentation. We help ensure you receive all treaty advantages while maintaining proper documentation for both tax authorities.

Your Personal and Business Accounting Team

George Dimov - Founding President of George Dimov CPA and Tax Specialists, an online CPA firm with the highest standards

George Dimov

President

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Stan Shraybman, MBA, EA

Senior Tax Manager

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Bob Liu, CPA

Senior Accountant

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Xintian Wang, CPA

Senior Tax Manager

5/5

Get award-winning accounting services

Minimize your Canada-US tax burden with expert guidance. Our CPAs understand the complexities of cross-border taxation, from RRSPs to residency requirements. We identify treaty benefits, manage foreign account reporting, and provide clear solutions for both Canadian and U.S. tax obligations. Work with Dimov Tax to protect your interests on both sides of the border.

Optimize your Canada cross-border taxes and save thousands

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Common Questions Answered

The U.S.-Canada Income Tax Treaty prevents double taxation through foreign tax credits. When you earn income taxed by both countries, you can claim a credit in your country of residence for taxes paid to the other country. For instance, as a U.S. resident with Canadian income, you would first report and pay tax on the income in Canada, then report it on your U.S. return and claim Form 1116 foreign tax credits. The credit is limited to your U.S. tax liability on the foreign income and must be calculated separately for different income types.

RRSPs receive special treatment under the tax treaty. While Form 8891 filing was eliminated after 2014 for most taxpayers, you must still report RRSP earnings on Form 8938 if your balance exceeds reporting thresholds. You also need to include RRSPs on FinCEN Form 114 (FBAR) if your total foreign accounts exceed $10,000. Most taxpayers receive automatic deferral of RRSP income taxation through the treaty, though some prior year elections may need Form 8891.

TFSAs don’t receive special treaty benefits and create complex reporting requirements for U.S. taxpayers. You must report and pay U.S. tax on TFSA earnings annually, include the account on Form 8938 and FBAR if applicable, and possibly file Forms 3520 and 3520-A due to foreign trust classification. Many tax professionals recommend closing TFSAs before becoming a U.S. resident to avoid these complications.

For RRSPs, consider your current and expected future tax rates in both countries, withdrawal withholding rates (5-30%), impact on retirement benefits, and currency exchange implications before withdrawing. RRSP withdrawals are taxed as ordinary income for U.S. residents, but you can claim credit for Canadian withholding tax. For TFSAs, consider withdrawing before U.S. residency to avoid complex reporting requirements and annual U.S. taxation of earnings.

To establish non-resident status with the CRA, you need to:

  1. File Form NR73 to determine residency status
  2. Submit Form NR301 to Canadian payers for proper withholding rates
  3. File a final Canadian tax return showing your departure date
  4. Report any deemed disposition of taxable Canadian property

The CRA evaluates both primary and secondary residential ties. Primary ties include maintaining a home, having a spouse or dependents in Canada, or keeping personal property in Canada. Secondary ties include Canadian bank accounts, driver’s license, social memberships, and business relationships. The more ties you maintain, the more likely the CRA will consider you a resident for tax purposes.

U.S. tax residency is primarily determined through the Substantial Presence Test, which counts:

  • All days in the current year
  • 1/3 of days in the first preceding year
  • 1/6 of days in the second preceding year

If your total equals or exceeds 183 days, you’re generally considered a U.S. resident for tax purposes. However, treaty tiebreaker rules may apply if you’re considered a resident of both countries.

You must file Canadian returns if you:

  • Earn Canadian-source employment or self-employment income
  • Sell taxable Canadian property
  • Need to claim a tax refund
  • Want to maintain Canadian tax credits or benefits
  • Receive Canadian rental income (optional Section 216 election)

U.S. tax benefits may include the Foreign Earned Income Exclusion (up to $112,000 for 2022), Foreign Housing Exclusion, foreign tax credits, treaty-based positions, and moving expenses for job-related relocations. As a Canadian non-resident, you may still claim prorated personal credits, Canadian pension contribution deductions, moving expenses within Canada, charitable donations, and rental property expenses.

Maintain comprehensive records including:

  • Travel logs documenting presence in each country
  • Documentation of residential ties
  • Tax returns and supporting documents from both countries
  • Foreign tax credit documentation
  • Currency exchange records
  • Investment account statements

These records are crucial for supporting your tax positions and responding to any tax authority inquiries.