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Canadian US Citizen moving to Canada - Canadian-USA-Global tax help -


Hi Taxman,

Sorry to bother you but I saw on FACEBOOK that you are a income tax preparer. My parents are from British Columbia, Canada but reside in New York, USA now. My father is also a tax preparer for 48 yrs here in New York and I have spent the past 5 yrs working with him. I have a question for you that I am having a tough time to answer. We both cant figure it out. I am a dual citizen, USA/Canadian. I was born in Chicago but became a Canadian citizen last year because my parents were born there.
I have a job offer in Montreal to start in July(next month). my question is this. I have collected unemployment from the United States from January-July this year (roughly around 15,000.00 usd). I will have to file a USA income tax to pay my taxes on this. if I start to work in Canada in July and work July-December I will file my Canadian income tax to Canada and pay my Canadian taxes on my Canadian earned money. I am aware that i need to show the USA income I made to Canada, and show the Canadian income I made to USA. The question is, will I have to pay Canadian taxes on my 15,000.00 usd I made???? or pay USA taxes on the money I end up making in Canada for the second half of this yr? if so it would make sense for me to not move to Canada until January 1 which i don't want to do but would rather than having to pay extra taxes on my money. if you know the answer to this it would help me out a ton.

I understand foreign earned income needs to be reported and since I am a citizen of both countries and will have made money in both countries I need to show the total of the 2 countries earned income on both canadian and usa taxes. But i would not think i will be double taxed that is basically my question, if I will be taxed on my USA unemployment in Canada it would not make sense for me to go to Canada to work until 2010.

Also, I understand there is a difference in Canada between citizen and resident. I will reside in Canada for work july-dec, so if this will affect my situation then I would stay in Boston until jan 1 2010.

Hope you can help,
david ingram replies:

Move whenever you want to. 

Thank you for the question which points out the problem that the general public has finding a tax consultant to deal with their cross border taxes.

From now to Xmas, most of my practice will be spent fixing returns done by other preparers around North America for Canadians or Australians or New Zealanders or Brits  who have moved to the US or US people who moved to Canada from the US.

Good on you for recognizing the problems and writing. 

You should start off by reading my Oct 93 Newsletter on dual citizenship.  Then you should read the Oct 1995 newsletter on the US tax liabilities / duties of a US citizen (or green card holder) living in Canada (or France or Japan or Australia, etc.).  These two newsletters are in the top left hand box at  Then you should go to the second box down on the right hand side and read the US / Canada Income Tax Section.

That will give you some 50 pages to read on your situation.

Basically, however, you will need to. (forget about exchange here please - although you do need to calculate exchange on the actual returns)

1.   file a Canadian T1 return showing your date of entry into Canada and reporting your Canadian wages and a prorata share of any investment income you might have from the US.

If, for instance, you had $15,000 of earnings in the US and $12,000 worth of interest for the year from the US and came to Canada on or about August 1, and then earned $25,000 in Canada, and saved just about every cent in the Royal Bank of Canada in a zero interest checking account, you would file  returns as follows.

You would file a Canadian T1 return showing your date of entry into Canada as August 1 (this prorates your personal exemption amounts on Schedule 1 by the number of days you are here divided by 365 (non leap year) and taking that percentage of the approximately $10,000 of personal exemption amounts.

Your T1 would therefore have $25,000 of wages on line 101 and $5,000 of interest on Schedule 4 and line 121 of the return.  You would claim a foreign tax credit of  up to $500.00 on form T2209 to get credit for the up to $500.00 of tax you will have paid to the US on the interest.

1(a)   You will also have to file a Quebec tax return.

2.   File a US 1040 and report the $15,000 from the US and $25,000 from Canada as wages on line 7.

The $12,000 of interest would be next and you would now calculate the tax on the total after exemptions and standard deduction.

You would calculate the tax percentage on the $15,000, the $25,000, the $7,000  of interest while you were in the US and the $5,000 of interest received while in Canada.

You would claim a general foreign tax credit on form  1116 to claim the Fed and Prov taxes and CPP and EI taxes paid to Canada as a credit against the $25,000.  In addition, if it worked out that you had paid more than 10% tax to the US on your US tax return on the $5,000 earned after going to Canada, you would file a foreign tax credit form 1116 and check off "resourced by treaty" to bring the tax rate down to the 10% stated in Article XI  of the US Canad Income Tax Convention.

3.   Because you had saved all of your Canadian earnings and now had over $10,000 US in a foreign bank, you would answer YES to question 7 on schedule B and fill in form TDF 90-22.1.  The first year you would say "no" to question 8 but NEXT year you will be saying YES and filing US form 8891 to report the RRSP (a foreign trust) that you will likely purchase.

That's it for the free stuff.

If you are still confused, I will be charging you $450 CDN for a phone consultation.  If you do that, get your dad on the line at the same time.

david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.
pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.

IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at or  If you forward this message, this disclaimer must be included." -


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