US Expats in Canada

Chris Wittich

The largest subset of US expats are living in Canada.  Our neighbor to the north is the place where we have the most clients residing outside of the US and there are some common issues that people run into when they reside in Canada as an expat.

I would recommend you check out the posts about expats in general, the FBAR filing requirement, and the main ways to reduce double taxation for expats.  Let’s also look at a few Canadian specific issues that come up.

Provincial taxes are treated like state taxes here in the US and they can be used as an itemized deduction on Schedule A.  With a new tax bill that will affect taxpayers in 2018 the standard deduction is now much higher so less folks will be itemizing, but if you are the provincial taxes can be claimed.

Most Canadians have RRSP accounts and yes those need to be reported on the FBAR.  The income earned in an RRSP account is tax free until withdrawn, the US treats it like a qualified retirement plan, so that’s great news for any Canadian dual citizens out there.

Some Canadians have TFSA accounts and those have different tax treatment in the US and Canada.  For US purposes, a TFSA is not a qualified retirement plan, so income inside of a TFSA should be reported as income on your US tax return just like it was a taxable investment account.

Social Security benefits are taxed differently if you are a Canadian resident.  The US – Canada tax treaty says that Old Age Pensions coming from Canada and US Social Security are only taxable in the country of residence.  That means people living in Canada get to exclude their Social Security from their US tax return, but in order to do it you’ll need Form 8833 to disclose a tax treaty position.

Another common question is about charitable contributions.  Contributions to a registered charity in Canada can be claimed as tax deductions on your US tax return, but you’ll want a Form 8833 disclosure to claim it.


Tax Breaks for Expats


Built-In Gains Tax is a BIG Bad Wolf