Tax Obligations

As a US citizen living in Canada, you are still subject to US tax obligations regardless of your residency status. We cover some key tax obligations you should be aware of as a US Citizen living in Canada here.

What are my tax obligations as a US citizen living in Canada?

  1. US Income Tax: As a US citizen, you are required to report your worldwide income to the US Internal Revenue Service (IRS), regardless of where you live. This means that you need to report income earned in Canada, such as employment income, self-employment income, rental income, investment income, and any other sources of income on your US tax return.
  2. Foreign Bank Account Reporting: If you have a financial interest in or signature authority over foreign bank accounts, including bank accounts in Canada, and the aggregate value of these accounts exceeds certain thresholds, you may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Financial Crimes Enforcement Network (FinCEN) and disclose these accounts on your US tax return.
  3. Foreign Earned Income Exclusion: If you meet certain requirements, you may be eligible to exclude a portion of your foreign-earned income from US taxation using the Foreign Earned Income Exclusion (FEIE). However, it’s important to note that this exclusion only applies to earned income, such as wages and self-employment income, and has specific requirements and limitations.
  4. Foreign Tax Credits: If you pay Canadian taxes on income that is also subject to US taxation, you may be eligible to claim a foreign tax credit on your US tax return. The foreign tax credit is designed to prevent double taxation on the same income.
  5. Reporting of Foreign Assets: Depending on the value of your foreign financial assets, you may be required to file Form 8938, Statement of Specified Foreign Financial Assets, with your US tax return, disclosing certain details about your foreign assets.
  6. State Tax Obligations: In addition to federal tax obligations, you may also have state tax obligations in the United States, depending on your state of residence or domicile.

NOTE: This article is for informational purposes only. We are not accountants and cannot provide tax advice. It’s important to note that tax laws are complex and subject to change, and it’s recommended to consult with a qualified tax professional who is knowledgeable in US-Canada tax matters to ensure compliance with all applicable tax laws and regulations.

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