Every spring, clients ask us: “I’m Canadian and I pay my taxes in Canada. Why does the IRS want a return from me?” The answer is usually a Florida condo, an Arizona rental, a US pension, or a winter that ran a few weeks too long.
IRS tax reporting for Canadians is not just for US citizens. The US taxes non-residents on US-source income and US real estate, and it expects paperwork even when no tax is owing. Miss a form and you can lose deductions, overpay withholding, or be treated as a US resident taxpayer.
Key takeaways
- Snowbirds who meet the Substantial Presence Test file Form 8840 by June 15 of the following year to stay US non-residents.
- US rent is taxed at 30% of gross unless you elect net-basis taxation and file Form 1040-NR every year.
- Selling US real estate triggers FIRPTA withholding of up to 15% of the price; Form 8288-B and a 1040-NR recover the excess.
- A Canadian who dies with over US$60,000 of US-situs assets needs a Form 706-NA, even if the treaty eliminates the tax.
- US filings pair with Canadian ones: T1135 and the T2209 foreign tax credit.
Which Canadians Have IRS Reporting Obligations?
In our practice, US tax filing for Canadians is usually triggered by one of these:
- Snowbirds with long US winters, even with no US income.
- Owners of US rental property, including a vacation home rented part of the year.
- Sellers of US real estate, who face FIRPTA withholding at closing.
- Recipients of US-source income: pensions, IRAs, Social Security, pidends, US employment or business income.
- Estates and heirs of Canadians who owned US property or US shares.
- Owners of US LLCs. A single-member LLC with a foreign owner files Form 5472 with a pro forma Form 1120 by April 15, and the non-filing penalty is US$25,000.
This article is for Canadian residents who are not US persons. US citizens living in Canada face a different regime: a full Form 1040 on worldwide income every year.
Snowbirds: The Substantial Presence Test and Form 8840
You are a US resident for income tax purposes if you are in the US at least 31 days in the current year and at least 183 days over three years, counting all current-year days, one-third of the prior year’s days and one-sixth of the days from two years back. Any part of a day counts as a full day.
A worked day-count example
A Toronto couple spends 150 days in Florida in each of 2024, 2025 and 2026. For 2026: 150 + 50 (150 &pide; 3) + 25 (150 &pide; 6) = 225 days. They meet the test without ever spending six months in the US in one year. At 120 days a year, the total is 120 + 40 + 20 = 180, just under the line. That is why we keep correcting the 30-day rule myth and similar rules of thumb.
The closer connection exception
If you meet the test but were in the US fewer than 183 days this year, kept your tax home in Canada, had a closer connection to Canada and have not applied for a green card, you stay a non-resident by filing Form 8840. With no other US return to file, you mail it by June 15 of the following year (June 15, 2026 for the 2025 year). If you file a 1040-NR, attach it.
Miss it and you generally lose the exception, unless you can show by clear and convincing evidence that you took reasonable steps to learn of the requirement. The fallback is the Article IV treaty tie-breaker, claimed on a 1040-NR with Form 8833. It is the only route if you spent 183 days or more in the US, but it is more involved and can carry US information-reporting consequences.
Also note the US registration requirement for Canadian snowbirds staying 30 days or more, an immigration filing rather than an IRS one.
US Rental Property: 30% Withholding or a Net Election
By default, US rent paid to a non-resident is taxed at 30% of gross rent, withheld by the tenant or property manager, with no deductions. On US$30,000 of rent, that is US$9,000.
Most owners do better with the election under IRC section 871(d) to treat the rent as effectively connected income. You give your manager Form W-8ECI so withholding stops, then file Form 1040-NR each year, deducting property tax, HOA fees, insurance, management, repairs, interest and depreciation. If those reduce the US$30,000 to US$4,000 of net income, federal tax is roughly US$400 instead of US$9,000. The election continues until revoked, so a return is due every year, even in loss years.
Deadlines and the 16-month rule
Form 1040-NR is due April 15 if you had US wages subject to withholding and June 15 if not, which covers most rental owners. Under Treasury Regulation 1.874-1, a non-resident generally keeps deductions only if the return is filed within 16 months of its due date. File later and the IRS can tax gross rent, plus penalties and interest.
State returns
A rental in Arizona, California or New York generally also requires a non-resident state return. Florida and Texas have no personal income tax. See our practical tips on renting out your US property.
Getting an ITIN (Form W-7)
A 1040-NR or FIRPTA refund needs a US taxpayer number. Canadians without a Social Security number apply for an ITIN on Form W-7, usually with their first 1040-NR or a Form 8288-B application. A Canadian passport is the standard document, submitted as an original or certified copy, or through a Certifying Acceptance Agent. Allow several weeks, and note that an ITIN not used on a return for three consecutive years expires.
