Digital Nomad Tax: Canada-US Cross-Border Rules for Remote Workers

There’s no digital nomad rule in either tax code. Two questions decide everything. Where are you resident, which sets who taxes your worldwide income: Canada looks at your ties, the US counts days (31 this year and 183 on a weighted three-year count) and taxes its citizens wherever they live. And where were you sitting when you did the work, which sets which country can tax that pay even if you’re not resident there. The treaty then trims the second layer, but only on a return that claims it.

Am I still a Canadian tax resident if I travel constantly?

Almost always yes, unless you’ve cut your Canadian ties. The CRA looks at a home in Canada, a spouse or partner there, and dependants, then at secondary ties like a driver’s licence, provincial health coverage and bank accounts. Days spent outside Canada don’t end residence on their own. A separate rule deems anyone who spends 183 days or more in Canada in a year to be resident for the whole year, but most nomads with a Canadian base are resident on ties long before a day count matters.

• ITA 250(3): “a reference to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada.” The CRA’s Folio S5-F1-C1 lists the ties “that will almost always be significant” as “the individual’s: dwelling place (or places); spouse or common-law partner; and dependants,” and the secondary ties as “personal property in Canada,” “social ties,” “economic ties,” a provincial “driver’s license,” “hospitalization and medical insurance coverage from a province,” and so on. The full test is in how the CRA decides residency.
• ITA 250(1)(a) deems a person resident all year if they “sojourned in Canada in the year for a period of, or periods the total of which is, 183 days or more.” The Folio adds that this catches someone “who has not established sufficient residential ties with Canada to be considered factually resident.”
• A resident pays tax “on the taxable income for each taxation year” under ITA 2(1), and ITA 3(a) counts income “from a source inside or outside Canada.” Where you earned it doesn’t matter.
• To stop being resident you sell or lease out the home, move the family, drop the health card and settle somewhere else. Leaving Canada permanently walks through it; travelling doesn’t do it.

When does working from the US make me a US tax resident?

When you hit the substantial presence test: at least 31 days in the US this year, and 183 days or more counting all of this year’s days, a third of last year’s and a sixth of the year before. A Canadian who’s under 183 days this year, has a tax home in Canada and closer ties there can still be treated as a non-resident by filing Form 8840 on time. Someone over 183 days in the year can’t use that exception and has to fall back on the treaty’s residence tiebreaker instead. A US citizen or green card holder is a US taxpayer regardless.

• IRC 7701(b)(3)(A): the test is met if “such individual was present in the United States on at least 31 days during the calendar year, and the sum of the number of days on which such individual was present in the United States during the current year and the 2 preceding calendar years (when multiplied by the applicable multiplier determined under the following table) equals or exceeds 183 days.” The IRS substantial presence page spells out the multipliers: “All the days you were present in the current year,” “1/3 of the days you were present in the first year before the current year,” and “1/6 of the days you were present in the second year before the current year.” Its example: 120 days in each of three years totals 180, so “you are not considered a resident.” The formula is in the substantial presence test, day by day.
• IRC 7701(b)(3)(B) switches the test off for someone “present in the United States on fewer than 183 days during the current year” who “has a tax home … in a foreign country and has a closer connection to such foreign country than to the United States.” The IRS closer connection page: “You must file Form 8840 … to claim the Closer Connection Exception,” by “the due date for filing the income tax return,” and “If you do not timely file Form 8840 … you cannot claim the closer connection exception.” See the closer connection exception and Form 8840.
• Over 183 days, the way out is Article IV(2) of the treaty, which deems a dual resident to be resident where “he has a permanent home available to him,” then where “his personal and economic relations are closer (centre of vital interests),” then his “habitual abode,” then citizenship. Publication 519: “If you are a dual-resident taxpayer and you claim treaty benefits, you must file a return using Form 1040-NR with Form 8833 attached, and compute your tax as a nonresident alien.” More in the treaty tiebreaker rules.
• The tiebreaker doesn’t help a US citizen. Article XXIX(2)(a): “this Convention shall not affect the taxation by a Contracting State of its residents … and, in the case of the United States, its citizens.”

Which country taxes the pay for the days I worked there?

