If you are a dual-resident taxpayer because you have a U.S. green card but you determine under the tie-breaker rule that you are a resident of Canada, you may claim treaty benefits and compute your U.S. income tax as a nonresident alien. But you must file a U.S. income tax return by the due date (including extensions) using Form 1040NR or Form 1040NR-EZ. You must also attach a fully completed Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b). For more information, see Pub. 519, U.S. Tax Guide for Aliens.

If you are a dual resident of the United States and a third country and derive income from Canada, you can only claim treaty benefits from Canada if you have a substantial presence, permanent home or habitual abode in the United States, and your personal and economic relations are closer to the United States than to any third state.

If you are a U.S. citizen or green card holder living in Canada, you still have to file a Form 1040 and report your worldwide income because of the "saving clause" in Article XXIX(2), which allows the United States to tax its citizens and residents as if the treaty had not entered into effect. There are limited exceptions to the saving clause, which means certain types of income may be exempt from tax in the United States. Exceptions to the saving clause can be found in Article XXIX, paragraph 3.

If you are a U.S. citizen and a resident of Canada, special foreign tax credit rules may apply to relieve double tax on income from the United States. See Article XXIV(3), (4) and (5). For more information about foreign tax credit rules generally, see Income Tax Credits, later.

Income from services performed (other than those performed as an employee) are taxed in Canada if they are attributable to a permanent establishment in Canada. This income is treated as business profits, and taxable on a net basis in Canada in accordance with Article VII(3).

If you carry on (or have carried on) business in Canada through a permanent establishment, Canada may tax the profits the permanent establishment might be expected to make if it were a distinct and separate person. The business profits attributable to the permanent establishment include only those profits derived from assets used, risks assumed, and activities performed by the permanent establishment.

You may be considered to have a permanent establishment if you meet certain conditions. For more information, see Article V (Permanent Establishment) and Article VII (Business Profits).

Under paragraph 9 of Article V, if you, or your enterprise, provide services in Canada, you may be treated as providing them through a permanent establishment in Canada even if you do not have a fixed base in Canada from which you operate. This rule applies, however, only if:

Income U.S. residents receive for the performance of dependent personal services in Canada (except as public entertainers) is exempt from Canadian tax if it is not more than $10,000 in Canadian currency for the year. If it is more than $10,000 for the year, it is exempt only if:

Whether there is a permanent establishment in Canada is determined by the rules set forth in Article V.

Income from services performed (other than those performed as an employee) are taxed in Canada if they are attributable to a permanent establishment in Canada. This income is treated as business profits, and deductions similar to those allowed under U.S. law are allowable.

If you carry on (or have carried on) business in both Canada and the United States, the business profits are attributable to each country based on the profits that the permanent establishment might be expected to make if it were a distinct and separate person engaged in the same or similar activities. The business profits attributable to the permanent establishment include only those profits derived from assets used, risks assumed, and activities performed by the permanent establishment.

You may be considered to have a permanent establishment if you meet certain conditions. For more information, see Article V (Permanent Establishment) and Article VII (Business Profits).

The provisions under income from employment or income from self-employment do not apply to public entertainers (such as theater, motion picture, radio, or television artistes, musicians, or athletes) from the United States who receive more than $15,000 in gross receipts in Canadian currency, including reimbursed expenses, from their entertainment activities in Canada during the calendar year. However, this provision for public entertainers does not apply (and the other provisions will apply) to athletes participating in team sports in leagues with regularly scheduled games in both the United States and Canada.

Wages, salaries, and similar income (other than pensions) paid to a U.S. citizen by the United States or any of its agencies, instrumentalities, or political subdivisions for discharging governmental functions are exempt from Canadian income tax.

The exemption does not apply to pay for services performed in connection with any trade or business carried on for profit by the United States, or any of its agencies, instrumentalities, or political subdivisions.

A full-time student, apprentice, or business trainee who is in Canada to study or acquire business experience is exempt from Canadian income tax on remittances received from any source outside Canada for maintenance, education, or training. The recipient must be or must have been a U.S. resident immediately before visiting Canada.

An apprentice or business trainee can claim this exemption only for a period of one year from the date the individual first arrived in Canada for the purpose of training.

A pension includes any payment under a pension or other retirement arrangement, Armed Forces retirement pay, war veterans pensions and allowances, and payments under a sickness, accident, or disability plan. It includes pensions paid by private employers and the government for services rendered.

Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada.

Pensions do not include social security benefits.

A distribution from a Roth IRA is exempt from Canadian tax to the extent it would be exempt from U.S. tax if paid to a U.S. resident. In addition, you may elect to defer any tax in Canada on income accrued within the Roth IRA but not distributed by the Roth IRA. However, you cannot defer tax on any accruals due to contributions made after you become a Canadian resident.

Generally, income that accrues in certain Canadian retirement plans (including RRSPs or RRIFs) is currently subject to U.S. tax, even if it is not distributed. However, a U.S. citizen or resident can elect to defer U.S. tax on income accrued in the plan until the income is distributed.

