File US taxes from Canada
Updated on August 22, 2025
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File US taxes from Canada: What every US expat needs to know in 2025
For US citizens living in Canada, the tax landscape becomes a mix of obligations to both countries. If you’ve made Canada your home and work there, chances are you’re considered a tax resident of Canada while still being a US citizen. So, where does your tax obligation fall?
This guide breaks down everything you need to know about filing US taxes from Canada in 2025, from the forms you need to how to avoid penalties and prevent double taxation.
Do US citizens in Canada have to file US taxes?
Yes. If you’re a US citizen or Green Card holder living in Canada, you must file a US tax return annually regardless of where you live or earn income. The US is one of the few countries that taxes based on citizenship, not residency.
You must report your worldwide income, even if all of it was earned in Canada and was already taxed by the Canadian government. The good news? The US-Canada tax treaty is designed to prevent unpleasant situations like double taxation.
What tax benefits does the US-Canada treaty offer expats?
The US-Canada tax treaty helps make sure you don’t get taxed twice on the same income (once by Canada and again by the US). It does this by deciding which country has the main right to tax different types of income, like wages, pensions, or investments.
Here’s how it benefits you:
- Clarifies tax residency: It includes “tie-breaker” rules to determine which country you’re a resident of for tax purposes.
- Avoids dual Social Security contributions: The treaty works with the US-Canada Totalization Agreement to ensure you don’t pay into both countries’ systems.
- Treaty relief for pensions: Certain Canadian retirement accounts may receive favorable treatment when reported to the IRS.
For example, if you live and work in Canada, the treaty usually lets Canada tax your salary, and then the US gives you credit for the taxes you’ve already paid to Canada. That way, you won’t owe the same tax to both countries.
📌 Bottom line: The US-Canada tax treaty prevents double taxation by assigning taxing rights to either Canada or the US based on income type.
How can US expats in Canada avoid double taxation?
As a US expat in Canada, there are two main ways to reduce or eliminate your US tax bill:
1. Foreign Earned Income Exclusion (Form 2555)
This benefit lets you exclude a portion of your foreign income (earned outside the US) from US taxes. In 2025, you don’t have to pay US tax on up to US$130,000 of foreign earned income if you qualify according to the IRS.
To use the FEIE, you must:
- Live and work outside the US, and
- Pass either:
- The Physical Presence Test (you were in another country for 330 full days in a 12-month period), or
- The Bona Fide Residence Test (you were a long-term resident of another country for a full calendar year)
2. Foreign Tax Credit (Form 1116)
The Foreign Tax Credit (FTC) provides you credit for the income tax you already paid to Canada, so you don’t pay it again to the US. If Canada taxed your income, the US would often let you reduce your US tax by that same amount. This avoids double taxation.
Need help filing taxes while living in Canada?
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US-Canada Totalization Agreement (for self-employed expats)
If you’re self-employed, you might be required to pay self-employment tax to the US government. However, the US-Canada Totalization Agreement helps avoid double contributions to Social Security systems.
If you’re already contributing to the Canada Pension Plan (CPP), you may be exempt from paying into US Social Security. The totalization agreement usually requires you to obtain a Certificate of Coverage to avoid dual Social Security.
What forms do I need to file US taxes from Canada in 2025?
Here are the most common IRS forms US expats in Canada may need to file, depending on their situation:
| Form | Purpose |
| Form 1040 | Standard US individual income tax return |
| Form 2555 | Foreign Earned Income Exclusion (FEIE) |
| Form 1116 | Foreign Tax Credit (FTC) |
| FBAR (FinCEN 114) | Report foreign financial accounts over US$10,000 in total |
| Form 8938 | FATCA reporting for foreign assets over US$200,000 (single) at year-end. |
What if I haven’t been filing?
If you’ve fallen behind on your US tax filing, you may qualify for the IRS Streamlined Amnesty Program.
This program:
- Is for non-willful expats
- Lets you catch up without penalties
- Requires 3 years of back tax returns and 6 years of FBARs
Many Americans in Canada don’t realize they’re required to file US tax returns. This common misconception is why the IRS offers a way to catch up without penalties.
To catch up without facing harsh penalties, you must:
- File 3 years of back tax returns
- File 6 years of FBARs
- Certify that your failure to file was non-willful (i.e., you were unaware of the requirement)
- Pay any tax due (if you owe anything after applying exclusions or credits)
📌 Tip: Even if you don’t owe any US tax, you still need to file. Not filing can lead to compliance issues, even when your tax bill is zero.
When are US taxes due for expats in Canada?
- April 15: Normal filing deadline, FBAR deadline
- June 15: Automatic extension for expats
- October 15: Final extension if requested, Automatic extension for FBAR
Do I need to report my Canadian bank accounts?
Yes, if your balance exceeds certain thresholds set by the IRS. This also includes every other financial account, such as RRSPs, TFSAs, RESPs, mutual funds, business accounts, and joint accounts.
You will need to take note of:
FBAR (FinCEN 114)
- If the combined value of your foreign financial accounts exceeds US$10,000 at any point during the year, you must file FBAR.
- This must be filed separately from your tax return through the Financial Crimes Enforcement Network (FinCEN).
FATCA (Form 8938)
- This requires reporting of foreign financial assets if their total value exceeds US$200,000 (single) or US$400,000 (married filing jointly) at year-end or;
- US$300,000 (single) or US$600,000 (married filing jointly) at any time during the year.
- Higher thresholds apply to expats compared to US residents.
- This is filed along with your Form 1040.
Failing to report can lead to serious penalties. You’ll automatically need to file these if you meet the conditions above.
FAQs
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Do US citizens living in Canada have to file a US tax return every year?
Yes. US citizens and Green Card holders must file a US tax return annually, even if they live in Canada and pay Canadian taxes.
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Do I need to report my Canadian RRSP or TFSA to the IRS and FinCEN?
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What is the difference between FBAR and FATCA reporting for Canadian accounts?
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Do I need to file FBAR if I share a joint bank account with my Canadian spouse?
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Can the IRS audit me if I forget to report foreign accounts from Canada?
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Do I have to report crypto accounts held in Canadian exchanges?
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