Executive Summary
Is my RSU taxed in Canada or the US?
It depends on your tax residency, where you perform services for the RSU, and how your employer allocates income. Many employees are taxed in the country of residence for the workdays related to the vest period—subject to treaty rules and employer payroll practices. You must reconcile Canadian T-slips and US W-2 reporting.
Do US citizens in Toronto file only Canadian returns?
US citizens must generally file US returns on worldwide income even while resident in Canada. You typically claim foreign tax credits for Canadian tax paid on the same income, subject to limitations and timing differences.
Why do my T4 and W-2 equity amounts differ?
FX conversion dates, payroll systems, and partial-year residency can cause different reporting on Canadian slips versus US forms. Reconcile per grant and per vest date—not per form total.
Seattle–Vancouver and Detroit–Windsor corridors host many split-year tech workers. Equity is where audits hurt most.
Use Canada country overview and relocating with equity. Deep dives: ISO vs NSO, AMT, California if you had CA before moving.
The bottom line: Build a three-column ledger: Canada, US, per-grant FMV.
Why this guide exists: Remote workers focuses on US states—this article adds the Canada border cases that dominate Pacific Northwest and Ontario hiring.
Critical Warning: Quebec abroad assignments add Relevé 1 complexity—get professional help.
Residency: CRA vs IRS vs Treaty Tie-Breaker
| Concept | Why it matters |
|---|---|
| CRA residency | Worldwide income |
| IRS substantial presence | US filing even non-citizens sometimes |
| Treaty tie-breaker | Breaks ties for dual residents |
Sourcing Equity by Workdays
See non-US sourcing—day counts matter.
T4, RL-1, and W-2 Reconciliation
| Slip | Typical equity lines |
|---|---|
| W-2 | Boxes 1, 12 codes |
| T4 | Option benefit boxes |
| RL-1 | Quebec specifics |
ISO, NSO, and AMT (US Side)
AMT guide—Canada may not mirror US AMT.
Provincial Tax: ON, BC, QC
Ontario vs BC vs Quebec rates differ materially.
Foreign Tax Credits
US Form 1116 and Canadian foreign tax credits—order of credits matters.
Credit baskets and passive vs general income can trap the unwary—a cross-border CPA who knows both systems is worth the fee for six-figure vests.
Practical Examples
Example A: Year in Toronto, US parent
- USD RSU vest → CAD income inclusion + US reporting
Example B: Commuter from Vancouver to Seattle
- Allocation by workdays and treaty articles
Compliance Checklist
- ☐ Per-grant spreadsheet
- ☐ FX rates documented
- ☐ Treaty Form 8833 if required
Home Buying and Credit
Common Cross-Border Mistakes
- Netting T4 and W-2 totals without per-grant reconciliation.
- Forgetting US state tax after leaving California for BC.
- Assuming one country will grant full FTC for timing-mismatched income.
- Ignoring departure tax or deemed disposition rules on emigration.
Record Retention
Keep all slips, broker PDFs, relocation letters, 7+ years.
Footnotes
Disclaimer: Educational only—not US or Canadian tax advice.
Primary Sources
Last Updated: March 2026 | Research Team: VestingStrategy