Cross-Border Tax

How the four-part course is organized, what you must already know, and where its limits are Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Explain why cross-border returns require two tax systems and the treaty at once • Describe the four parts of the course and which part is an elective • Check your readiness against the precise U.S. and Canadian prerequisites • State what completing the course shows and what it does not • Identify fact patterns that must be escalated to a specialist • Plan a realistic set-up of tools and worksheets for two-country returns Before this lesson you should know: • US Tax Level 1 (U.S. Individual Tax Foundations) or equivalent experience preparing routine Form 1040 returns • A working knowledge of the Canadian T1 personal return (e.g., Canada Tax Level 1) or equivalent experience; the course re-teaches neither Outside this lesson's scope (refer or escalate): • Dual-status years, U.S. residency elections, or departure/expatriation from the U.S. • Treaty-based return positions (Form 8833) beyond those taught step by step in the course • U.S. estate or gift tax, or Canadian deemed dispositions on emigration • Foreign trusts, corporations or partnerships; state, provincial (Quebec) or entity returns • Double taxation that the foreign tax credits in both countries do not resolve (competent authority)

The mindset, sources of law, core rules and workflow behind every Canada–U.S. return, on a complete 2025 example Tax year 2025 (returns filed in 2026) in both countries · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Rank law and guidance in both countries, and ask five core questions on every file • Determine residency under Canadian, U.S. and treaty tie-breaker rules • Identify treaty provisions that exclude or cap tax, and the effect of the saving clause • Choose the correct 2025 exchange rate for income, purchases and sales • Trace a commuter's W-2 through the T1, Form 1040-NR and the foreign tax credit • State the 2025 filing deadlines and how non-residents get tax numbers Before this lesson you should know: • Cross-Border Tax: Course Introduction • US Tax Level 1 (U.S. Individual Tax Foundations) or equivalent Form 1040 experience • A working knowledge of the Canadian T1 personal return (e.g., Canada Tax Level 1) or equivalent Outside this lesson's scope (refer or escalate): • Dual residency where a treaty tie-breaker position (Form 8833) is needed • Non-discrimination or other unusual treaty-based positions • U.S. citizens or green card holders claiming treaty exemptions despite the saving clause • Residency that changed during the year (covered later; dual-status in Module 3) • State or provincial calculations beyond the figures the foreign tax credit needs

Choosing and preparing the right Canadian filing for non-residents and part-year residents Tax year 2025 (returns filed in 2026), Canada · Canada (federal), with Ontario figures where an example needs them · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Distinguish the five Canadian filing options available to non-residents • Recover excess Part XIII withholding using Form NR7-R • Recognize when a Section 217 election can reduce tax on pension-type income • Prepare a Section 216 return for Canadian rental income • Set up a non-resident T1 for Canadian employment income • Report income and foreign tax credits correctly in the year a client leaves Canada Before this lesson you should know: • Cross-Border Tax Module 1: Overview of Cross-Border Tax • A working knowledge of the Canadian T1 (e.g., Canada Tax Level 1), including credits, CPP/EI and provincial tax Outside this lesson's scope (refer or escalate): • Emigration with property: deemed dispositions, T1161/T1243, security for departure tax • Dispositions of taxable Canadian property (section 116) and treaty-protected property claims • Foreign tax credit in a year of a move where the result depends on the unsettled full-year rule • Contested residency dates or ties (consider an NR73 opinion) • Quebec income or non-resident business income with a permanent establishment

How Part 2 (treaty foundations) and Part 4 (advanced treaty applications) fit around the worked examples Canada and U.S. · Course version 2026.1 Level: Applied By the end of this lesson you will be able to: • Describe what Part 2 (core) and Part 4 (elective) each cover • Explain why the treaty foundations come before the worked examples • State the saving-clause theme that runs through every treaty lesson • Confirm you have the prerequisite knowledge and tools • Plan a study approach that turns each lesson into working practice Before this lesson you should know: • Cross-Border Tax Part 1 · Cross-Border Fundamentals (all modules), or equivalent experience preparing Canadian and U.S. individual returns Outside this lesson's scope (refer or escalate): • A learner's client file already involves a specialized treaty position (non-discrimination, estate tax, competent authority): point to the Part 4 lesson and to a specialist

