US Citizen Living in Canada: What You Need to File and When

The Dual Filing Obligation

Most countries only require their citizens to file taxes if they live there. The United States is one of the few countries in the world that taxes its citizens on their worldwide income regardless of where they live. This means that as a US citizen living in Canada, you are required to file tax returns with both the IRS and the CRA every single year, even if you have not set foot in the United States.

This dual obligation surprises many American expats in Canada, and the consequences of ignoring it can be serious.

What You Need to File in Canada

As a resident of Canada, you file a T1 personal income tax return with the CRA reporting your worldwide income. This includes income earned in Canada, income earned in the United States, and income earned anywhere else in the world. Your Canadian tax return is due by April 30th each year, or June 15th if you or your spouse are self-employed.

What You Need to File in the United States

As a US citizen, you are required to file a US federal tax return each year reporting your worldwide income to the IRS, regardless of where you live. The filing deadline for Americans abroad is automatically extended to June 15th, with the option to request a further extension to October 15th.

In addition to your federal return, you may also need to file:

FinCEN Form 114 (FBAR): If you have Canadian bank accounts, investment accounts, or retirement accounts like RRSPs or TFSAs with a combined value exceeding $10,000 at any point during the year, you must file an FBAR by April 15th.

Form 8938 (FATCA): If your foreign financial assets exceed certain thresholds, you must also file Form 8938 with your federal tax return.

Form 8833: If you are claiming any benefits under the US-Canada Tax Treaty, you must disclose the treaty-based position on Form 8833.

How RRSPs are Treated for US Tax Purposes

RRSPs receive special treatment under the US-Canada Tax Treaty. Most US citizens in Canada can defer US taxation on RRSP earnings through a treaty election, similar to how Canadians defer Canadian tax on RRSP growth until withdrawal. However, the account must still be reported on your FBAR and Form 8938 if applicable.

TFSAs, on the other hand, do not receive the same treaty protection and are treated as taxable foreign accounts by the IRS. Many tax professionals recommend that US citizens in Canada avoid contributing to TFSAs to prevent complex reporting complications.

How Foreign Tax Credits Prevent Double Taxation

The taxes you pay to the CRA can generally be claimed as a foreign tax credit on your US return, reducing your US tax liability on the same income. When structured correctly, most US citizens in Canada end up owing little or no additional US tax beyond what they already paid in Canada.

How FMC Agency Can Help

We prepare both your Canadian T1 and your US federal return, apply the treaty provisions and foreign tax credits correctly, and handle all required foreign account reporting. If you have not been filing your US returns, we can also help you become compliant through the IRS Streamlined Filing procedures.