Frequently Asked Questions

I am a U.S. citizen. If I move to Canada to live and work there as a Canadian Permanent Resident, do I pay both U.S. and Canadian Taxes?

United States citizens and resident aliens living abroad are required to file annual U.S. income tax returns and report their worldwide income if they meet the minimum filing requirements for their filing status and age. You will have to file both a Canadian income tax return and a United States income tax return. For the United States income tax return, you will have several options available to you regarding claiming a foreign tax credit or excluding some or all of your foreign earned income.

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I am a Canadian citizen living and working in the U.S. for a U.S. employer on a VISA. Do I need to file both a U.S. tax return and a Canadian tax return?

You must comply with both U.S. and Canadian filing requirements. In the United States, you are required to file a return if you have income from the performance of personal services with the United States. However, under certain circumstances, that income may be exempt from U.S. tax pursuant to the U.S.-Canada income tax treaty. You need to determine what type of VISA you have, and how that impacts your residency status in the United States. If your VISA treats you as a U.S. resident, then your entitlement to treaty benefits will be impacted.

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I am a Canadian citizen who worked in the U.S. for 4 months. Do I have to file an U.S. Income Tax return as well as my Income Tax return in Canada?

That would depend upon whether you are a resident of the U.S. for purposes of U.S. tax law. There are several tests to determine residency, including a substantial presence test, which is based on how much time you are in the U.S. over a period of three years. If you are simultaneously a U.S. resident under U.S. law and a Canadian resident under Canadian law, you should consult the U.S.-Canada income tax treaty for rules that would treat you as a resident of only one country. It is also possible that you may have to file a dual status return in the U.S. if you qualify as a U.S. resident for only part of the year.

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Are the Canada Pension Plan and Canadian Old Age Security Benefits taxable to a U.S. resident?

Benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident are taxable only in the United States. These Canadian benefits are treated as U.S. social security benefits for U.S. tax purposes. If your total income is above certain limits, a maximum of 85% of your benefits will be subject to U.S. tax. Any benefit under the social security legislation of Canada that would not be subject to Canadian tax if paid to a resident of Canada is not subject to U.S. tax.

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I am a U.S. citizen working for a U.S. firm in a foreign country. Is any part of my wages or expenses tax deductible?

U.S. citizens are taxed on their worldwide income, no matter where they work. Some taxpayers may qualify for the foreign earned income exclusion, foreign housing exclusion, or foreign housing deduction, if their tax home is in a foreign country. If the taxpayer is temporarily away from his or her tax home (less than a year), the taxpayer may qualify to deduct away from home expenses.

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I am a U.S. citizen and would like to gift money to my spouse and/or child. Will these amounts be subject to the U.S. gift tax?

Since you are a U.S. citizen, gift tax may apply. The giver is liable for the tax. However if you gift under US$11,000 a year to the same person, this may be given tax-free. If your spouse is also a U.S. citizen, no gift tax will apply. If your spouse is not a U.S. citizen you can give to them up to $106,000 a year.