Canadian Tax Guide for American Expats Leaving The US and Moving Into Canada: Filing Taxes, Dual Residency, and Rates

Optimise Accountants: Mastering International Taxation for American Expats

When it comes to international taxation, especially between the US and Canada, Optimise Accountants stands tall as the definitive guide. Diving into tax forms, regulations, and deadlines can be overwhelming. That’s where our expertise shines.

Examples of Americans leaving the United States (US) and moving to Canada as residents

Florida to Ontario Migration: David, a real estate developer from Florida, chooses to expand his ventures in Toronto, Ontario. While used to no state income tax in Florida, David must now prepare for Ontario’s provincial tax rates. As he earns income in Ontario, he’ll benefit from the US-Canada tax treaty provisions, potentially allowing for foreign tax credits on his US return for taxes paid in Canada.

Texas to British Columbia Transition: Laura, a digital artist from Texas, embraces Vancouver’s scenic beauty in British Columbia for inspiration. Though Texas didn’t levy a state income tax, she must now consider British Columbia’s progressive provincial tax. On her US tax return, she might utilise the Foreign Earned Income Exclusion, reducing her US taxable income by the amount she earns in Canada up to a certain limit.

California to Quebec Move: Alex, from California, is attracted by the vibrant culture of Montreal, Quebec, and moves there to start a café. Besides navigating Quebec’s unique tax regime, he must understand how his California-sourced income will be taxed. Quebec, not following the federal tax structure, requires Alex to file a separate provincial tax return. The US-Canada tax treaty will also play a pivotal role in ensuring he isn’t doubly taxed.

New York to Ontario Relocation: Mia, a New Yorker in the fashion industry, relocates to Toronto, Ontario, sensing a burgeoning fashion scene. While she’ll potentially find Ontario’s tax rates lower than New York’s combined state and city taxes, she must be mindful of Ontario’s health premium. The US-Canada tax treaty provisions can offer relief by preventing her income from being taxed in both countries.

American Expats in Canada: A Detailed Overview

Being an American expat in Canada isn’t just about embracing the Canadian lifestyle. It involves understanding tax for American expats in Canada and ensuring you remain compliant in both nations. Our team is equipped to offer precise guidance, simplifying the tax process for you.


Crucial Forms for Americans in Canada:

FBAR (Foreign Bank and Financial Accounts): If you have foreign bank accounts with an aggregate value exceeding $10,000 at any point during the year, you’ll need to file an FBAR with the US Department of the Treasury.

Form 8938 (Statement of Specified Foreign Financial Assets): This is required if you hold certain foreign financial assets with an aggregate value exceeding specific thresholds.

 Form 2555 (Foreign Earned Income Exclusion): If you earn income in Canada, you might qualify to exclude a portion of your foreign earnings from US taxation using this form.

T1 General Tax Return: This is the primary Canadian income tax return form for individuals, typically due on April 30 following the tax year.

Key Dates to Remember:

April 15: US tax return due date. However, American expats get an automatic extension to June 15. But remember, if you owe taxes, the interest starts accruing from April 15. 

April 30: The deadline for most individuals to file their T1 General Tax Return in Canada.

June 15: Extended US tax return deadline for American expats.

 June 30: FBAR filing deadline. Note that there’s no extension available for FBAR.

Understanding Dual Residency and Its Tax Implications

Holding a US-Canada dual residency brings a unique set of tax challenges and opportunities. Being knowledgeable about the tax implications of US-Canada dual residency is essential to prevent any inadvertent missteps. With Optimise Accountants by your side, you’re always in safe hands.

Canadian Tax Rates for US Residents: Keeping You Informed

The Canadian tax rates for US residents can seem complex, but we’re here to elucidate them. From federal to provincial rates and how they might affect your financial picture, Optimise Accountants is your go-to resource.Top of Form

US-Canada Tax Treaty Overview The US-Canada Tax Treaty was designed to prevent double taxation of citizens and residents of the two countries on the same income. This treaty also aims to prevent tax evasion and provide a framework for the fiscal authorities in both countries to collaborate.

Withholding Tax Rates:

The treaty provides for reduced rates of withholding tax on various types of income:

Dividends: Typically 15%, but can be as low as 5% if the beneficial owner is a company that holds directly at least 10% of the company’s voting stock paying the dividends.

Interest: Generally 0% withholding tax

Royalties: 10% of the gross amount.

Capital Gains: Gains derived by a resident of one country from the alienation of real property situated in the other country may be taxed in that other country.

Pension Payments: Periodic pension payments (including Social Security) arising in one country and paid to a resident of the other country are taxable only in the country of residence.


Royalty Payments: Imagine an American author who receives royalty payments from a Canadian publishing house for her book sales in Canada. Suppose she earns $10,000 in royalties. Thanks to the treaty, only $1,000 (10% withholding tax) would be deducted before she receives her payment.

Dividend Income: A Canadian company in which a US resident holds a significant 15% stake declares dividends. If the dividends amount to $20,000, instead of the regular withholding tax rate, only $1,000 (5%) would be deducted before the US resident receives their dividend due to the beneficial rate in the treaty.

US Retiree in Canada: John, who retired from his job in the US, now lives in Ontario. He receives a monthly Social Security payment from the US. Under the treaty, John won’t have these payments subjected to US taxes but will report and pay taxes on this income in Canada, his country of residence.

The tax treaty provisions are comprehensive and cater to various income types and scenarios. It’s essential to consult with a tax professional to ensure correct interpretation and application in specific cases.

Navigating the Canadian Tax Maze: A Comprehensive Guide for American Expats on Filing Taxes, Understanding Dual Residency Implications, and Canadian Residents Tax Rates. Moving from the USA to Canada has many tax traps to avoid. Do not make the mistake of not understanding the US-Canada Double Taxation Agreement (DTA) Treaty

FAQ on Americans leaving the United States (US) and moving to Canada and filing taxes as Canadian Residents

What's the difference between filing taxes as an American in Canada as a Canadian resident?

While there are similarities, American expats must consider Canadian and US tax obligations, depending on their income sources and residency status.

How does dual residency impact my tax rates?

Dual residency can affect tax rates and obligations in both countries. Our experts can provide specific guidance tailored to individual situations.

Are there any tax treaties between the US and Canada I should be aware of?

Yes, treaties are designed to prevent double taxation and define taxing rights. Optimise Accountants can guide you through these.

What are the key dates for tax filing in Canada?

The Canadian tax year runs from January 1 to December 31, with the deadline for most individuals being April 30.

Can Optimise Accountants assist with tax planning and strategy?

Absolutely! Our goal is to ensure compliance and strategies for maximum tax efficiency.

Book a call to see how we can help you.


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