I am a Canadian citizen who has lived in Texas since March 2023. I work remotely for a Canadian company in 2025, with Canadian income tax withheld. I perform 100% of my employment duties physically in Texas, with no working days in Canada.
Looking whether my employment income was taxable in Canada under the Canada–US tax treaty, whether the Canadian income tax withheld may be recoverable, and whether my Canadian return needs amending.
Canada–US tax treaty
Moderator: Mark T Serbinski CA CPA
Re: Canada–US tax treaty
No, Yes, and Yes.
There is a problem with your arrangement in that your CDn firm should be paying you as a US resident. That said, you should be able to exclude the income on your return, and report it only in US (you have to report it in US in any case).
The fact that you already filed however, will make you have to prove that you are not in Canada, and may cause problems for your employer.
What immigration status are you living in US under?
There is a problem with your arrangement in that your CDn firm should be paying you as a US resident. That said, you should be able to exclude the income on your return, and report it only in US (you have to report it in US in any case).
The fact that you already filed however, will make you have to prove that you are not in Canada, and may cause problems for your employer.
What immigration status are you living in US under?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Canada–US tax treaty
You should also have broken tax residency in Canada in 2023.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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mandapanda134
- Posts: 2
- Joined: Tue Oct 13, 2026 1:51 pm
Re: Canada–US tax treaty
Thank you for your reply! Guess I ultimately have a few more questions - that I am not sure who to get the answers from.
1. Should my employment income be taxable in Canada at all?
My understanding of Article XV of the Canada–US tax treaty is that employment income is generally taxed where the work is physically performed, subject to residency and other treaty provisions. Since I live and work exclusively in Texas, should my salary be taxable only in the US, despite being paid by a Canadian employer?
2. Can I recover the Canadian income tax already paid?
If my employment income shouldn't have been taxed in Canada, can I amend my assessed 2025 Canadian non-resident return and recover the income tax withheld? Would this potentially apply to earlier years (2023 and 2024) as well?
3. Should my US accountant claim a foreign tax credit?
My US accountant has suggested adding my Canadian salary to our joint US return and claiming a foreign tax credit for the Canadian income taxes paid. However, if Canada wasn't legally entitled to tax those earnings, would those taxes qualify for a US foreign tax credit, or should I instead seek a Canadian refund?
4. What about CPP and EI contributions?
Because I work exclusively in Texas, should I still be paying CPP and EI through my Canadian employer? Does the Canada–US Social Security Agreement affect my CPP obligations, and is there a way to recover contributions if they weren't required?
5. Should my Canadian employer change how I'm paid? If my employment income is considered US-source, should my employer stop withholding Canadian income tax and potentially change my payroll arrangements? Are there Canadian or US payroll compliance requirements that apply when a Canadian employee works permanently from Texas?
I'm not expecting anyone to provide formal tax advice, but I'd really appreciate guidance on the relevant treaty provisions, CRA/IRS rules, or similar experiences. I'm trying to determine whether I've been paying Canadian income tax unnecessarily and whether it's worth pursuing amendments for multiple years.
1. Should my employment income be taxable in Canada at all?
My understanding of Article XV of the Canada–US tax treaty is that employment income is generally taxed where the work is physically performed, subject to residency and other treaty provisions. Since I live and work exclusively in Texas, should my salary be taxable only in the US, despite being paid by a Canadian employer?
2. Can I recover the Canadian income tax already paid?
If my employment income shouldn't have been taxed in Canada, can I amend my assessed 2025 Canadian non-resident return and recover the income tax withheld? Would this potentially apply to earlier years (2023 and 2024) as well?
3. Should my US accountant claim a foreign tax credit?
My US accountant has suggested adding my Canadian salary to our joint US return and claiming a foreign tax credit for the Canadian income taxes paid. However, if Canada wasn't legally entitled to tax those earnings, would those taxes qualify for a US foreign tax credit, or should I instead seek a Canadian refund?
4. What about CPP and EI contributions?
Because I work exclusively in Texas, should I still be paying CPP and EI through my Canadian employer? Does the Canada–US Social Security Agreement affect my CPP obligations, and is there a way to recover contributions if they weren't required?
5. Should my Canadian employer change how I'm paid? If my employment income is considered US-source, should my employer stop withholding Canadian income tax and potentially change my payroll arrangements? Are there Canadian or US payroll compliance requirements that apply when a Canadian employee works permanently from Texas?
I'm not expecting anyone to provide formal tax advice, but I'd really appreciate guidance on the relevant treaty provisions, CRA/IRS rules, or similar experiences. I'm trying to determine whether I've been paying Canadian income tax unnecessarily and whether it's worth pursuing amendments for multiple years.