The election procedures differ depending on whether an individual qualifies as an "eligible individual" as described under Section 4.01 of Revenue Procedure 2014-55 available at www.irs.gov/irb/2014-44_IRB/ar10.html. A beneficiary of a Canadian retirement plan is an "eligible individual" if the individual:

Eligible individuals are treated as having made the election in the first year in which they would have been entitled to defer U.S. tax on the undistributed income from the plan.

Filing Form 8891 (now obsolete) is no longer required to make the election. An individual who has previously made the election on Form 8891 or under the procedures set forth in Revenue Procedure 2002-23 (superseded by Revenue Procedure 2014-55) is not required to file Form 8891 or a similar statement for tax years after December 31, 2012.

Individuals who have previously reported the undistributed income accrued in a Canadian retirement plan (including RRSP or RRIF) on a U.S. federal income tax return are not eligible individuals as described in Revenue Procedure 2014-55 , and must continue to report the undistributed income accrued in their Canadian retirement plan on their U.S. federal income tax return and pay U.S. tax on the undistributed income. If these individuals want to make the election, they must seek approval from the IRS.

Revenue Procedure 2014-55 also provides guidance concerning information reporting with respect to interests in certain Canadian retirement plans (including RRSPs and RRIFs). However, the revenue procedure does not affect any other reporting obligations that a beneficiary or annuitant of a Canadian retirement plan (including RRSPs and RRIFs) may have, including the requirement to file a Form 8938, Statement of Specified Foreign Financial Assets, and FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).

For more information on the election and information reporting requirements, see Revenue Procedure 2014-55. Information on FinCEN Form 114 is available at bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.

An annuity is a stated sum payable periodically at stated times, during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). Annuities do not include:

Special rules apply to pensions and annuities with respect to:

Generally, distributions in such cases are deemed to be earned in the country in which the plan is established, without regard to where the services were rendered.

U.S. social security benefits paid to a resident of Canada are taxed in Canada as if they were benefits under the Canada Pension Plan, except that 15% of the amount of the benefit is exempt from Canadian tax.

Alimony and similar amounts (including child support payments) from Canadian sources paid to U.S. residents are exempt from Canadian tax. For purposes of U.S. tax, these amounts are excluded from income to the same extent they would be excluded from income in Canada if the recipient was a Canadian resident.

For Canadian source dividends received by U.S. residents, the Canadian income tax generally may not be more than 15%.

A 5% rate applies to intercorporate dividends paid from a subsidiary to a parent corporation owning at least 10% of the subsidiary's voting stock. However, a 10% rate applies if the payer of the dividend is a nonresident-owned Canadian investment corporation.

These rates do not apply if the owner of the dividends carries on, or has carried on, a business in Canada through a permanent establishment and the holding on which the income is paid is effectively connected with that permanent establishment.

Generally, Canadian source interest received by U.S. residents is exempt from Canadian income tax.

The exemption does not apply if the owner of the interest carries on, or has carried on, a business in Canada through a permanent establishment and the debt on which the income is paid is effectively connected with that permanent establishment.

Generally, gains from the sale of personal property by a U.S. resident having no permanent establishment in Canada are exempt from Canadian income tax. However, the exemption from Canadian tax does not apply to gains realized by U.S. residents on Canadian real property, and on personal property belonging to a permanent establishment in Canada.

If the property subject to Canadian tax is a capital asset and was owned by the U.S. resident on September 26, 1980, not as part of the business property of a permanent establishment in Canada, generally the taxable gain is limited to the appreciation after 1984.

The following are exempt from Canadian tax:

This rate or exemption does not apply if the owner of the royalties carries on, or has carried on, a business in Canada through a permanent establishment and the right or property on which the income is paid is effectively connected with that permanent establishment.

This exemption (or lower rate) does not apply to royalties to explore for or to exploit mineral deposits, timber, and other natural resources.

Canadian residents may deduct gambling losses in the U.S. against gambling winnings in the U.S. in the same manner as a U.S. resident.

Under Article XXI, you may deduct contributions to certain qualified Canadian charitable organizations on your United States income tax return. Besides being subject to the overall limits applicable to all your charitable contributions under U.S. tax law, your charitable contributions to Canadian organizations (other than contributions to a college or university at which you or a member of your family is or was enrolled) are subject to the U.S. percentage limits on charitable contributions, applied to your Canadian source income. If your return does not include gross income from Canadian sources, charitable contributions to Canadian organizations are generally not deductible.

These Canadian organizations must meet the qualifications that a U.S. charitable organization must meet under U.S. tax law. Usually an organization will notify you if it qualifies. For further information on charitable contributions and the U.S. percentage limits, see Pub. 526, Charitable Contributions.

Under certain conditions, contributions to qualified U.S. charitable organizations may also be claimed on your Canadian income tax return if you are a Canadian resident.