I'm Canadian on a TN Visa. How Do US Taxes Work My First Year?

Your days on a TN count toward the substantial presence test the same as anyone else’s, so a Canadian who moves by early July usually becomes a US tax resident part-way through the arrival year. The default first-year filing is a dual-status return: US-source income before residency starts, worldwide income after. Arrive later in the year and you may stay a nonresident until January. Count your days first; every other choice hangs off that number.

Do my TN days count toward the substantial presence test?

Yes, all of them. The IRS keeps a short list of exempt individuals whose days don’t count: foreign-government people on A or G visas, teachers and trainees on J or Q visas, students on F, J, M, or Q visas, and athletes here for a charitable event (IRS, substantial presence test). TN appears nowhere on that list, so every day you’re physically in the US counts.

Buying or building a business on an E-2 instead of taking a job? The day count works the same, but the filings around it don’t, and the E-2 year-one stack covers that version.

The test itself has two parts: at least 31 days of presence in the current year, and 183 weighted days across three years. The weighting comes from IRC 7701(b)(3)(A): current-year days count in full, last year’s days count at one third, and days from the year before that at one sixth.

When does my US residency actually start?

Generally on the first day you were present in the US during the calendar year you meet the test. That’s the IRS position (residency starting and ending dates) and the statute’s wording in IRC 7701(b)(2)(A)(iii): “the first day during such calendar year on which the individual is present in the United States.”

A late-year arrival can also stay a nonresident on purpose. The closer connection exception covers someone present less than 183 days who kept a tax home in Canada for the entire year and closer ties there than to the US, claimed on Form 8840.

Dual-status return or full-year resident election: which one do I file?

Dual-status is the default, and nobody elects into it. Become a resident mid-year and the IRS taxes you on worldwide income for the resident part of the year and on US-source income only for the nonresident part (IRS, taxation of dual-status individuals). The mechanics have teeth: no standard deduction, and no joint return unless an election applies. A dual-status filer who’s a resident at year-end files Form 1040 with “Dual-Status Return” written across the top.

The alternative needs a spouse. Under IRC 6013(h), someone who starts the year a nonresident and ends it a resident can be treated as a full-year resident, and the statute requires being married to a US citizen or resident at the close of the year, with both spouses electing. A companion election under IRC 6013(g) treats a spouse who’s still a nonresident at year-end as a resident too. A single filer meets neither provision, so there’s no election to make: dual-status is the only route. And electing means both spouses report worldwide income for the whole year (IRS, nonresident spouse), including everything earned in Canada before the move.

Question	Dual-status return (the default)	Full-year resident election (6013(h))
Who can use it	Anyone who becomes a resident mid-year; no election involved	Only a filer with a spouse who’s a US citizen or resident at year-end; both spouses elect
Income on the 1040	US-source before the move, worldwide after	Worldwide income for the entire year, both spouses
Canadian salary from before the move	Stays off the 1040	Lands on the 1040, with a foreign tax credit on Form 1116
Standard deduction	Not allowed	Allowed
Filing status	Single or separate mechanics; no joint return	Joint return
The generic tradeoff	Keeps pre-move Canadian income out, costs the deduction and joint rates	Buys the deduction and joint brackets, runs Canadian income through the credit

Which way the math falls depends on the size of your pre-move Canadian income and the Canadian tax already paid on it. Run both versions with your own numbers.

What happens to the Canadian income I earned before the move?

On a dual-status return, the US side mostly leaves it alone. For the nonresident months the US taxes only US-source income, and wages are sourced where the services are physically performed (IRS, nonresident aliens: source of income). A Toronto salary earned at a Toronto desk stays off the 1040. Days you physically worked in the US before the move are the catch; that pay is US-source even while you’re a nonresident.

Make the 6013(h) election and the picture flips. The whole year’s Canadian income lands on the joint 1040, and the Canadian tax paid on it comes back as a foreign tax credit claimed on Form 1116. The credit usually soaks up most of the overlap.

If Canada still considers you a resident at the same time (family or a home stayed behind, say), Article IV(2) of the US-Canada tax treaty breaks the tie: permanent home first, then centre of vital interests, then habitual abode, then citizenship, with the competent authorities settling anything left over. Canada has its own mechanics for the year you leave: start with how Canada taxes the year you leave and the Canadian departure-year forms, T1161 and T1243.

When do FBAR and Form 8938 obligations start?

Sooner than most arrivals expect, and the two rules don’t start the same way. The FBAR duty attaches to a “resident of the United States,” which 31 CFR 1010.350(b)(2) defines as a resident alien under IRC 7701(b). Once you’re a 7701(b) resident and your non-US accounts topped $10,000 in aggregate at any point in the calendar year, file it. The regulation has no part-year carve-out, so treat the arrival year conservatively. The FBAR is due April 15 with an automatic extension to October 15 (IRS, FBAR).

Form 8938 works differently and says so in its instructions. A part-year resident is a “specified individual,” and the reporting period is only “the part of the year that you are a specified individual” (Instructions for Form 8938). The thresholds for someone living in the US: more than $50,000 on the last day of the year or $75,000 at any time (unmarried), doubled to $100,000 and $150,000 on a joint return.

A Canadian chequing account, an RRSP, and a TFSA are all accounts these forms want to see, and a TFSA can drag extra paperwork of its own; that’s covered in what a TFSA triggers on a US return.

Does my state follow any of this?

No. States write their own residency rules and don’t borrow the federal day count, the treaty tie-breaker, or the dual-status split. New York, for example, treats you as a resident if your domicile is New York, or if you keep a permanent place of abode there for substantially all of the year and spend 184 days or more in the state (NY Department of Taxation and Finance). Your federal answer can be right while the state answer goes the other way, so check the rules of the state you actually moved to.

What should I do next?

Build your day count first: the exact arrival date, every prior-year US day, and the weighted total. That single number tells you whether you’re dual-status, nonresident, or a candidate for the first-year choice. If you’re married, price the dual-status return and the 6013(h) election side by side. Then put FBAR and Form 8938 on the same checklist as the return for the arrival year.

If you’d rather have the whole first year mapped before you file, the $249 Cross-Border Assessment gets you a written, CPA-reviewed read on your specific facts.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.