Selling US Real Estate: FIRPTA
When a Canadian sells US property, the buyer generally withholds 15% of the gross price and remits it with Forms 8288 and 8288-A within 20 days of closing. If the buyer will live in the home, there is no withholding at US$300,000 or less and 10% up to US$1 million.
Withholding is not the tax. On a US$800,000 sale, US$120,000 is withheld. If your cost plus selling expenses is US$540,000, the US$260,000 long-term gain typically produces federal tax well under US$40,000. You recover the difference by applying for a reduced withholding certificate on Form 8288-B before closing, and by filing a 1040-NR for the year of sale with the IRS-stamped 8288-A. Our FIRPTA tax withholding guide covers the steps, and our update on FIRPTA withholding certificate processing times explains current wait times.
In Canada, the same gain is reported on your T1 in Canadian dollars, and the US tax is claimed as a foreign tax credit on Form T2209.
US Investment Income, Pensions and Social Security
pidends. A current Form W-8BEN with your broker reduces US withholding on pidends from 30% to the treaty rate of 15%; most portfolio interest is exempt. Payers report withholding on Form 1042-S by March 15; if it is correct, you usually have no US return to file.
Pensions and IRAs. Periodic payments are generally withheld at 15% under the treaty once a W-8BEN is on file. Lump sums can be withheld at 30%.
Social Security. Under Article XVIII of the treaty, US Social Security paid to a Canadian resident is taxable only in Canada. You report it on line 11500 and deduct 15% on line 25600, or 50% if you have received it continuously as a Canadian resident since before 1996.
When a Canadian Dies Owning US Assets: Form 706-NA
If a Canadian dies holding more than US$60,000 of US-situs assets (US real estate, or US shares even in a Canadian account), the executor files Form 706-NA within nine months of death. The treaty grants a prorated share of the US unified credit based on US assets over the worldwide estate. Under the One Big Beautiful Bill Act, the basic exclusion is US$15 million from 2026 (indexed), a unified credit of US$5,945,800. Estates under that amount generally owe no US estate tax but must still file to claim the credit. Read more on US estate tax for Canadians and Canada–US estate planning.
The Canadian Side: T1135 and T2209
- Form T1135 is required if the cost of your specified foreign property exceeds C$100,000 at any time in the year. A US rental and US shares held outside Canadian accounts count; a US home kept mainly for personal use does not.
- Form T2209 claims the foreign tax credit for US tax on rent, gains, pidends and pensions.
Ownership structure drives both sides of this reporting, which is why we review it for Canadians with US real estate before they buy.
Situation, IRS Forms and Deadlines at a Glance
| Situation | IRS form(s) | Deadline |
| Snowbird meeting the Substantial Presence Test | 8840 (or 1040-NR + 8833) | June 15 of following year |
| US rental, net election | W-8ECI; 1040-NR; state return | June 15 (April 15 with US wages) |
| No US taxpayer number | W-7 (ITIN) | With first return or 8288-B |
| Selling US real estate | 8288 / 8288-A (buyer); 8288-B; 1040-NR | 8288 within 20 days of closing; 1040-NR June 15 |
| US pidends or pensions | W-8BEN; 1042-S received | Before first payment |
| Single-member US LLC | 5472 + pro forma 1120 | April 15 |
| Death with US-situs assets over US$60,000 | 706-NA | Nine months after death |
A Year-Round Compliance Calendar
- January: confirm W-8BEN and W-8ECI forms are current.
- March 15: Forms 1042-S arrive.
- April 15: Form 5472; 1040-NR if you had US wages; most state returns or extensions.
- April 30: Canadian T1 with T1135 and T2209.
- June 15: 1040-NR for rental owners and sellers; Form 8840.
Frequently Asked Questions
Do Canadians have to file a US tax return?
Only in specific situations: you must file if you have US rent under a net election, sell US real estate, earn US wages or business income, or claim the closer connection exception. Those whose only US income is correctly withheld pidends generally do not file.
When is Form 8840 due?
June 15 of the year after the tax year if you have no US wages, so June 15, 2026 for 2025. If you file a 1040-NR, attach it. A late 8840 can cost you the exception.
What happens if I file my 1040-NR late for a US rental?
You may lose all deductions. Under Treasury Regulation 1.874-1, a non-resident generally must file within 16 months of the due date to deduct expenses; otherwise gross rent can be taxed, plus penalties and interest.
Is US Social Security taxed in the US if I live in Canada?
No. Under the treaty it is taxable only in Canada, where you deduct 15% of the benefits, or 50% if you have received them continuously as a Canadian resident since before 1996.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
