Taxation of Canadians in the U.S.

Taxation of Canadians in the U.S.

  • A Foreign Alien is anyone who is not a U.S. Citizen (Refer to our notes on residency determination).
  • A Foreign Alien will fall into one of the following categories for U.S. tax purposes depending on the facts:


Non-Resident Alien

    • Are required to file a form 1040NR.
    • The residency determination is done in a separate topic (refer to our notes on residency determination). 
    • Must use single or married filing separate status.
    • Canadians will be able to claim exemptions for children and spouse.
    • A non-resident alien is subject to tax on U.S. source income only. Income is considered a U.S. source it is earned through an activity or investment in the U.S.
    • A U.S. source income is classified as “income not connected with a U.S. business” or “income effectively connected with a U.S. trade or business”. They both are taxed at different rates.

Resident Alien

  • Are required to file a form 1040.
  • If one of the married taxpayer is not resident in the US for the full calendar year, an election can be made to treat him/her as a full year resident of the U.S. (6013 (g) and 6013 (h))

Dual-Status Alien

  • Two tax returns are required to be filed.
  • In the year of arrival, 1040 is the return and 1040NR is the statement.
  • In the year of departure, 1040NR is the return and 1040 is the statement. Married filing jointly return is not allowed to be filed. 

Spread the Word!

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on reddit
Share on email
Share on whatsapp

Leave a Reply

Scroll to Top