Tax Implications for TN Visa Holders

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Substantial Presence Test (SPT)

The IRS uses the Substantial Presence Test to determine if you are a U.S. tax resident. You meet the test if:

• You were present in the U.S. for at least 31 days during the current year, AND
• The sum of the following equals 183 days or more:

Canada-U.S. Tax Treaty

• Prevents double taxation — income is not taxed twice through foreign tax credits
• Tie-breaker rules — if both countries claim you as a resident, the treaty determines which has primary taxing rights
• Foreign tax credits — taxes paid to one country offset obligations in the other

Social Security & Medicare

• Social Security: 6.2% of wages (employer matches)
• Medicare: 1.45% of wages (employer matches)
• Totalization Agreement: Canada-U.S. agreement prevents double contributions and allows combining credits from both countries for benefit eligibility

RRSP & 401(k)

• RRSP: Growth is tax-deferred in the U.S. under the tax treaty (must file Form 8891 election or rely on treaty)
• 401(k): Contributions reduce U.S. taxable income but are NOT deductible in Canada
• Returning to Canada: 401(k) can be rolled into an RRSP (within limits) to avoid double taxation

Required Forms

U.S. Tax Forms

Canadian Tax Forms

FBAR & FATCA

• FBAR (FinCEN 114): Required if aggregate value of foreign accounts exceeds $10,000 at any point during the year. Filed electronically by April 15 (auto-extension to October 15).
• FATCA (Form 8938): Required if foreign assets exceed $50,000 (single) or $100,000 (married filing jointly) on last day of year, or $75,000/$150,000 at any point.

Canadian Tax Obligations

When you move to the US on a TN visa, you don't automatically stop being a Canadian tax resident. CRA has its own rules:

Departure Tax

When you leave Canada, CRA may consider you to have "disposed" of certain assets at fair market value (deemed disposition). This can trigger capital gains tax on investments, rental properties, and other assets. File Form T1161 (list of properties) and Form T1243 (deemed disposition) with your final Canadian tax return.

NR73 — Residency Determination

Filing Form NR73 is optional but recommended. CRA will formally determine your residency status. File within 6 months of leaving Canada.

Severing Ties

To become a Canadian non-resident for tax purposes:

• Sell or rent out your Canadian home
• Close or minimise Canadian bank accounts
• Cancel provincial health insurance (OHIP, MSP, RAMQ)
• Update your driver's licence to your US state
• Move your spouse and dependents to the US

RRSP & TFSA for TN Holders

• RRSP: Growth is tax-deferred in the US under the Canada-US Tax Treaty. Do NOT contribute after becoming a US tax resident — contributions are not deductible on your US return.
• TFSA: The IRS does NOT recognise TFSAs. All growth is taxable in the US. Consider closing before moving or accept the US tax hit and complex reporting (Form 3520/3520-A).
• 401(k): US employer retirement plan. Contributions reduce US taxable income. Can be rolled into an RRSP when returning to Canada (within limits).

Cross-Border Tax Professionals

Do not use a regular accountant for cross-border taxes. You need a specialist who understands both CRA and IRS rules and the Canada-US Tax Treaty.

• Typical cost: $1,500–$3,000/year for dual Canadian + US filing
• What they handle: departure tax, treaty elections, FBAR/FATCA, RRSP reporting, foreign tax credits

Look for firms that specifically advertise "Canada-US cross-border tax" services.

States With No Income Tax

These U.S. states do not levy a state income tax:

• Alaska
• Florida
• Nevada
• New Hampshire*
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

*New Hampshire taxes only interest and dividend income (phasing out fully by 2027).