Tax Q&A – US Citizen Living in Canada..Do I Need to File?

By
Phil Hogan, CPA, CA, CPA (Colorado)
-
25
3787

I have helped hundreds of people successfully navigate from the US to Canada. If you're thinking of moving or retiring to Canada contact me today to chat about your plans.

I can be reached via email at phil@philhogan.com, by phone at 250-661-9417 or through my contact page here.

I look forward to speaking to you soon.

Phil Hogan, CPA, CA, CPA (CO)
Cross-Border Tax and Investment Specialist

Question

Hi

I just found out the other say that all US citizens need to file US tax returns. I’ve been living in Ottawa (from Seattle) for the last 10 years.

I worked for the first 6 years, but have been unemployed for the other 4 years. If the IRS finds out will I be in big trouble?

Any information you can send me would be greatly appreciated.

Thanks

XXXXXX

Answer

Hi

Yes, you are correct, as a US citizen you are required to file 1040 tax returns even if you live outside of the US. The good news is that the US (IRS) has a tax amnesty provision that allows you to catch up on past due returns without any penalties or threat of criminal action.

The key is to contact them before they contact you. In most cases you would file the last 6 years of past due returns under the Amnesty provisions with the IRS.

Depending on the type of income you received in the earlier 2 years you’ll most likely not incur any additional taxes as the Canada US treaty includes provisions to eliminate (in most cases) double taxation between borders.

Hope that helps and please feel free to call me if you have any other questions.

Regards

Phil Hogan, CA
250-661-9417

25 COMMENTS

  1. Hi Phil

    Thanks for the post…quick question (I’m worried that I think I know the answer to this question already):

    Do green card holders need to also file US tax returns if they live in Canada and commute back to the US less than 183 days a year?

    Anton

  3. I am planning to move to Canada to work in London,Ontario
    Please help me out in taxes
    1. For example I make 120 K , how much tax I will have to give in Canada and how much in USA
    2. Any other big issue,I might have to know
    Please help me out, specially in medical insurance

    Thanks

    • Hi

      You’ll file a Canadian and US tax return to report the 120k of income on both returns. And although you’ll be liable for tax on the 120k in each country the US will give you a foreign tax credit for the Canadian tax paid on the same income. Essentially you’ll end up paying the Canadian rate of tax on 120k e.g. ~average rate of 31% for Ontario (just an estimate and does not consider additional deductions or tax credits).

      Give me a call at 250-661-9417 and we can discuss your move. You’ll definitely want to ensure you plan properly for tax purposes as you’ll have a part year Canadian tax return to prepare for the year of entry to Canada and some potential tax implications of assets owned before moving to Canada.

      Regards

      Phil

    • Hi Javed

      Sorry for the late reply…

      If you’re a US citizen then you will most likely not have to pay any US tax as the IRS will give you credit for any Canadian taxes paid on the same income (assuming the Canadian and US tax returns are properly prepared).

      If you have another question related to medical insurance please feel free to call me at 250-661-9417.

      Regards

      Phil

  4. Hello,
    I am a dual citizen of Canada and the USA. I’m planning on moving to Canada permanently with my family. Do I need to file a US tax return each year even if I have no US income and no plans to return to the USA in the immediate future? Is US Citizenship tied to income taxes? In other words, do I need to file a return each year to retain my citizenship status?
    Thank you

    • Hi Nazirv

      Yes, you are correct. You will have to file a US tax return even if you are out of the US for the year. All US green card holders and US citizens are required to file US 1040 tax returns. There is however tax relief provided by the Canada-US tax treaty. In most cases if the tax returns are properly prepared you will not owe any US tax (unless you have US source income) because your Canadian taxes can be used to reduce your US taxes e.g. tax credit per form 1116.

      If you need some help with your dual status returns please feel free to call me at 250-661-9417.

