US Estate Tax for Canadians, Explained
You don't need US citizenship, a Green Card, or a single day of US residency to owe US estate tax. If you own US-listed stocks, a US-domiciled ETF, or a condo in Florida or Arizona when you die, the IRS can tax those assets on your death — a fact that surprises a lot of Canadians who've never lived south of the border and assumed "US tax" meant something that only applied to Americans.
What actually triggers it: where the asset sits, not where you live
US estate tax for a non-resident, non-citizen ("non-resident alien" in IRS terms) is based on US situs — where the asset is deemed to be located — not your residency or citizenship. Three categories count:
- US real estate — a vacation property, rental condo, or any real property physically in the US.
- Tangible personal property located in the US — a car, boat, or artwork kept there.
- Stock issued by a US corporation — this is the one that catches people off guard. It applies regardless of where you live, where your brokerage account is held, or where the share certificate technically sits. A single share of a US company held in an ordinary Canadian brokerage account is US-situs property.
Bonds and most debt of US issuers are generally excluded under the "portfolio interest" exception, and US life insurance proceeds paid out on a non-resident alien's death are also generally excluded — two common exceptions worth knowing if you're trying to estimate your actual exposure.
The exemption most people don't know they qualify for
On paper, the default US estate tax exemption for a non-resident alien is startlingly small: just $60,000 of US-situs assets, versus the multi-million-dollar exemption a US citizen gets. Taken at face value, that would mean almost any Canadian with a meaningful US brokerage position owes US estate tax. In practice, almost none do — because of the treaty.
Article XXIX-B of the Canada-US Tax Treaty lets a Canadian-resident estate claim a pro-rated share of the much larger credit a US citizen would get, instead of the bare $60,000. The formula is simple in shape even though the underlying tax tables aren't: it's the same $15 million exemption US citizens get for 2026 (made permanent and inflation-indexed by 2025's tax legislation), multiplied by the ratio of your US-situs assets to your entire worldwide estate.
Worked example
US-situs share: $500,000 ÷ $3,000,000 = 16.7%. Applied to the 2026 exemption, that's roughly $2.5M of shielded credit against $500,000 of US-situs assets — far more coverage than needed. Estate tax owing: $0. But the filing obligation below still applies, because it's keyed to the size of the US-situs assets, not to whether tax is actually owed.
The practical upshot: unless your worldwide estate is in the eight-figure range, the treaty credit almost always erases the actual tax bill. The part that actually catches people is the paperwork, not the tax.
The marital credit — relevant if you're leaving assets to a spouse
Article XXIX-B(3) adds a further marital credit when US-situs assets pass to a surviving spouse, in effect roughly doubling the exemption available for that portion of the estate. Claiming it properly — especially if the surviving spouse isn't a US citizen — usually requires either an outright transfer that qualifies or a Qualified Domestic Trust (QDOT), and is squarely the kind of thing to get in front of a cross-border estate specialist rather than assume applies automatically.
The paperwork: Form 706-NA, and why it surprises executors
If a deceased Canadian's US-situs assets exceed $60,000 at death, the estate's executor is required to file IRS Form 706-NA — regardless of whether the treaty credit reduces the actual tax owed to zero. It's due within 9 months of death, with a 6-month extension available. Most executors don't know this form exists until a US brokerage or title company asks for it.
Don't confuse this with Canada's departure tax or the US exit tax
These are three unrelated regimes that happen to sit near each other conceptually, and mixing them up leads to either false alarm or false comfort:
- US estate tax (this guide) — triggered by death, based on where the asset sits, and applies to Canadian residents who've never set foot in the US.
- Canada's departure tax — triggered by leaving Canada, a deemed disposition on worldwide capital property. See the full guide.
- The US exit tax (IRC §877A) — triggered by giving up a Green Card held 8+ of the last 15 years, or renouncing US citizenship. See the moving back guide for how that one works.
If you're a Green Card holder or US citizen domiciled in the US rather than a Canadian resident, you're generally taxed like a US citizen on your worldwide estate against the full exemption — the $60,000/treaty regime above is specifically the non-resident-alien case.
This is one of the more consequential blind spots in cross-border planning precisely because it applies to people who've never lived in the US at all. If you hold US-listed stocks, ETFs, or property directly, it's worth a conversation with a cross-border estate specialist — and worth tracking your account composition with the CoastFIRE Calculator so you know roughly how much of your net worth actually sits in US-situs form.