Pay Income Tax in Two Countries?

[Shari 6]

If this should be under another topic, please feel free to move it. I just didn't know where to post this.

My English husband just got his U.S. citizenship last month but is being considered for a job in Vancouver, Canada. I believe I have read that if you are a U.S. citizen and move to another country and work, you still have to pay U.S. income taxes or at least file them. Does anyone know for certain if we move to Canada, will my husband have to pay both Canadian income taxes and U.S. income taxes? It might not be worth the move if he is taxed twice. Thanks for any replies.

[Kathryn41 3,205]

Post moved from the Immigration News forum to the Canada Regional Forum as the most appropriate location for this question

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Canada and the US have a tax treaty between the two countries that effectively stops double taxation. When a US citizen works in Canada he is still required to file a US tax return, however the tax treaty rules that the individual will pay taxes in the country in which he resides - so he would pay taxes in Canada and then on his US return file for a foreign tax credit to cover the tax paid to Canada. You will find that while you may pay more in taxes (depends on how much you are earning and what your tax credits are in Canada) you will also be getting more for your taxes, especially in terms of health care and social benefits so it is a good trade.

It wouldn't be a bad idea to talk with a knowledgeable cross-border financial adviser as there are a number of cross-border issues that might come up such as retirement pensions and such. Good luck with the job - Vancouver is a wonderful city in which to live and I am sure you would both enjoy living there very much.

Edited October 10, 2012 by Kathryn41

[Shari 6]

Post moved from the Immigration News forum to the Canada Regional Forum as the most appropriate location for this question

~~~~~~~~~~~~~~~~~~~~~~~~~~

Canada and the US have a tax treaty between the two countries that effectively stops double taxation. When a US citizen works in Canada he is still required to file a US tax return, however the tax treaty rules that the individual will pay taxes in the country in which he resides - so he would pay taxes in Canada and then on his US return file for a foreign tax credit to cover the tax paid to Canada. You will find that while you may pay more in taxes (depends on how much you are earning and what your tax credits are in Canada) you will also be getting more for your taxes, especially in terms of health care and social benefits so it is a good trade.

It wouldn't be a bad idea to talk with a knowledgeable cross-border financial adviser as there are a number of cross-border issues that might come up such as retirement pensions and such. Good luck with the job - Vancouver is a wonderful city in which to live and I am sure you would both enjoy living there very much.

Thanks Kathryn!

[gad33 47]

I'm surprised that no one has answered this. But I can help with some basic info.

USCs have to file a tax return regardless of where they live. There is a difference between filing a return and paying taxes. Paying US tax when living out of the US depends on how much you earn and how much investment income you have.

The US has a foreign income limit (don't no of it's correct name). Basically a certain amount of your foreign earned income is counted as a credit. ie you don't pay US tax on it. You can look up the amount on the IRS site, it was just under $100000. I believe there is no credit for unearned income. There is also a problem that Canada likes to know about all your worldwide income even if it is taxed in the home country. That's about all I know from my husband's mutterings at tax time.

If noone else comes on to help you, I suggest a google search and a trip to the library.

[Krikit 1,164]

That's weird. I could have sworn Kathryn answered this.

[gad33 47]

Note to self - don't answer posts if there is already a reply.

[Flames9_RN 358]

Note to self - don't answer posts if there is already a reply.

Nah!! I find many people dont even read the posts,lol so your best just to post again,lol

[Krikit 1,164]

Note to self - don't answer posts if there is already a reply.

Or you could add to the thread without dismissing someone else's response.