Cross-border tax for Canadians with US exposure.

Structure and planning

US structures for Canadians. US LLCs are a tax trap for Canadians. The default classification creates double taxation and foreign tax credit mismatches that leave you owing more total tax than on equivalent Canadian-source income. We restructure properly, usually through a Form 8832 election and the right ownership layer above it.

Form 8832 entity classification. A one-time choice with decade-long consequences. We model the alternatives, file the election, and coordinate with US counsel so the US-side compliance matches.

Section 9100 late relief. Missed the Form 8832 deadline? Section 9100 relief is available where the late election was inadvertent and the taxpayer acted reasonably and in good faith. We have prepared and submitted these. The facts and the framing matter.

s.45(2) change of use. Canadians moving abroad and converting a principal residence to rental can elect under s.45(2) to defer the deemed disposition and preserve principal residence exemption for an additional four years. Timing and mechanics matter.

Integration analysis. US tax paid generates Canadian foreign tax credit, but only up to the Canadian tax on the same income and only when the categories line up. We model the full integration so nothing is a surprise.

Canadian filings

T1134 information returns. Required for Canadian residents with controlled or non-controlled foreign affiliates. The 2024 redesign expanded the disclosure substantially. Penalties for non-filing are severe.

T1135 foreign asset reporting. Required when foreign property exceeds $100,000 at cost. Filed for clients with foreign investment accounts, foreign rental property, and foreign business interests.

NR6 and s.216. Non-residents with Canadian rental property face 25% withholding on gross rent unless an NR6 is filed. Paired with an annual s.216 return, withholding moves from gross to net.

US filings (reviewed and coordinated, prepared by US partners)

We do not prepare US returns. We coordinate them with US CPA partners we work with regularly, review the work for Canadian-side reconciliation, and ensure the two filings line up. The relevant US returns include:

1040 (US individual return). For US citizens and green card holders living in Canada, including dual citizens with ongoing US filing obligations. The Canadian return and the US return need to reconcile on foreign tax credit, foreign earned income exclusion, and treaty positions.

1040NR (non-resident US return). For Canadians with US-source income, US rental property, or income from a US business. Form 8833 treaty disclosures often apply where the Canada-US tax treaty is invoked.

1120 and 1120-S (US corporations). C-Corp and S-Corp returns for Canadian-owned US operating companies. S-Corps are generally not appropriate for Canadian-owned structures because non-resident shareholders disqualify the election, so the work usually centers on 1120 C-Corp filings.

1065 (US partnerships). For Canadians who are partners in US LPs, US LLCs taxed as partnerships, or US joint ventures. The K-1s need to reconcile to the Canadian filings.

5471 (US-side controlled foreign corporation). The US equivalent of T1134, required when a US person has interests in a foreign corporation. Substantially expanded reporting under recent IRS guidance.

5472 (foreign-owned US corporations). Required for US corporations with at least 25% foreign ownership, or for foreign-owned single-member LLCs. Common for Canadian-owned US C-Corps. Penalties for non-filing start at $25,000.

FBAR (FinCEN 114) and 8938. Foreign bank account and financial asset reporting for US persons. Frequently missed by dual citizens and US persons living in Canada. Streamlined Filing Compliance Procedures available where catch-up is needed.