The groundwork you need before applying any treaty article to a cross-border return Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Applied By the end of this lesson you will be able to: • Explain how the treaty relates to Canadian and U.S. domestic tax law • Distinguish treaty law (Convention, Protocols) from guidance and commentary • Locate the official treaty text and read an article in plain language • Classify income as taxed first by the source country or the residence country • Apply the five-step sequence for preparing resident and non-resident returns • Recognise when a treaty position can reduce unused foreign tax credits Before this lesson you should know: • Cross-Border Tax Part 1 · Cross-Border Fundamentals • Treaty Introduction (Part 2) Outside this lesson's scope (refer or escalate): • The position relies on a Technical Explanation reading that seems to depart from the treaty text • A later U.S. statute may override a treaty provision (later-in-time issue) • Double tax remains after both returns are finalised: consider competent authority assistance (Art. XXVI)

How each treaty lesson works, what excluding income changes, and when the treaty beats Form 2555 Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Applied By the end of this lesson you will be able to: • Describe the four-part structure used for each treaty lesson • Identify credits, benefits and plans affected when income is excluded or reduced • Explain how Form 2555 works and where it falls short • Compare a treaty exclusion with Form 2555 for AGI and MAGI purposes • Calculate a 2025 MAGI-based phase-out with and without Form 2555 • Recognise the saving clause limit on treaty benefits for U.S. citizens Before this lesson you should know: • Treaty Module 1: Treaty Foundations, Income Sourcing and Filing Order • Working knowledge of Form 1040, AGI and the Canadian T1 net income/taxable income lines Outside this lesson's scope (refer or escalate): • A U.S. citizen client wants to exclude income under a treaty article not listed in Art. XXIX(3) • Choosing between Form 2555 and foreign tax credits across several years (revocation of the 2555 election) • Premium tax credit or Schedule 1-A eligibility depends on a contested treaty exclusion

What the nine client cases cover, what you need first, and the eight-stage cycle every case follows Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Describe who has cross-border filing obligations and why the treaty matters • Identify the Part 1 and Part 2 knowledge you need before the cases • Outline the nine client situations covered in Part 3 • Explain why the same slips can produce very different returns • Describe the eight-stage cycle that every case follows • Recognise the scope limits: federal focus, tax year 2025, when to escalate Before this lesson you should know: • Cross-Border Tax Part 1: Cross-Border Fundamentals (Course Introduction to Fundamentals Conclusion) • Cross-Border Tax Part 2: Treaty Foundations (Treaty Introduction and Treaty Modules 1–3) • Working knowledge of Canadian T1 and U.S. Form 1040 preparation, or equivalent experience Outside this lesson's scope (refer or escalate): • Estate or gift tax, trusts, corporations or partnerships are involved • Residency remains unclear after the Article IV tie-breaker analysis • A specialized treaty position (e.g. Form 8833 disclosure) is being considered • The client needs figures for a year other than 2025

A dual citizen living in Ontario earns a T4 and a W-2 in 2025: both returns, the exclusion and the Canadian credit Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Decide residency and treaty exclusions before entering any slip • Report U.S. wages and a U.S. retirement plan contribution on the Canadian return • Link related deductions to foreign income on Form T2209 • Exclude Canadian wages on the U.S. return with Form 2555 • Compute the U.S. taxes eligible for the Canadian foreign tax credit • Explain why some foreign tax goes unused and what can reduce it Before this lesson you should know: • Cross-Border Tax Part 1, especially Module 6 (U.S. pension contributions, RC268), Module 8 (U.S. exclusions) and Module 9 (Canadian foreign tax credits) • Cross-Border Tax Part 2: Treaty Foundations (Treaty Introduction and Treaty Modules 1–3) • Worked Examples Introduction Outside this lesson's scope (refer or escalate): • The client also has a home in the U.S. (dual residence and tie-breaker) • The employer is a government or public body (Article XIX) • The U.S. plan has employer matching or the client has a past Form 2555 revocation • A state return has items beyond wages and withholding

