US Citizen & Resident Working in Canada

by Tax Guy - Burlington Accountant on October 1, 2008 Print This Post Print This Post

If you are a US citizen or resident self-employed in Canada or working in Canada you may be able to contribute to a Canadian registered retirement savings plan.

As a US resident working in Canada, you would be subject to Canadian taxes as a non-resident and must file a T1NR (which is similar to the US 1040NR).  Under the Canadian tax rules you should be able to contribute to an RRSP if you have earned income subject to Canadian tax.  Earned income is defined as:

  • Salary, wages, bonuses and taxable fringe benefits
  • Taxable wage loss replacement or long-term disability income resulting from employment
  • Canada Pension Plan disability benefits
  • Net rental income from real estate (less any current year rental losses)
  • Net income from self-employment (less any current year business losses)
  • Net research grants
  • Royalties received by an author or inventor

Upon retirement distributions from the RRSP would be subject to the 15% Canadian withholding tax to which you would receive a credit or deduction in the US.  There may be additional US tax implications of holding the RRSP in Canada.

Note that if you work in Canada, it is strongly advisable to seek a cross border tax specialist to help you navigate the Canadian & US tax implications.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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