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Income Tax Guide for US Expats Working in Canada

  To many Americans, Canada might appear to be a parallel universe: a land of courteous people who generally speak English yet do not hold American citizenship—a country that is both close and far away. Others remember Canada as the country that invaded the United States in 1812 and burned down the White House (despite the fact that Canada did not exist at the time, and the British bear sole responsibility for the attack on Washington, DC). However, approximately 800,000 US citizens call Canada home. Cities such as Toronto, Calgary, Vancouver, and Edmonton, as well as other parts of the country near the US border, have large numbers of US expats. Taxpayers in Canada must pay both federal and provincial (or territorial) taxes, much as citizens of the United States do to the IRS and state governments. The primary distinction is that most Canadian provinces (with the exception of Quebec) do not need the filing of a separate return; the federal government collects provincial. Because o...
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Tax Requirements for US Citizens Employed in Canada

 According to Brent Allen, a certified financial planner and financial management adviser with Investors Group in London, Ontario, if you are a U.S. citizen living and working in Canada, you are taxed on any money you make there, whether it's from working for a Canadian company or investing in Canadian stocks, bonds, or mutual funds.The meaning of "resident" in Canada is very broad. There are many things that can help a taxpayer claim that they live in Canada for tax reasons, but the most basic is how much time the taxpayer spends in Canada.If a person lives in Canada for more than 183 days a year, the Canada Revenue Agency will probably consider them to be a resident. This is especially true if their main home is in Canada. If you want to live in Canada, you should know that the CRA decides each case on its own. Call the CRA at 1-800-959-8281 if you aren't sure if you are a resident or not.

On their Canadian tax return, people who live in Canada must list all of their income from anywhere in the world.

People from the United States who live and work in Canada Because the border between the U.S. and Canada is so long, many people cross it every day to get to work. This means that a U.S. person can live in the U.S. and make money in Canada.A non-resident usually only has to pay Canadian tax on income that comes from sources in Canada. However, because of the income tax deal between Canada and the U.S., a worker may not have to pay Canadian tax and may also ask that tax not be withheld from income that comes from sources in Canada.Employment income is not taxed in Canada if the taxpayer works in Canada for a U.S. company and is paid by the U.S. company, as long as the taxpayer does not live in Canada.Having two taxesArticle XXIV of the 1980 Canada-U.S. Income Tax Convention lays out the rules for when each country can claim the right to tax the same income.A person who lives in more than one country is subject to the rules and laws of the country where they live, unless they have a fixed base in another country. This piece explains this idea. The stationary base could be a home or office.

If a U.S. citizen works in Canada, they are protected from double taxes by the rule of residence

However, there are choices that a taxpayer can make that remove treaty protection, such as choosing to be taxed only as a U.S. citizen.When a U.S. citizen has to pay taxes on the same income in both Canada and the U.S., they can usually avoid double taxation on line 405 of the Canadian return. This is because they can claim the foreign tax credit for taxes paid in the U.S. on income stated on the Canadian return.Canadians have been able to use TurboTax since 1993. It is the best-selling tax software in the whole country. We offer a wide range of products to meet the wants of all our customers. We recently added a LIVE service so that our customers can get help from tax pros right away. Feel free to try it! It's simple to use and comes with a variety of support tools to help you with all of your tax needs.In most cases, if you are a "tax resident" of a country, you have to pay taxes on all of your income in that country.

It is normal for someone who moves around the world to be a "tax resident" of more than one country

If you don't get the right help, this could mean that two countries can tax your income from all over the world, which is also known as "double taxation." A good tax treaty between the two countries can often make this situation less of a problem. You are automatically a "tax resident" of the United States if you are a citizen of that country. However, you can easily be a "tax resident" of Canada if your move there for work makes it seem like you will stay there permanently (for example, if you sell your American home and buy one in Canada and bring your spouse and children with you). Due to the administrative burden of having to withhold and remit taxes for workers who only spend a short time in Canada, the CRA offers a few possible tax exemptions from withholding and remitting, as long as the right forms are filed on time. The R102-R: Regulation 102 Waiver Application is one of these forms. It needs to be filled out by each employee at least 30 days before they start working in Canada. Another exemption form is the RC473: Non-Resident boss Certification. This is a general form that can be used for all U.S.

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