A non-resident Canadian return for the T4, a joint U.S. return, and a foreign tax credit that falls short Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Determine residency for a Canadian citizen living in the U.S. with a U.S. resident spouse • Explain why the foreign earned income exclusion is not available • Prepare a non-resident Canadian return with the correct province and Schedule A • Build a working paper of Canadian taxes and allocate income for Form 1116 • Calculate the Form 1116 credit limit and the resulting U.S. tax • Identify ways to use more of the Canadian tax and suitable retirement savings options Before this lesson you should know: • Cross-Border Tax Part 1, especially Module 2 (non-resident T1 returns) and Module 10 (Form 1116) • Cross-Border Tax Part 2: Treaty Foundations • Worked Example 1 Outside this lesson's scope (refer or escalate): • Work days are split between Canada and the U.S. (wages must be sourced by days) • Less than 90% of world net income is reported in Canada • The spouse also has Canadian income or Canadian ties • A state credit for Canadian tax is in doubt

Exempt small amounts of cross-border employment income from tax in the country where the work was done Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • State the conditions of the Article XV(2)(a) exemption for employment income • Apply the $10,000 limit in the correct currency and on an all-or-nothing basis • Claim the exemption on a non-resident Canadian T1 using a line 25600 deduction • Claim the exemption on 2025 Form 1040-NR, Schedule OI item L and line 1k • Explain why a U.S. citizen cannot exclude the wages on Form 1040 Before this lesson you should know: • Part 2 · Treaty Foundations (Treaty Introduction and Modules 1-3) • Part 3 · Cross-Border Worked Examples Outside this lesson's scope (refer or escalate): • The worker is a U.S. citizen or green card holder • Wages over $10,000 where the employer-cost or permanent establishment test in XV(2)(b) is unclear • Payroll tax (social security agreement) or state income tax questions

Tax government wages in the paying country and remove them from the residence country's return Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Explain why government service income has its own treaty article • Apply Article XIX's citizenship test and its trade-or-business exception • Explain why Article XIX survives the saving clause (Article XXIX(3)(a)) • Exclude government wages on a 2025 Form 1040 and deduct them on the Canadian T1 • Calculate the 2025 effect of the exclusion and explain it to the client Before this lesson you should know: • Part 2 · Treaty Foundations • Part 3 · Cross-Border Worked Examples • Advanced Treaty 1 (Article XV(2)(a)) Outside this lesson's scope (refer or escalate): • Citizenship is unclear, or a green-card holder or permanent resident relies on Article XIX (domestic waiver questions) • The employer may be a government business enterprise (trade or business exception) • Dual citizens, or U.S. citizens paid by a Canadian government • Government pensions (Article XVIII), or deemed residence of government staff abroad

Which royalties only the residence country may tax, and how to recover tax the source country withheld Tax year 2025 (returns filed in 2026) · Canada and U.S. · Course version 2026.1 Level: Advanced By the end of this lesson you will be able to: • Distinguish royalties exempt under Article XII(3) from those capped under XII(2) • Identify the four categories of exempt royalties and their exclusions • Recover Canadian Part XIII tax on exempt royalties using Form NR7-R • Report exempt royalties on U.S. Form 1040-NR, Schedule NEC and Schedule OI • Explain how a U.S. citizen resident in Canada obtains relief on U.S. royalties Before this lesson you should know: • Cross-Border Tax Parts 1–3 (fundamentals, treaty foundations, worked examples) or equivalent experience • Treaty Modules 1–3: income sourcing, the saving clause (Article XXIX(2)) and residency (Article IV) • Working knowledge of Form 1040, Form 1040-NR, Form 1116 and the Canadian non-resident T1 Outside this lesson's scope (refer or escalate): • The royalty is connected with a permanent establishment or business carried on in the source country • Film, TV or mixed licences, or payments through agents, nominees or related companies (beneficial ownership) • A U.S. citizen's Form 1116 re-sourcing amount is material or interacts with other foreign income • A payer refuses to apply the treaty, or the refund deadline has passed