Cross-Border Trucking: Tax Rules for Canadian Drivers Earning in the U.S. — CPA Firm Near You, Montreal

Introduction

Many Quebec long-haul and owner-operator truck drivers cross into the United States regularly. While earnings may be generated in the U.S., Canadian truck drivers are still subject to Canadian tax rules — with additional cross-border filing obligations in certain cases. Misunderstanding U.S. sourcing rules, tax treaties, and reporting requirements can result in double taxation or heavy penalties. This guide explains how Canadian truck drivers earning U.S. income must file taxes and how a CPA firm near you in Montreal can help maintain full compliance on both sides of the border.

Legal and Regulatory Framework

Under the Canada–U.S. Tax Treaty and the Income Tax Act:

1. Canadian Residents Are Taxed on Worldwide Income

If you live in Quebec, all U.S. trucking income must be reported on your Canadian tax return — even if paid in USD.

2. U.S. Tax Filing May Be Required (Form 1040NR)

U.S. filing is required only if:
• The driver performs substantial services in the U.S.
• The carrier does not apply treaty exemptions correctly
• Income exceeds certain thresholds
Most trucking income is exempt from U.S. tax under Article XV of the Treaty, but proper documentation (Form W-8BEN) may be required.

3. Foreign Tax Credits

If any U.S. tax is withheld or payable, Canadian drivers may claim a foreign tax credit on their Canadian return to avoid double taxation.

4. GST/QST

GST and QST rules apply normally to Canadian business operations, even if part of the work occurs in the U.S.

Key Court Decisions

Courts have ruled that:
• Canadian truckers must report all gross U.S. income, regardless of U.S. withholding
• Currency conversions must use Bank of Canada rates
• Foreign tax credits require proof of U.S. tax paid
• Mileage logs and dispatch records must support business-use vehicle expenses
• Residency is determined by ties to Canada, not time spent driving in the U.S.

Judges emphasize accurate documentation of U.S. trips, earnings, and expenses.

Why CRA and IRS Target Cross-Border Truck Drivers

Audit risk is higher because drivers often:
• Fail to report USD income
• Mix personal and business travel
• Do not track U.S. vs Canadian mileage
• File late or incorrect W-8BEN forms
• Lose fuel or repair receipts
• Claim 100% business use without logs
• Cannot prove whether treaty exemptions apply

CRA compares U.S. carrier data, customs records, ELD logs, and bank deposits.

Mackisen Strategy

At Mackisen CPA Montreal, we help cross-border truck drivers stay compliant with both Canadian and U.S. tax rules. We:
• Report U.S. income correctly in Canada
• Prepare W-8BEN forms to prevent U.S. withholding
• File U.S. 1040NR returns when required
• Claim foreign tax credits
• Maintain thorough U.S./Canada mileage logs
• Track truck expenses with proper allocations
• Prepare GST/QST filings for incorporated drivers
• Provide audit-ready documentation

Real Client Experience

A Quebec driver was withheld U.S. taxes because he never submitted Form W-8BEN. We completed the form, corrected future withholding, and claimed a foreign tax credit for taxes already paid. Another driver did not report U.S. trip income; CRA audited and reassessed. We rebuilt dispatch logs and resolved the issue before penalties escalated.

Common Questions

Do Canadian truckers pay U.S. income tax?

Usually no, if treaty forms are filed properly — but all income must still be reported in Canada.

What if USD income fluctuates?

Convert income using Bank of Canada rates (daily or annual average).

Do I need to file a U.S. tax return?

Only under certain conditions — we determine this case-by-case.

Are truck expenses different for U.S. trips?

No. The same Canadian deduction rules apply, prorated by business use.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps truck drivers navigate complex cross-border tax rules. Whether you drive occasionally into the U.S. or full-time long-haul routes, our expert team ensures precision, transparency, and audit protection.