The country where you were physically working when you did it. US law sources pay for services to where they’re performed, and Canada taxes a non-resident on employment or business income earned in Canada. The treaty carves out short stays: an employee’s pay is exempt in the other country if it’s under $10,000, or the stay was 183 days or less in any twelve months and no employer or permanent establishment there bore the cost. A self-employed person is exempt until they have a permanent establishment there, and 183 days of services in twelve months can create one.

	Canada	United States
Residency test	Residential ties, or 183 days sojourning in a year (ITA 250)	31 days this year plus 183 weighted days over three years (IRC 7701(b)(3)); citizens and green card holders always
Escape hatch for a visitor	Treaty tiebreaker (Article IV(2))	Form 8840 closer connection if under 183 days; Article IV(2) tiebreaker on Form 1040-NR with Form 8833 if over
Non-resident taxed on	Employment duties performed in Canada and a business carried on in Canada (ITA 115(1)(a))	Pay for services performed in the US (IRC 861(a)(3)), taxed at graduated rates as effectively connected income (IRC 871(b))
Employee exemption	Article XV(2): under $10,000, or 183 days or less in any twelve months with no Canadian employer or PE bearing the pay	Same, mirrored: under $10,000, or 183 days or less with no US employer or PE bearing the pay
Self-employed exemption	Article VII: no Canadian tax without a PE; services for 183 days or more in twelve months can create one (Article V(9))	Same, mirrored; Form 8233 to the client stops the 30% withholding on US-performed work (Publication 515)
Form that claims it	T1 or non-resident return as applicable	Form 1040-NR with Form 8833 for a business-profits claim (Publication 519); no Form 8833 needed for an employee’s Article XV claim
Deadline	April 30, or June 15 if you carried on a business (ITA 150(1)(d))	June 15 for a non-resident with no wages subject to withholding (Publication 519)

• IRC 861(a)(3) treats “compensation for labor or personal services performed in the United States” as US-source, with an exception only where the person is present “not exceeding a total of 90 days during the taxable year,” the pay “does not exceed $3,000 in the aggregate,” and it’s paid by a foreign employer “not engaged in trade or business within the United States.” Under IRC 864(b), a “trade or business within the United States” “includes the performance of personal services within the United States at any time within the taxable year,” and IRC 871(b) taxes a non-resident’s effectively connected income “as provided in section 1,” the ordinary graduated rates.
• Canada’s mirror is ITA 2(3) and ITA 115(1)(a): a non-resident is taxed on “incomes from the duties of offices and employments performed by the non-resident person in Canada” and “incomes from businesses carried on by the non-resident person in Canada.”
• Employees. Article XV(2), as rewritten by the 2007 protocol: pay for employment exercised in the other country is taxable only at home if “such remuneration does not exceed ten thousand dollars ($10,000) in the currency of that other State; or” the person “is present in that other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned, and the remuneration is not paid by, or on behalf of, a person who is a resident of that other State and is not borne by a permanent establishment in that other State.” A Canadian employee of a Canadian company working a few months from the US is usually inside this. The employer side is in remote work across the border and working remotely for a US company.
• Self-employed. Article VII(1): business profits “shall be taxable only in that State unless the resident carries on business in the other Contracting State through a permanent establishment situated therein.” Article V(9) deems a services PE where the work is done “by an individual who is present in that other State for a period or periods aggregating 183 days or more in any twelve-month period, and, during that period or periods, more than 50 percent of the gross active business revenues of the enterprise consists of income derived from the services performed in that other State by that individual,” or where services on “the same or connected project” for residents of that country run 183 days or more. A rented desk for a winter isn’t a PE; a year of it for US customers can be. Detail in self-employed across the border.
• Withholding. Publication 515: a US payer “must generally withhold tax at the 30% rate on compensation you pay to a nonresident alien individual for labor or personal services performed in the United States,” and “Form 8233 should be used to claim a treaty benefit based on a business profits provision or an independent personal services provision.” Work done from Canada for a US client is foreign-source and outside this; the client just needs your Form W-8BEN. The US-performed part needs Form 8233.
• Filing. Publication 519 requires Form 8833 for a treaty position that reduces tax, and its exceptions cover “dependent personal services, pensions, annuities” and similar items but not business profits, so a freelancer claiming Article VII files a 1040-NR with Form 8833. A non-resident with no wages subject to withholding files “by the 15th day of the 6th month after your tax year ends,” June 15 for a calendar year. Canada’s T1 is due “the following April 30,” or “the following June 15” for “an individual who carried on a business in the year,” under ITA 150(1)(d).

