Physician cross-border tax: locums, telehealth, and the accounts training left behind

Locum work in the US: filings yes, tax usually no

A Canadian physician who covers locum shifts in the US generally owes no US federal tax on the fees, because the treaty's business-profits article reserves them for Canada unless you have a fixed base there. The exemption is claimed, not automatic. Agencies pay foreign contractors under a default 30 percent withholding, and Form 8233 is what switches it off before the first cheque; a Form 1040-NR with Form 8833 attached then documents the treaty position after year-end.

Two cautions. First, a recurring pattern — the same hospital, one week every month, your name on the printed schedule — starts to look like a fixed base, and a fixed base means US tax on the profits tied to it. Second, states are not bound by the treaty, so a stint in a non-conforming state can carry state income tax even when the federal answer is zero. We check both before you sign the contract, not after.

Hospital employment is a different article entirely. If the locum runs through a US hospital's payroll as W-2 employment, the US taxes the wages from the first shift — the treaty only spares employment income below US$10,000 for the year, or short stays paid by a non-US employer. Canada then taxes the same income on your T1 and credits the US tax against it.

Telehealth from Ontario is not US income

Seeing US patients over video from Canada does not create US income tax, because the work happens on your side of the screen. Give the platform a W-8BEN — or a W-8BEN-E if you bill through your Medicine Professional Corporation — so it does not withhold by default, and report the revenue in Canada like any other practice income, converted from USD at the transaction date or CRA's average annual rate.

Licensure is the real constraint, not tax: most states require their own licence before you treat their residents. We flag that question; your college and your lawyer answer it.

Fellowship years, residency status, and the trip home

The tax story of a US fellowship is written by your residency status, not your stipend. Many J-1 fellows keep enough Canadian ties — a spouse at home, a return-of-service commitment — to remain factual residents of Canada, reporting the stipend on a T1 with a foreign tax credit; others sever ties and file only in the US for those years. J-1 trainees who are nonresident aliens also skip FICA, which is worth confirming against your pay stubs before assuming.

Coming home, your taxable investments restart at fair market value on the day residency resumes, so growth from the US years never reaches a Canadian return. Attendings who spent H-1B years paying into US Social Security keep those credits: the Canada-US totalization agreement can combine coverage periods, and benefits paid to a Canadian resident are taxed only by Canada, which includes 85 percent of them in income.

The 403(b) or 401(k) you built during training

Hospital plans travel better than most physicians expect. A 403(b) or 401(k) attributable to years worked as a non-resident of Canada can move into your RRSP under paragraph 60(j) without using contribution room; the US withholding on the lump sum usually comes back through foreign tax credits when the year is modelled first. Leaving the plan invested is equally valid — file a W-8BEN with the custodian and periodic withdrawals later face the treaty's 15 percent rate.

Roth accounts run on their own clock: a one-time treaty election filed with your first Canadian resident return preserves the tax-free status, and any contribution made after the move breaks it permanently.

Running US income through the MPC

US-source fees can flow to your corporation instead of to you, and the treaty analysis mostly carries over: an MPC owned by a Canadian-resident physician typically qualifies for treaty benefits, claims them on a W-8BEN-E, and faces US tax only if the corporation itself has a US permanent establishment. What changes is the planning around it — how salary and dividends move the money out of the MPC shapes how quickly US loans and leftover accounts get dealt with, which is year-round work we do for incorporated physicians.

Source: CRA — Income Tax Folio S5-F1-C1, Determining an Individual's Residence Status.