      Regards

      Phil

  5. Phil H,

    If I live in Ontario (permanent Canadian residency) and I commute across the border to work for a US employer, will I have to pay any US taxes in addition to Canadian income tax?

    Thanks,

    Phil T

  7. Phil, I am a dual citizen (born in Canada but non resident since jan.4th 2000). I have been an american citizen for the past 3 years.

    My question is…I could be looking at a job in BC that will allow me to live in WA State or back in BC. I am leaning to living in WA State but have no idea which will be the best situation for me tax wise.

    My wife (also a dual citizen of canadain birth) will be earning an income in the country we make our home.

    Will I have to pay the BC sur tax?

    If we live in WA state can we still write off our mortgage against her income?

    Kevin

  8. My spouse is becoming a canadian citizen. She has income from the u.s. After she becomes a canadian citizen, will she still have to file taxes in the United States? What if she decides to have dual citizenship?

  9. Phil: I must be the stupidest American yet. I have been a dual citizen of the US and Canada since 1990, and I have resided permanently in Canada since 1995. I have never filed a 1040 in the 17 years I have lived here in Canada. I realize ignorance is no excuse, but I really didn’t know. Who and or Where can I contact to clear this matter up? Thank you!

  10. Hi, I lived in the US from 2006 – 2010 (moved back to Canada Jan 2010). I was unemployed all of 2010 and have no income to report. I didn’t collect unemployment (no source income, only family help). I am a dual citizen. Do I really have to go through the exercise of filing a 1040?

    Thanks!

  11. I moved to Calgary AB. Oct. 1981 and filed my usa taxes that year and canada taxes also. But have not done a usa tax form after that. I came to Canada as a landed immigrant and now have a permanent resident card. I also have all my tax files for Canada from 1982 and up to 2010 can you help? sending this Aug 22/2011 at 3:39pm

  12. My wife is a US citizen but has lived up in canada for the past 6 years and has not worked at all.

    I file my Cdn return everyyear and i put her info into my return and declaring she isnt filing and she has 0 income.

    Should she be filing her own cdn return and what do we do about the US stuff.

  13. I am a U.S. citizen residing in Canada. I am married to a Canadian and we have 3 children. We recieve occasional benefit payments from the Government of Canada (for example, the Canada Child Tax Benefit). Is this considered income by the U.S.? If so, can I attibute all or part of it to my wife’s income (she does not file with the U.S.) Do I need to treat any of this as part of my worldwide income on my U.S. tax return? If so, where and how do I do this?
    Thanks in advance for your help.

  14. I am a US citizen living in Calgary for the past 8 years (landed immigrant). My husband is canadian. I have been a stay at home mom the entire time and have not worked. Am I supposed to file in the US even though I have no personal income. My husband works for the post office and files every year with Canada. Thanks

  16. I am a US citizen who has been living in canada for the last 4 years. I am now working on filing my back taxes…. wondering do I need to call the IRS to let them know I am working at them. I also now have a child who is 1.5 years old and wondering if I file her as a dependant even though I do not have a SSN or SIN number for her yet. Thanks!

  17. I got married in August to Canadian citizen and moved there. I have income from US. How do I file taxes for the US? Single, Married.Do I use my married name? Do I need to do anything else? I usually always get a refund. Thanks.

    • Hi Denise

      Yes, if you’re a US citizen you’ll need to file both Canadian an US taxes. Your worldwide income will be reported and taxed in both countries and you’ll receive a foreign tax credit to alleviate any double taxation that may occur.

      Cheers

      Phil

  18. I am a dual U.S.Cdn. citizen having lived in Canada for the last 50 years. I have a mid 30’s daughter who was born in Canada and will never reside in the U.S. I understand that for her U.S. citizenship is not self-executing, in other words she has to take action to prove and obtain her U.S. citizenship; i.e. being entitled to U.S. citizenship is not the same as “being” a U.S. citizen. If that is true, I don’t see the need to advise my daughter to file annual U.S. tax returns.
    What say you.
    Mike

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