Taxpayers who travel between or sojourn in Canada and the U.S. may earn income from both countries. Canada signed a treaty with the U.S., as it has done with many other countries, to avoid double taxation of these taxpayers and to ensure tax is paid in the appropriate tax jurisdiction.
The Canada – United States Tax Treaty is intended for both Canadian residents who earn income from U.S. sources and American residents who earn income from Canadian sources. If there is a conflict between a country’s tax legislation and a treaty provision, generally the treaty provisions will take precedence. It is important to note that not all states apply the Canada – United States Tax Treaty.