Tax guides
Business tax under rules on both sides of the border and the Canada–US tax treaty.
A US citizen resident in Canada can own a Canadian corporation, but US tax may arise before payment if it is a controlled foreign corporation. Canadian corporate tax is not automatically the owner's US tax credit. Salary, dividends and retained business or investment income follow different rules, so the T2, T1 and Form 1040 must be reconciled.
Individuals · Corporations
Selling to US customers alone does not require a Canadian corporation to file a US federal income tax return. US business activity can require Form 1120-F even when the Canada–US treaty removes tax because the corporation has no US permanent establishment. A treaty claim may also require Form 8833. US activity, income, withholding and treaty eligibility determine the answer.
Corporations
Canadian residents selling US founder shares report the gain in Canada; the treaty usually leaves no US tax for section 1202 to reduce. If the US can tax you, section 1202 may help but cannot reduce Canada's gain. First check treaty residence, citizenship and moves. A Canadian corporate seller reports gain, cannot claim section 1202, and may elect foreign-affiliate treatment.
Individuals · Corporations
Canadian resident freelancers report US-client fees in Canadian dollars on Form T2125; Quebec residents also file TP-1. Qualifying exports usually have no GST/HST or QST charged, but registrants still file sales-tax returns. Work done entirely in Canada generally creates no US federal filing by itself. US work, other income, or withholding can change that.
Self-employed
Check the company's creation and Canadian work first. The US corporation files Form 1120 and may need Form 5472. A company created only under US law is generally US-resident under the treaty despite Canadian management. Canadian business activity can require a T2. The Canadian shareholder generally files T1134; a corporate shareholder also files its own T2.
Corporations · Individuals
US: the LLC files Form 5472 with a pro forma Form 1120 in any year with related-party transactions, and a US trade or business requires your Form 1040-NR even without taxable income. Canada treats the LLC as a corporation: a Canadian resident filing a T2 if managed from Canada, otherwise a foreign affiliate you report on Form T1134.
Self-employed · Corporations
First confirm the entity's US and Canadian classifications and whether you or your corporation owns it. If the partnership has US business profit, it generally pays withholding on the Canadian partner's share; the partner claims it on Form 1040-NR or 1120-F. In Canada, report partnership income or LLC dividends and affiliate income on the owner's T1 or T2 when required.
Individuals · Partnerships · Corporations
A Canadian corporation claims qualifying US income tax on Schedule 21 of its T2, up to the Canadian federal tax on that US income. Business and non-business credits have separate limits. Unused business credits can carry to other years; qualifying non-business tax may instead be deducted. Treaty-excess withholding calls for a US refund.
Corporations
First assess Canadian business activity. Corporations and LLCs carrying on business in Canada must file a T2 within six months of year-end, even with treaty relief. Individuals and individual partners file for Canadian tax payable or another T1 trigger. Owners normally pay hosting GST/HST, plus Quebec QST; miners generally cannot recover it.
Corporations · Partnerships · Self-employed
You or your corporation, whichever had to file, not the US company, owes C$25 a day, up to C$2,500 for each missed T1134, even with no tax due. Knowing or grossly negligent failure costs more. The CRA may cancel a penalty, but voluntary disclosure cannot reach one already assessed, so check CRA letters and choose that route before filing.
Individuals · Self-employed · Corporations
File required years, prioritizing deduction and refund deadlines. To keep most US business deductions, the corporation needs a true, accurate Form 1120-F within 18 months of each due date. If its preceding required return was unfiled, a specified IRS notice can shorten that window. After cutoff, seek a discretionary waiver. Disclose reportable treaty claims; the corporation can owe US$10,000 per failure.
Corporations
No choice is automatically cheaper; compare all three using the same move date and company value. Leaving Canada can trigger tax on your shares even if you keep them, while later dividends can face Canadian withholding and US tax. Moving to Canada, the countries may tax a US LLC or S corporation's income at different times. Closing can trigger tax too.
Individuals · Self-employed · Corporations
Whether the Canadian or US company bills the other, first identify the work, rights or goods, then use arm's-length prices backed by contracts, costs and comparables. The seller reports income; the buyer records its cost. The Canadian company checks T106 and the US company checks Form 5472. Before payment, check withholding: the payer, and sometimes Canadian directors, can owe missed tax.
Corporations
A licence fee for your work is often a treaty royalty, even if Canada taxes it as business income. US tax generally follows where the work is used. With a W-8BEN or W-8BEN-E given before payment, an eligible Canadian resident's copyright (not film or TV), software and patent royalties are 0%, trademark royalties 10%; with none, 30% is generally withheld.
Individuals · Self-employed · Corporations
The buyer generally withholds from the price: nothing on ordinary US shares, 15% of the amount realized on US real property interests, 10% on a partnership-taxed LLC interest. For US tax, a single-member LLC sale is an asset sale. Certificates should reach the buyer before closing. Canada generally taxes the gain; a corporate seller may elect part as a dividend.
Individuals · Corporations
Check the entry and delivery terms: the importer of record owes customs; terms decide whether seller or buyer pays. Low parcel value no longer secures duty-free entry. Record seller-paid duties with inventory or delivery expenses on a T2 or T2125. Importer status alone does not create a permanent establishment; assess US activity and sale source. Export proof governs GST/HST relief.
Corporations · Self-employed
Canadian corporations can seek US-located bank accounts without US companies. An account alone requires neither a US return nor FBAR. Compare the Canadian-dollar cost of reportable foreign property with C$100,000; exclude cash used exclusively in an active business. Quebec corporations also check provincial Form TP-1079.8.BE-V. Banks may request W-8BEN-E. US-citizen signers check non-US accounts separately.
Corporations
A 1099-K or 1042-S from a US platform does not by itself mean a Canadian seller owes US tax; that depends on the income's source, any US business activity and treaty eligibility. First match it to your sales records. Business income is reported in Canada in Canadian dollars; US tax withheld may qualify for a foreign tax credit.
Self-employed · Corporations
Moving to Canada does not itself end an S election. A nonresident alien shareholder ends it, or stops a new one taking effect, from the date the owner's US status changes, and the corporation then pays corporate tax unless the IRS grants relief. An acceptance letter does not cure an ineligible owner. First, list each owner's US status by date.
Corporations · Individuals
Check whether the US tax was actually owed. Ask the payer to correct excess withholding promptly; otherwise, a US nonresident individual generally claims an IRS refund on Form 1040-NR and a Canadian corporation on Form 1120-F. Canada may credit only final US tax on qualifying US-source income, subject to Canadian limits. Form 1042-S alone does not establish that the tax qualifies.
Individuals · Self-employed · Corporations
A Canadian corporation generally checks Corporation on W-8BEN-E line 4, enters its nine-digit business number on line 9b, and signs Part XXX. Complete line 5 and its FATCA part when required; use Part III only for a supported treaty claim. Give a foreign corporation's W-8BEN-E, never a false W-9. If a 1099-NEC arrives in error, ask the payer to correct it.
Corporations
A Canadian business needs a cross-border accountant when US work, a US entity, US-source payments or a US-citizen owner create filings its Canadian preparer cannot assess. US customers alone often need no US return. Start with a written filing review; the accountant then handles returns, related-company reports and coordination. Fees depend on the agreed scope.
Self-employed · Corporations
Not sure which rules apply?