Can Canadians Open American Bank Accounts?

Banks have laws they must operate by, and these include rules on a foreign citizen opening a U.S. account. It's possible to do, but a bit of extra paperwork is involved, courtesy of the Internal Revenue Service and federal regulations. Depending on services offered by the bank, it may also be possible to open an account denominated in Canadian currency or simply keep on banking with your Canadian bank through the ease of debit cards and automated teller machines.

When a U.S. citizen or legal resident walks into a bank to open an account, she'll have to bring along some photo identification, as well as a Social Security number. The bank is not trying to present an inconvenience; it's enforcing federal law. All U.S. account holders are subject to these rules on bank and brokerage accounts. If you're a foreign national and don't have a Social Security number, you still must provide identification and sign a tax declaration known as a Form W-9.

The Canadian Social Insurance Number is the north-of-the-border equivalent of the Social Security number. The U.S. bank may require this number as well as photo identification. If not, the bank still needs an individual taxpayer identification number (ITIN) to complete the W-9 form. The ITIN is in the same format as the nine-digit Social Security number. You can obtain an ITIN by filing Form W-7 with the IRS by mail, at an IRS office or going online with a service provider that will process the application for a fee. You need to provide proof of citizenship or legal status in Canada.

If you are a foreigner holding a U.S. bank account, any interest paid to that account is subject to a mandatory 30 percent "nonresident alien" or NRA withholding. The bank is responsible for declaring this income to the IRS and is subject to the tax itself if it doesn't withhold. This applies to U.S.-source income; any interest or dividends coming from a foreign source – such as a Canadian bank – is not subject to NRA withholding. If you're employed in the U.S. or a student on scholarship, you may be exempt from income or employment taxes.

A useful alternative, if you're simply looking for banking convenience, would be to open an account in Canada, apply for a debit card and use the card while in the U.S. to make payments, ATM withdrawals and deposits. The bank will change any U.S. dollar deposits you make into Canadian funds to your account and allow you to withdraw U.S. dollars while you're in the U.S. Larger banks such as the Royal Bank of Canada also have branch offices in major U.S. cities.