Cross-Border Tax Services

Leaving it too late. Many tax strategies (like estate freezes, trust setups, or pre-departure planning) must be done before moving, selling, or expanding. Once you’ve triggered residency or sold an asset, your planning options narrow significantly.

Contacting our team of cross-border tax experts will allow you to plan in advance to minimize departure tax, ensure you have the correct structure in your new home, and decrease the compliance costs (and headache) of the move

Cross-border taxation refers to the obligation to report and pay taxes on income earned outside your country of residence. This may apply if you work in one country but live in another, maintain dual residency, or operate an international business.

For example, if you're a U.S.-Canada dual resident earning income in Canada, both countries’ tax laws will determine how you file your taxes.

Navigating these rules is complex and often requires interpretation of tax treaties and regulations. Each individual’s situation is unique, which is why consulting a Cross-Border Tax Expert at Prasad and Company LLP can help ensure compliance and optimize your filings.

Cross-border tax planning involves evaluating your financial profile — including income, investments, and international transactions — to create a tax strategy that minimizes your tax liabilities in both jurisdictions.

Our experts design customized tax solutions to help you avoid double taxation, stay compliant, and retain more of your income.

Canada’s Departure Tax is triggered when you become a non-resident for tax purposes. Key considerations include:

• Residency status: Understanding whether you’ve officially ceased Canadian residency is the first step.
• Departure Tax exemptions: You may be exempt if, for example:
  • Your Canadian property is a principal residence (and not rented out)
  • Your Canadian business has a permanent establishment
  • You are a short-term resident (less than 60 months)
• Taxable deemed dispositions: You may be taxed on capital gains from assets like:
  • Personal-use property (art, jewellery, collectibles)
  • Foreign-held investments
  • Non-in orated businesses outside Canada
  • Shares, mutual funds, and partnership interests

Understanding these rules is essential before making any moves. Speak with our team to protect your assets.

This is common — but introduces complexities:

• You may need to file Form 5471 and other international disclosure forms
• If you are an officer or director in the Canadian company while U.S. resident, the IRS treats this as foreign corporate ownership, with controlled foreign corporation implications
• Transfer pricing becomes critical if services are rendered across the border

We can help: implement cost-sharing, intercompany billing, and compensation structures that satisfy both CRA and IRS.

• U.S. rental properties generate effectively connected income, reportable via Form 1040NR or your 1040
• Canadian taxation applies, but foreign tax credits may apply
• Form 8938, FBAR, and state filings may be required

We can help: determine whether it’s more tax-efficient to hold U.S. assets personally, corporately, or via trusts.

Moving to the U.S. with Canadian investments requires careful planning:

• Rental Property: Non-residents must remit 25% withholding tax on Canadian rental income and file annually with the CRA.
• Canadian Mutual Funds: New purchases are generally restricted, though existing holdings may be retained. These often fall under U.S. PFIC rules, which trigger complex reporting and higher taxes.
• TFSA: Although tax-free in Canada, TFSA income is fully taxable in the U.S. post-departure. Contributions must stop once you become a non-resident.
• RRSP: You may keep your RRSP, convert it to an RRIF, or withdraw funds, but transferring to an IRA is generally not advisable.

Given the financial and compliance risks, it’s critical to consult a Cross-Border Tax CPA before taking action.

Canada does not have an inheritance or estate tax in the traditional sense. Instead, the Canada Revenue Agency (CRA) treats the deceased’s assets as if they were sold on the date of death, triggering a capital gains tax obligation on the estate — not the beneficiaries.

The final tax return must account for any deemed dispositions and income earned up to the date of death.

Yes, depending on your residency status and Canadian-sourced income, you may still need to file Canadian tax returns.

Each case varies, and the filing requirements depend on the type of income earned and whether you're considered a factual or deemed resident.

Our tax advisors can assess your situation to ensure compliance with Canadian tax obligations.

Canadians who move to the U.S. (or even hold U.S. situs assets like real estate or stocks) may be exposed to U.S. estate tax, which kicks in for worldwide assets above approx. $13.6 million USD (as of 2025). This threshold may drop dramatically in 2026.

We can help: restructure ownership using holding companies or trusts, and ensure estate plans consider both countries’ rules.

If you're a U.S. citizen or resident abroad and have missed past tax deadlines, you may be eligible to file under the IRS Streamlined Filing Compliance Procedures. This program allows taxpayers to catch up on late returns without facing penalties, provided they can certify that their non-compliance was non-willful.

You’ll typically need to file:

• The past 3 years of U.S. tax returns
• The past 6 years of FBARs (Foreign Bank Account Reports)

Speak with our Cross-Border Tax Experts to ensure you qualify and to guide you through the process.

