Green card holders living in Canada

IRS Compliance Requirements:

  • File Form 1040 annually if the individual remains a U.S. tax resident under the green card test or otherwise qualifies as a U.S. resident for tax purposes.
  • Report worldwide income on the U.S. tax return, including Canadian employment, business, rental, investment, pension, and other income.
  • File FBAR (FinCEN Form 114) if the aggregate value of qualifying foreign financial accounts exceeds the applicable threshold.
  • File Form 8938 (FATCA) if specified foreign financial assets exceed the applicable reporting thresholds.
  • File Form 1116 to claim a foreign tax credit for qualifying Canadian income taxes paid.
  • Consider Form 2555 for the foreign earned income exclusion, where the individual meets the eligibility requirements.
    • File Form 5471 where applicable for ownership or control of certain Canadian corporations.
    • File Form 8865 where applicable for interests in certain Canadian partnerships.
    • File Form 8858 where applicable for certain foreign disregarded entities or foreign branches.
    • File Form 8621 where applicable for Canadian investments treated as PFICs for U.S. tax purposes.
    • File Forms 3520 and 3520-A, where applicable, for certain Canadian trusts and foreign trust transactions.
    • Review the U.S. tax treatment and reporting requirements for TFSAs, RESPs, FHSAs, Canadian pensions, corporations, trusts, and other Canadian investment arrangements.
    • Review green card abandonment/surrender rules, including potential Form I-407 immigration considerations and Form 8854 expatriation tax reporting where applicable.
    • Determine whether the individual qualifies as a long-term resident for U.S. expatriation tax purposes before surrendering the green card.
    • Review applicable Canada–U.S. Tax Treaty provisions, including treaty residency and tie-breaker rules where relevant.

CRA Compliance Requirements:

  • File T1 General annually if the individual is a resident of Canada for Canadian tax purposes.
  • Report worldwide income, including U.S. employment, business, rental, investment, pension, and other foreign-source income.
  • File Form T1135 if specified foreign property exceeds the applicable reporting threshold.
  • File Form T1134 where applicable for interests in certain U.S. foreign affiliates.
  • Report U.S. investment income, dividends, interest, and capital gains on the Canadian return, as applicable.
  • Report U.S. rental income and related expenses and calculate the Canadian taxable amount under the applicable rules.
  • Report U.S. pensions, retirement income, and other distributions according to Canadian tax rules and applicable treaty provisions.
  • Claim a foreign tax credit for qualifying U.S. taxes paid, subject to Canadian foreign tax credit rules.
  • Review Canadian tax treatment of U.S. retirement accounts, 401(k)s, IRAs, Roth IRAs, and other U.S. investment arrangements.
  • Review Canadian reporting obligations for foreign trusts, partnerships, corporations, and other foreign entities, where applicable.
  • Apply the Canada–U.S. Tax Treaty where relevant to residency, income allocation, withholding, and relief from double taxation.
  • Review Canadian departure tax and deemed disposition rules if the individual ceases to be a Canadian resident.
  • Maintain documentation supporting foreign income, U.S. taxes paid, exchange rates, financial accounts, investments, and foreign reporting forms.
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