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I am a US citizen by birth and moved to Canada with my parents at the age of 8. I have never resided in the US after this move. I am a Canadian citizen since 1980 and have only a Canadian passport. I have never had a US passport and have never invoked my US citizenship for any reason. I really never considered myself to be a US citizen.
I am now 35 and have been working in Canada for the last 10 years. Until now, I never realized that I should have been also filing a US tax return. How can I correct the problem without incurring extreme penalties and back taxes which would effectively bankrupt me? In doing some research, I seem to understand that the foreign earned income exclusion cannot be carried back for this long a period of time. If I simply start to file a return now (like as a first return) will I be trapped? Can I ignore the problem?
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david ingram replies:
I have received three of these this week. Must be something in the water.
I hate to answer it as well because I will look like a worry monger. BUT
The rules are clear. As a US citizen, you are required to file a US Income tax return no matter where you live and no matter where your income comes from. This is an onerous and thankless task. On the other hand, being a US citizen can be a tremendous advantage in your work. You should be looking for a job which involves crossing the border because you have to file a return anyway and might as well make extra money by working at something that can take advantage of your dual citizenship.
.
In the meantime, you should file six years back. It is extremely unlikely that you will owe anything although it could happen if you had a large tax free capital gain in Canada (you sold your private Canadian Company for up to $500,000 tax free would be one example).
Do not ignore the problem.
I / we would be glad to help you out.
Contact addrsses and numbers are below
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321
[email protected]
www.centa.com www.david-ingram.com
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 & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
This from "ask an income tax and immigration and bankruptcy expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
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