Core Knowledge: U.S.-Canada Cross-Border Taxation

1. Worldwide Income Reporting

• Canadian Residents: Under the Income Tax Act, Canadian tax residents are required to report their worldwide income to the Canada Revenue Agency (CRA). This includes all U.S.-sourced income such as wages (W-2), freelance earnings (1099), dividends, and rental income.

• U.S. Persons (Citizens/Green Card Holders): The U.S. follows a citizenship-based taxation system. U.S. citizens and Green Card holders living in Canada must still file IRS Form 1040 annually to report global income, regardless of where they live.

2. Key Filing Forms

• Form 1040 / 1040-NR: The primary U.S. Individual Income Tax Return. Non-residents with U.S. income typically use the “NR” version.

• Form T1135 (Foreign Income Verification): Required by the CRA if a Canadian resident owns “specified foreign property” (including U.S. stocks, bank accounts, or real estate) with a total cost exceeding $100,000 CAD at any time during the year.

• FBAR (FinCEN Form 114): U.S. persons must report foreign (Canadian) financial accounts if the aggregate maximum value exceeded $10,000 USD at any point in the year.

3. The U.S.-Canada Tax Treaty

• Eliminating Double Taxation: The Canada-U.S. Tax Convention prevents taxpayers from being taxed twice on the same income.

• Foreign Tax Credits (FTC): Taxpayers can generally claim a credit in one country for taxes paid to the other. For example, taxes paid to the IRS on U.S. dividends can often be used as a credit to reduce Canadian tax owing on that same income.

• Withholding Rates: The treaty often reduces the standard withholding tax on dividends (usually to 15%) and interest.

4. 2026 Important Deadlines

• United States (IRS): * April 15, 2026: Tax payment deadline and standard filing date.

  • June 15, 2026: Automatic filing extension for U.S. citizens/residents living abroad (interest on unpaid tax still accrues from April 15).

• Canada (CRA):

  • April 30, 2026: Standard filing and payment deadline.

  • June 15, 2026: Filing deadline for self-employed individuals (though taxes owed must still be paid by April 30).

5. Professional Requirements

• Cross-border tax compliance is complex. It is highly recommended to consult with practitioners holding dual qualifications, such as a Canadian CPA and a U.S. CPA or Enrolled Agent (EA).

(Note: the price is Base Package for T1+1040, according to the complexity and time requirements; please proceed with payment of the final quote provided by your accountant.)