US Estate Tax for Canadians: The $60,000 Rule Nobody Mentions
Nobody talks about this until it's too late. If you own US stocks in any account, your estate has a filing obligation with the IRS that could cost thousands.
If you own more than $60,000 USD in US stocks, the IRS considers those assets part of your taxable estate. That's true even if they're inside your RRSP or TFSA, and even if you've never set foot in the United States.
Most Canadians won't actually owe anything. The Canada-US tax treaty exemption is generous, and it's now permanently set at $15 million. But "you probably won't owe tax" and "your executor has nothing to worry about" are two very different statements. The filing obligation alone can cost your estate thousands of dollars in professional fees.
This isn't the most exciting topic I've covered. But it's the kind of thing I wish someone had flagged for me earlier, before my US holdings quietly crossed that $60,000 line and I realized there was a whole layer of cross-border rules nobody had mentioned.
Your US stocks are "US-situs property"
Every share of Apple, Microsoft, Amazon, Nvidia, VOO, SCHD, or any other US-listed security you own is what the IRS calls "US-situs property." It falls under US estate tax jurisdiction regardless of where you live. It doesn't matter that you bought them through a Canadian broker. It doesn't matter which account they're in. RRSP, TFSA, non-registered. The IRS doesn't care about your Canadian account wrappers. They care where the company is incorporated.
Canadian-listed ETFs that hold US stocks (VFV, ZSP, XUU, XUS) don't count. They're units of a Canadian trust. The fund owns the US stocks. You own Canadian trust units. That's a real distinction, and I'll come back to it.
The filing threshold is $60,000 USD. If your US-situs assets exceed that at the time of death, your executor needs to file a US estate tax return (Form 706-NA) with the IRS. That's not a high bar. A few hundred shares of a couple of large-cap US stocks and you're there.
The treaty exemption that saves most Canadians
The Canada-US tax treaty (Article XXIX-B, for the light-bedtime-reading crowd) gives Canadian residents a prorated share of the US estate tax exemption. As of 2026, that exemption sits at $15 million USD, permanently locked in by the One Big Beautiful Bill Act signed in July 2025. That's the same exemption US citizens get.
The "prorated" part is important. You don't get the full $15 million. You get a fraction of it, based on how much of your worldwide estate is US-situs property.
The formula is straightforward.
Effective exemption = (US-situs assets / worldwide estate) x $15,000,000
$200,000 in US stocks, $1,000,000 worldwide estate Effective exemption: ($200K / $1M) x $15M = $3,000,000. Your $200K in US stocks is nowhere near that. No tax.
$1,000,000 in US stocks, $3,000,000 worldwide estate Effective exemption: ($1M / $3M) x $15M = $5,000,000. A million dollars in US assets and you're still using a fifth of the exemption. No tax.
You'd need a worldwide estate well into the tens of millions and a heavy concentration of US assets to actually owe anything. For most Canadians investing in US markets, the treaty exemption wipes out the tax completely.
I'm not going to pretend this kept me up at night once I understood the math. It didn't.
The paperwork is the real cost
So if most Canadians won't owe US estate tax, why am I writing about this?
Because the filing requirement and the tax liability are two separate things. And the filing requirement kicks in at just $60,000 in US assets.
Your executor needs to file Form 706-NA with the IRS to claim the treaty credit. That's not optional. The credit isn't automatic. If the form doesn't get filed, the IRS doesn't assume you're Canadian and shrug it off. They assume you owe tax on everything above a $60,000 exemption (the base exemption for non-treaty filers) at rates up to 40%.
Filing 706-NA requires a cross-border tax professional. That typically runs $1,500 to $3,000+, depending on the complexity of the estate. Your executor will need valuations on every US-situs asset at the date of death, plus documentation of the worldwide estate for the prorating calculation. It's not a weekend project.
This is the part that actually matters for most people. Not a tax bill. An administrative headache and a professional fee that lands on your executor at the worst possible time.
(If your executor doesn't know this obligation exists, that's a conversation worth having. Ideally not today. But eventually.)
How to reduce your exposure
None of this requires restructuring your portfolio. But there are a few things worth knowing.
Use Canadian-listed ETFs where it makes sense
If you're buying individual US stocks, trading options, or doing anything that requires direct US market access, there's no workaround here. Those are US-situs assets and that's the trade-off you accept for being in the game.
But if part of your portfolio is just broad S&P 500 index exposure sitting in VOO, that's worth a second look. VFV and ZSP track the same index at a 0.09% MER, trade in CAD on the TSX, and because they're Canadian trust units, they aren't US-situs property. Your estate never has to think about them.
I compared all 3 in the Best Canadian S&P 500 ETFs. The performance difference is negligible. For the passive index slice of your portfolio, the Canadian-listed version gets you the same returns while keeping those assets out of the US-situs calculation entirely. Save the direct US holdings for the names and strategies you actually need to be on a US exchange for.
Tell your executor
This is the free option and probably the most important one. Your executor needs to know that US-situs assets exist in your accounts, that there's a $60,000 filing threshold, and that they'll need a cross-border tax professional if you're above it.
You don't need a formal estate plan for this. A note in your files or a conversation over coffee works fine. The worst outcome isn't the tax. It's your executor discovering the obligation 6 months into probate because an accountant happened to ask the right question.
The bottom line
Most Canadians holding US stocks won't owe US estate tax. The treaty is generous and the $15 million exemption is now permanent. But the filing obligation starts at just $60,000 in US assets, and the cost of that filing falls on your estate whether you owe tax or not.
If you're actively investing in US markets, you're going to cross the $60,000 line. That's fine. Just know what it triggers and make sure your executor does too. For the passive index slice of your portfolio, Canadian-listed ETFs like VFV or ZSP keep the same exposure off the US-situs ledger.
One more thing. Your RRSP protects you from US dividend withholding tax, but it doesn't protect you from US estate tax. Both registered accounts are treated the same here. I covered the withholding side in RRSP vs TFSA for US investing if you want the full picture.
