Cross Border Taxes

Yes. Generally you'll file a US non-resident return (Form 1040-NR) reporting the US-source employment income, plus your regular Canadian T1 reporting worldwide income. The Canada-US Tax Treaty and domestic foreign tax credit rules together prevent the same income from being taxed twice: you claim a foreign tax credit on your T1 for the US tax paid (limited to what Canadian tax would have been on that same income). For very short US assignments, treaty-based exemptions may apply if income, days, and employer thresholds are met.

Both are US foreign-account disclosures, but they go to different agencies and have different thresholds. FBAR (FinCEN Form 114) is filed with the US Treasury when the aggregate maximum balance of all your non-US financial accounts exceeded USD 10,000 at any point during the year. Form 8938 is filed with the IRS as part of Form 1040 and applies at higher thresholds: typically USD 50,000 at year-end or 75,000 at any point for single filers living in the US, and USD 200,000 / 300,000 for those living abroad. US citizens and green-card holders in Canada often have to file both. RRSPs, TFSAs, RRIFs, RESPs, and most Canadian bank/investment accounts count toward the thresholds.

The treaty assigns primary taxing rights based on income type and residency. Employment income is generally taxed where the work is physically performed (with short-stay exceptions). Business profits are taxed in the country where the business has a "permanent establishment." Investment income (dividends, interest, royalties) is typically taxed in the source country at reduced treaty rates, with the residence country giving a credit. Real estate income stays with the country where the property is located. The treaty also contains "tie-breaker" rules to determine residency when someone qualifies as a tax resident of both countries.

T1135 (Foreign Income Verification Statement) must be filed by any Canadian resident (individual, corporation, or trust) whose specified foreign property had a total cost amount exceeding CAD 100,000 at any point in the year. "Specified foreign property" includes foreign bank/investment accounts, shares of non-Canadian companies (even held in Canadian brokerage accounts), foreign rental real estate, and debts owed by non-residents. It does NOT include personal-use property (e.g., a vacation home used personally), property held in a Canadian RRSP/TFSA/RRIF, or shares of foreign affiliates filed under T1134. The threshold is based on cost amount (adjusted cost base), not market value. Penalties for non-filing start at $25/day to a maximum of $2,500.