Failing to file U.S. taxes as an expat can lead to:

• Interest charges
• Penalties for late filing or non-compliance
• In severe cases, criminal prosecution

It’s important to stay compliant — even if you believe you owe nothing — by filing all necessary forms with the IRS.

Tax implications vary depending on your financial profile, but here are some essential first steps:

• Report all capital gains, dividends, and income prior to your move
• Prepare proper documentation for asset valuation at the time of entry
• Understand how Canadian tax rules will affect U.S. retirement accounts

Engage a Cross-Border Tax Specialist at Prasad and Company LLP to ensure a smooth transition and avoid unexpected tax liabilities.

If you, as the owner or shareholder, relocate to the U.S. but your corporation remains Canadian, it may still be a Canadian tax resident. However, management and control (e.g. if you start running the business from the U.S.) could trigger U.S. tax obligations for the company.

Key Issues:

• Potential “dual residency” issues
• Exposure to U.S. corporate income tax
• Increased reporting (e.g. Form 5471 for U.S. shareholders of foreign corporations)

We can help: determine residency status, restructure operations, and minimize dual tax exposure.

Holding companies that own active Canadian businesses can pose significant tax planning issues during emigration.

Risks include:

• Deemed disposition of shares at FMV upon leaving Canada
• Loss of Lifetime Capital Gains Exemption (LCGE) if shares no longer qualify
• Exposure to U.S. Controlled Foreign Corporation (CFC) and GILTI rules

We can help: freeze value before departure, defer taxes, and restructure holdings to preserve tax efficiency and LCGE access.

Yes — but this will likely create a Permanent Establishment (PE) in the U.S., triggering U.S. corporate tax and state tax filings.

You’ll need to consider:

• Employer registration and U.S. payroll
• U.S. withholding tax compliance
• Transfer pricing rules if staff work for both Canadian and U.S. entities

We can help: navigate U.S. HR and payroll obligations while preserving your corporate structure.

Yes, if you are a U.S. citizen or green card holder residing in Canada, you are still required to file U.S. tax returns on your worldwide income.

Even if you pay Canadian taxes, you must report income to the IRS and may need to file additional forms such as FBAR or FATCA disclosures.

Yes, non-residents are required to pay tax on income earned from Canadian sources. The type and amount of tax depend on the nature of the income, such as rental income, employment income, or capital gains.

Since tax obligations vary case by case, it’s recommended to consult a professional CPA familiar with non-resident tax filings.

Yes, FBAR (Foreign Bank Account Report) requirements extend to entities such as corporations, partnerships, LLCs, trusts, and estates. If any of these entities hold foreign financial accounts exceeding the threshold, they must comply with FBAR filing obligations.

This is a critical decision.

LLCs are common in the U.S. but can be problematic for Canadians. CRA does not recognize LLCs as corporations and may deny treaty benefits, causing double taxation.

C-Corps are often a safer route for Canadian owners.

LPs (Limited Partnerships) can also offer flexibility for certain structures.

We can help: design optimal cross-border structures that reduce tax leakage and comply with both jurisdictions.

The following types of financial accounts are typically reportable under FBAR:

• Chequing and savings accounts
• Brokerage and securities accounts
• Deposit accounts
• Foreign pension or retirement accounts
• Any account held with a financial institution abroad

Additionally, individuals with signature authority over foreign accounts may also be required to file.

Yes, U.S. expats must file taxes if their worldwide income exceeds the IRS filing threshold. While some may not owe tax due to exclusions or credits, the requirement to file remains.

Eligibility for U.S. tax treaty benefits depends on several factors including your residency status, the nature of your income, and applicable tax treaties. Consulting a cross-border tax specialist is the best way to determine whether and how you can benefit.

Tax forgiveness isn't automatic. However, under certain IRS programs and through strategic planning, individuals may qualify for relief such as penalty abatement or tax exemptions. Each situation is unique — consult a Cross-Border CPA to assess your eligibility.

The IRS determines wage garnishment based on income, dependents, and filing status. As an example, if you earn $1,000 biweekly with no dependents, the IRS may garnish approximately $538. Actual amounts vary, so consult a tax advisor for a case-specific assessment.

Cross-border taxation involves interpreting complex tax treaties and rules that differ from country to country. In the U.S., the IRS has specific frameworks for international income and foreign financial activity. Rather than navigate this alone, consult a Cross-Border Tax CPA for accurate, tailored guidance.

Yes, U.S. citizens and residents generally must report worldwide income and may owe taxes in both countries. Tax treaties and foreign tax credits can reduce or eliminate double taxation. Consulting a tax expert ensures you take advantage of available relief options.

Yes — residency is based on facts, not just where your passport says you live. You could become tax resident in both countries, triggering double reporting.

