U.S. Residents Earning Canadian Income

File Form 1040 annually if the individual is a U.S. citizen or U.S. resident for tax purposes.
Report worldwide income, including Canadian rental income, interest, dividends, pensions, employment income, business income, and capital gains.
Report Canadian rental income and deductible expenses on Schedule E, where applicable.
Report Canadian interest and dividend income on the appropriate schedules, including Schedule B where required.
File Form 1116 to claim a foreign tax credit for qualifying Canadian income taxes paid or accrued, subject to U.S. foreign tax credit limitations.
Review whether Canadian-source income qualifies for a foreign tax credit or other treaty-based relief.

Report the disposition of Canadian real estate and other Canadian investments, including any applicable capital gains.
Review U.S. tax treatment of Canadian pensions, RRSPs, TFSAs, RESPs, FHSAs, and other Canadian registered accounts.
Review FBAR (FinCEN Form 114) requirements for Canadian financial accounts where the applicable aggregate account-value threshold is exceeded.
Review Form 8938 (FATCA) requirements for specified Canadian financial assets exceeding the applicable thresholds.
File Form 3520/3520-A, Form 5471, Form 8865, Form 8621, Form 8858, or other international information returns where applicable based on Canadian trusts, corporations, partnerships, investments, or other foreign entities.
Review Schedule 3 and other applicable forms for capital gains and losses arising from Canadian property or investments.
Apply applicable Canada–U.S. Tax Treaty provisions, including rules concerning residence, income from real property, pensions, employment income, and other Canadian-source income.
Maintain documentation for Canadian tax paid, T-slips, rental statements, property transactions, investment statements, exchange rates, and foreign financial accounts.

Determine whether the individual is a resident or non-resident of Canada for Canadian tax purposes.
If a Canadian resident, file T1 General and report worldwide income.
If a non-resident, determine whether a Canadian tax return is required based on the type of Canadian-source income and the applicable Canadian rules.
Report Canadian rental income and allowable expenses in accordance with Canadian tax rules.
Consider a Section 216 return where a non-resident earns rental income from Canadian real property and wishes to have Canadian tax calculated on net rental income rather than the applicable gross withholding regime.
Review Canadian non-resident withholding tax requirements, including the general 25% withholding rate on certain types of Canadian-source income, subject to treaty reductions.
Review Form NR6 where applicable for non-resident rental property owners who wish to have withholding based on estimated net rental income, subject to CRA approval.

Report Canadian interest, dividends, pension income, employment income, business income, and other Canadian-source income, as applicable.
Review Canadian tax obligations on the sale of Canadian real estate, including non-resident withholding requirements and the Section 116 certificate of compliance process.
File the applicable forms relating to the disposition of taxable Canadian property, which may include Form T2062 or other applicable forms depending on the property and circumstances.
Review Canadian capital gains tax on the disposition of Canadian real estate, shares, or other taxable Canadian property.
Review whether Form T1135 applies based on the individual’s Canadian residency status and ownership of specified foreign property. Note: T1135 is generally a Canadian-resident reporting requirement and does not ordinarily apply merely because a U.S. resident owns Canadian assets.
Review Canadian tax treatment of Canadian pensions and retirement arrangements and applicable treaty provisions.
Apply the Canada–U.S. Tax Treaty to determine Canadian taxing rights, withholding rates, residency treatment, and relief from double taxation.
Maintain records of Canadian-source income, expenses, withholding taxes, rental property documents, investment statements, property purchase and sale documents, and taxes paid.