What if I’m a US citizen working from Canada?

The US taxes you on everything, wherever you sit, and Canada taxes you too: on everything if you’re resident on ties, or on the pay for work done in Canada if you’re only visiting. The treaty’s tiebreaker can’t switch the US off for a citizen. What stops the double tax is the foreign tax credit, and because Canadian rates on earned income are generally higher, the credit usually wipes out the US income tax. You still file both returns, plus the FBAR and Form 8938 once Canadian accounts cross the thresholds.

• Article XXIV(1): “the United States shall allow to a citizen or resident of the United States … as a credit against the United States tax on income the appropriate amount of income tax paid or accrued to Canada.” Under IRC 904(c), unused credit carries “in the first preceding taxable year and in any of the first 10 succeeding taxable years.” Mechanics in Form 1116 for Canadian tax and do US citizens pay double tax in Canada.
• The foreign earned income exclusion is the alternative, at “$130,000” for 2025 and “$132,900” for 2026 per the IRS 2025 and 2026 adjustments, if you meet IRC 911(d)(1): “a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year,” or presence “in a foreign country or countries during at least 330 full days” in any twelve months. A nomad who keeps crossing the border often fails both tests, and in Canada the credit usually beats the exclusion anyway; see FEIE versus the foreign tax credit.
• Self-employment tax. IRC 1401 imposes “12.4 percent” plus “2.9 percent” on self-employment income, 15.3% together. The IRS totalization page says the agreements exist “for the purpose of avoiding double taxation of income with respect to social security taxes,” and that someone claiming exemption “must secure a Certificate of Coverage from the social security agency of their home country.” Which system you land in, and how to get the certificate, is in the Canada-US totalization agreement and self-employment tax versus CPP.
• Reporting. The FBAR is due once “the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year,” and Form 8938 for someone living abroad once foreign assets top “$200,000 on the last day of the tax year or more than $300,000 at any time during the year” ($400,000 and $600,000 on a joint return). See who has to file an FBAR and the Form 8938 thresholds.

How does this play out for a Canadian freelancer who winters in Miami?

At 60 days a year, she’s still only a Canadian taxpayer, but she has to say so on US paper. At 200 days, the US becomes a second tax home for the Miami work, and the Canadian credit does the rest. The line between the two cases is the 183-day figure, which turns up in the residency test and in the treaty’s services rule.

What about state and provincial taxes?

Canada keeps it simple: you pay provincial tax to the province you live in on December 31, and working from another province during the year doesn’t create a return there unless you run a business with a fixed base in it. The US doesn’t. States tax non-residents on work done inside their borders under their own rules, several from the first day, and the treaty doesn’t bind them. A few weeks of work from a state with an income tax can mean a state return even when the federal answer is nil.

• Income Tax Regulations 2601(1): “If an individual resides in a particular province on the last day of a taxation year and has no income for the taxation year from a business with a permanent establishment outside the province, the individual’s income earned in the taxation year in the particular province is the individual’s income for the taxation year.”
• State rules differ enough that we don’t summarise them here; state income tax for cross-border workers covers the ones that come up most. Treaty relief is federal only.

What should I do next?

Start with ties, then days, then work location. If your Canadian ties are intact you file a Canadian return on everything, full stop. Then count US days on the weighted formula and, if you’re anywhere near 183, decide between Form 8840 and the treaty tiebreaker before the June 15 deadline. Then split your income by where you did the work and claim the treaty exemption, with Form 8233 to clients and Form 8833 on the return, for the US-performed part.

• Splitting time between Canada and the US: the 183-day questions, the two tests side by side
• Form 1040-NR for a Canadian non-resident, what the US return looks like
• What tax home means for the IRS, the concept behind the closer connection test
• Home office deduction across the border, the deduction when your office moves with you

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