Key Considerations:

• The Canada-U.S. Tax Treaty offers "tie-breaker" rules
• Canadians may be subject to U.S. exit tax if ceasing Canadian residency with significant assets
• Need to file T1161, T1243, T1244 (Canada) or Form 8854 (U.S.)

We can help: analyze residency risks and manage departure tax exposure for business owners with large private company shares or retained earnings.

Yes, if you are a Canadian resident, you are required to report and potentially pay tax on income earned in the U.S. Even if U.S. taxes have already been paid, Canadian obligations may still apply, though foreign tax credits can offset the impact.

Double taxation occurs when the same income is taxed by two countries. For example, a U.S.-Canada dual resident earning interest in Canada may be taxed on that income by both the CRA and IRS.

Yes, dual residents often face taxation from both countries. Fortunately, tax treaties and credits can help reduce the overall burden. Proper tax planning is essential to avoid overpayment.

U.S. taxpayers can claim a Foreign Tax Credit (Form 1116) for taxes paid to Canada. The credit must not exceed the actual tax paid. Effective planning can ensure proper application and avoid overpayment.

In most cases, yes. Dual citizens have tax obligations in both countries. Key areas of concern include:

• Reporting obligations for foreign accounts
• Treatment of tax-advantaged accounts like RRSP and TFSA
• IRS amnesty programs for non-compliance

Our Cross-Border Tax team can help you remain compliant and minimize your liability.

Both the 401(k) and RRSP are tax-deferred retirement savings vehicles with annual contribution limits and investment options.

Key differences include:

• Early RRSP withdrawals are not penalized in Canada, but early 401(k) withdrawals may incur a 10% IRS penalty.
• RRSP contribution room can be carried forward; 401(k) contributions cannot.

When moving to the U.S.:

• RRSPs retain their tax-deferred status under the treaty — but must be reported on FBAR and Form 8938
• TFSAs and RESPs are not tax-sheltered in the U.S., and any income is taxable
• Foreign reporting requirements are strict — non-compliance triggers heavy penalties

We can help: file accurate cross-border returns and consider consolidating assets where beneficial.

Yes, the Canadian RRSP is comparable to a Traditional IRA. Both are designed to help individuals save for retirement with tax-deferred benefits and similar contribution rules.

The IRS does not recognize the TFSA as a tax-free account. Income earned in a TFSA must be reported on your U.S. tax return (Form 1040) and is taxable in the U.S.

While TFSA earnings are tax-free in Canada, they are not sheltered from U.S. taxation.

Form 1040NR is a 5-page form suitable for all types of income.

Form 1040NR-EZ is a shorter, 2-page version with limited options and is no longer available for tax years after 2019.

Form 1040 is intended for U.S. residents. Non-residents must file Form 1040NR to report only U.S.-sourced income. Filing the incorrect form could result in penalties or audits.

Form 8233 is used by non-resident alien individuals to claim an exemption from withholding on income for personal services, such as wages or compensation covered by a tax treaty.

U.S. expats in Canada typically need to file:

• Form 1040: U.S. Tax Return
• Form 2555: Foreign Earned Income Exclusion
• Form 1116: Foreign Tax Credit
• Form 8938: Foreign Assets (FATCA)
• Form 8621: PFIC Reporting
• Form 8833: Treaty-Based Return Position
• FinCEN 114: FBAR

FATCA requires U.S. taxpayers with foreign financial assets exceeding $50,000 (thresholds vary by filing status and residency) to report them using Form 8938. Failure to comply may result in penalties. Speak with a CPA for personalized advice.

Yes, FATCA applies to U.S. citizens, green card holders, and U.S. tax residents with foreign financial assets over the applicable thresholds.

Yes, while the U.S. has primary taxing rights, Canada may also tax withdrawals from a 401(k). However, U.S. taxes paid can typically be claimed as a foreign tax credit on your Canadian return.

Here are a few tips to choose a trusted CPA:

• Ensure they have a valid CPA license and PTIN
• Check their online reviews and client testimonials
• Confirm experience with cross-border tax filings
• Make sure you're comfortable sharing your financial information with them

At Prasad and Company LLP, we specialize in cross-border tax matters and would be happy to assist.

At Prasad & Company LLP, we work with:

• Entrepreneurs selling or expanding into the U.S.
• Canadian corporations hiring U.S. talent or opening U.S. branches
• High-net-worth families with cross-border investments or real estate

We coordinate with cross-border legal, immigration, and investment advisors to deliver a holistic, proactive plan.

If you're considering a move to the U.S., expanding your business across the border, or already operating in both countries — now is the time to plan. Contact us to ensure you're fully compliant, tax-efficient, and protected from costly surprises.