Cross-Border Tax · Guide
TN visa taxes: the visa decides where you work, not how you are taxed
A TN visa decides where you can work, not where you pay tax: US tax residency turns on your days of presence, and Canadian tax residency turns on the ties you keep. Most TN holders who move to the US meet the substantial presence test and file a resident 1040, while their Canadian obligations depend on whether they cut Canadian residential ties. The first year usually offers a choice between dual-status and full-year treatment — worth running both ways before filing.
By the AnalytIQ Accounting team · Last reviewed: August 12, 2026
The visa is immigration law; tax residency is arithmetic
Nothing about TN status makes you a US tax resident or keeps you a Canadian one. The IRS applies the substantial presence test: all of your US days this year, plus one-third of last year's, plus one-sixth of the year before, with a minimum of 31 days in the current year. Reach 183 on that formula and you are a US tax resident, whatever your visa says. TN holders get no exempt-individual carve-out — unlike students on F-1 status, your days count from day one — so a move in the first half of the year almost always makes you a US resident that same year.
The CRA asks a different question: did you keep a home, a spouse or partner, or dependants in Canada? Keep those ties and you can be a tax resident of both countries at once, which is where the treaty tie-breaker comes in — permanent home first, then centre of vital interests. The answer decides which filing pattern below is yours.
The first year: three ways to file
A mid-year move splits the year, and the IRS gives you more than one way to handle the split. The difference between routes is often thousands of dollars, so we run the numbers on each before choosing.
| Route | What the IRS sees | When it tends to win |
|---|---|---|
| Dual-status return | Non-resident until arrival, resident after; pre-move Canadian income stays out of US tax, but no standard deduction | A large Canadian bonus, vesting, or business income before the move |
| Full-year resident election | A regular 1040 on worldwide income for the whole year; standard deduction available, and married couples can often elect jointly | An early-year move with modest pre-move Canadian income |
| Treaty non-resident | A 1040-NR with a treaty tie-breaker disclosure; the US taxes only US-source income | You kept a home and family in Canada and the assignment is genuinely temporary |
Each route carries mechanical requirements — elections, statements, disclosure forms with deadlines — and the wrong default is a dual-status return filed without ever checking the alternatives.
What a 1040 actually taxes
Once you are a US resident, the 1040 covers worldwide income: Canadian bank interest, a rental left behind in Canada, capital gains — all of it, with foreign tax credits for Canadian tax paid. Residency also switches on the information returns: an FBAR once your Canadian accounts top US$10,000 combined, and Form 8938 at higher thresholds. In non-resident years, a 1040-NR reports US-source income only, and the Canadian side of your life stays out of the US return entirely.
The Canadian side: what you keep decides what you file
Keep a Canadian home and family and the CRA will likely still treat you as a resident — worldwide income on a T1 with foreign tax credits for the US tax, the pattern we walk through in our guide for Canadians working in the US. Make a clean break and you become an emigrant instead: a departure date on your final T1 and a deemed disposition of most capital property at fair market value — Canada's departure tax. That final return is worth planning rather than just filing; the elections and timing around it can move real money.
RRSP and TFSA while you're away
Leave the RRSP alone and it behaves well. The treaty defers US tax on growth inside the plan automatically — Form 8891 was retired at the end of 2014 under Rev. Proc. 2014-55, so anyone telling you to file it is a decade out of date. New contributions rarely make sense without Canadian earned income, and lump-sum withdrawals as a non-resident of Canada face 25% Canadian withholding tax.
The TFSA is the opposite story. It has no treaty protection, so a US resident pays US tax on its growth, and the US reporting position (some advisers treat it as a foreign trust) adds cost either way. No new room accrues while you are a non-resident of Canada, and contributions made as a non-resident draw a penalty tax of 1% per month. Many TN holders simply collapse the TFSA before crossing; we look at it case by case, because the right answer depends on how long you expect to be away.
Source: IRS — Substantial presence test.
Common questions.
I am on TN status — can I just file a 1040-NR like a visitor?
Only if the numbers allow it: you fail the substantial presence test, or you keep genuinely stronger ties to Canada and take the treaty tie-breaker position with the proper disclosure. Most TN holders who have actually moved meet the test and file a resident 1040.
Should I collapse my RRSP before moving on TN?
Usually not. US tax on growth inside the plan is deferred automatically under the treaty, so the RRSP can sit untouched. Withdrawals as a non-resident face 25% Canadian withholding — occasionally worthwhile in a low-income year, but that is a planning decision, not a moving-day chore.
Does working in the US on TN trigger Canadian departure tax?
Only if you cease Canadian residency. The tax follows your ties, not your visa: keep your Canadian home and family and you remain a Canadian resident with no deemed disposition. Cut ties, and the departure-tax rules apply from your departure date.
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