I moved to the US but kept my Canadian clients. Which country taxes that income?

The US, if the move made you a US tax resident, and the reach is then wider than you’d expect: a resident is liable on income from sources inside and outside the country, so work you do on a trip back to Canada is not outside the US net. Source is a separate question, and the source of services income follows where the work is done. Sitting at a desk in Florida serving a Toronto client produces US-source income, and the client’s country, the invoice and the bank sit outside that test. A narrow exception for small amounts needs three conditions met together.

Does the US tax the work I do back in Canada too?

If the move made you a US tax resident, yes. This is the half people skip, because it isn’t a sourcing question at all. A US resident is taxed on worldwide income, so a week spent working from Toronto doesn’t move that income outside the US net. Everything else on this page is about source, which decides where income comes from rather than who is liable on it.

“In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.” Treas. Reg. 1.1-1(b)

Note what that turns on, because this page doesn’t answer it: whether you are a resident alien individual at all. That’s a status test under IRC 7701(b), which treats an alien individual as a US resident for a calendar year only where one of three routes is met, and it isn’t worked through here. Nor does Treas. Reg. 1.1-1(b) tell you what Canada may still tax on the same income, which stays a separate question.

Why doesn’t the client’s country decide it?

Because the general rule in IRC 861(a)(3) keys source to performance, and that rule says nothing about the payer’s location. It runs one clause long and it is the whole foundation of this question. Everything people instinctively reach for, the client’s country, the currency, the invoicing entity, is absent from it. What matters is the physical place the labour happened. The payer’s identity does appear later, inside the narrow exception, though it plays no part in the general rule.

“Compensation for labor or personal services performed in the United States” IRC 861(a)(3), listing items of gross income from sources within the United States

That has a practical consequence worth stating plainly. Keeping your Canadian client base after a move does not make the income Canadian-source. The relationship stayed the same; the place you work changed, and the place you work is the thing the general rule in IRC 861(a)(3) measures.

Is there an exception for small amounts?

There is, and it’s narrower than it first looks because all of its conditions apply together. Under the small-amounts exception in IRC 861(a)(3), compensation for services performed in the US is not US-source where the person is a nonresident alien temporarily present for no more than 90 days in the year, and the compensation does not exceed $3,000 in aggregate, and the contract condition is satisfied. Miss any one of the three and that exception is unavailable. It is not the only exception in the provision, and the second one also requires nonresident alien status.

“except that compensation for labor or services performed in the United States shall not be deemed to be income from sources within the United States if, (A) the labor or services are performed by a nonresident alien individual temporarily present in the United States for a period or periods not exceeding a total of 90 days during the taxable year, (B) such compensation does not exceed $3,000 in the aggregate, and (C) the compensation is for labor or services performed as an employee of or under a contract with” a specified foreign-connected payer IRC 861(a)(3)

Condition	What it requires	Met by someone who has moved to the US?
(A) Presence	Nonresident alien, temporarily present, 90 days or fewer in the year	No, a person who has moved is neither temporarily present nor typically a nonresident alien
(B) Amount	$3,000 or less in aggregate	Rarely, for anyone with a real client base
(C) Payer	Employment or contract with a specified foreign-connected payer	Sometimes, but it never stands alone

Notice the first row, because it usually ends the analysis before the dollar figure matters. The exception is written for a nonresident alien making a short visit. Someone who has moved to the US and is building a life there is generally outside it from the start, whatever the amounts involved. The provision’s second exception lands the same way: it runs to a nonresident alien serving as a regular member of the crew of a foreign vessel engaged in transportation between the United States and a foreign country or a possession of the United States, so it closes at that same first step and for the same reason.

What about the Canadian side, and GST or HST?

Both are separate questions and this page deliberately does not answer them. The US rules above tell you that the income is US-source, and that a US tax resident is liable on income from both sides of the border. Whether Canada also has a claim after the move is decided by the Income Tax Act and the Canada-US treaty rather than by anything on this page. Treat it as its own analysis, get a direct answer on it, and do not assume that any single test disposes of it. Nor does this page work out whether a foreign tax credit or the treaty reduces either side’s tax.

• Whether you are still a Canadian tax resident, which is the prior question for the whole Canadian side
• Working remotely for a US company as a Canadian, the mirror-direction version of this problem
• Whether you owe US self-employment tax as well as CPP

Sales tax is its own regime again. Whether a GST or HST registration continues, ends, or produces zero-rated supplies after you leave is decided by the Excise Tax Act rather than by anything on this page, and it is worth getting a direct answer on rather than inferring one from your income tax position. The two do not move together.

What should I do next?

Work out where you physically performed the work during the year, because that is the fact the US sourcing rule turns on and it is often the fact nobody wrote down. If you moved part-way through a year, that split matters more than anything about who the clients are, and it can bear on more than source. This page does not work out the part-year position; what your first US year looks like is its own question. Then treat the Canadian side and the sales-tax side as separate questions with their own answers rather than assuming they follow the US result.

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