taxes, u.s. edition

US citizens, no matter where they live, have to file US tax returns. You have to show all your income, no matter in what country it's earned. However, unless you're in a fairly high income bracket, you'll be exempt from US tax.

If you live in a country with a tax treaty with the US - such as Canada - you also receive a credit for taxes you've already paid in that country. So you shouldn't be taxed twice on the same income.

The year you move, however, is tricky. Because we lived in the US and worked for US companies during most of 2005, our income is not yet exempt. In addition, we have to declare whatever we earned in Canada, and get credit for any taxes paid on that.

To complicate things further, my freelance work is for U.S. companies, so I still have some US income, and no taxes are withheld from that in advance.

Each word of every sentence on this post represents a form to fill out and a barely comprehensible instruction book to follow.

We also have to file Canadian tax returns. From what I've heard, these are much more straightforward. (We haven't done them yet; I'll let you know.) Also, this will be the first time we fill out one tax form for both of us. Because we are not legally married, according to U.S. tax law, we're single.

Filling out two sets of tax forms every year, and continuing to grapple with the convoluted US system even if we don't pay US taxes, is incentive enough to try to give up my US citizenship as soon as I'm eligible.

We have to be Permanent Residents of Canada for three years before we can apply for Canadian citizenship, and then - of course - it takes some time to get it. I've heard that it's not so easy to give up citizenship. But I'll tell you, it might be worth the effort.

Comments

  1. Alex13 April 2006 at 13:14

    I wouldn't worry too much about the tax situation. I did the two tax returns (or more importantly, H&R Block did them) and it worked out that I owed in Canada and got a refund from the U.S. In the end, they balanced each other out.

    Don't be too quick to give up your U.S. citizenship either - it's actually easy to give up and damn near impossible to get.

    ReplyDelete
  2. laura k13 April 2006 at 14:49

    it worked out that I owed in Canada and got a refund from the U.S. In the end, they balanced each other out.

    You're lucky. That isn't how it looks over here.

    it's actually easy to give up and damn near impossible to get.

    I'm glad to hear it's easy to give up - I've heard just the opposite. Either way, I'm up for the challenge. If Canada will take me as a citizen, that will be enough for me.

    So many people act like having US citizenship is this special status that gets you so much around the world. (I'm not saying you're saying that, Alex.) Yet somehow, millions of people manage to live their whole lives without it, and they get along just fine.

    I'll be very happy to travel with a Canadian passport and to never have to fill out another US tax form for the rest of my life. But that's still several years in the future.

    ReplyDelete
  3. Alex13 April 2006 at 16:15

    So many people act like having US citizenship is this special status that gets you so much around the world.

    It does get you so much the world. With a U.S. passport, you get $0.05 off colour copies at Kinkos every second Tuesday of the month. Also, flashing your U.S. passport to the bouncer at Pinguin Club in Berlin will get you past the long line ups.

    ReplyDelete
  4. laura k13 April 2006 at 19:28

    Between that and being hated in 47 different countries, who could resist?

    ReplyDelete
  5. iwant13 April 2006 at 20:57

    I have a friend that's Iranian and only been here for a few years now and got his Canadian Citizenship last month. I think I'd check into that again about how long a wait it is after the first 3 years. I don't think it's all that long but I may be wrong.

    ReplyDelete
  6. Wrye13 April 2006 at 23:08

    If I may...

    Your US passport will always give you an easier time crossing that border to visit family stateside. That's something not even a Canadian passport can guarantee.

    ReplyDelete
  7. laura k14 April 2006 at 04:57

    Thanks, iwant - I'll check.

    Your US passport will always give you an easier time crossing that border to visit family stateside.

    That will be something to weigh in the mix, for sure. I'm not sure I'd stay a US citizen just for that reason, but then, this is right after my bruising session with these #$%?^! tax forms.

    ReplyDelete
  8. Alex14 April 2006 at 10:45

    I checked into the three year deal for citizenship - if you have a workpermit (as I do) - you get a half day credit for every day here. So my two years has gotten me one year credit towards citizenship. Pretty sweet deal - I wish I could use Airmiles towards it.

    ReplyDelete
  9. laura k14 April 2006 at 14:28

    Are you planning on applying for citizenship?

    For Permanent Residents, it looks like the three year mark is still in effect.

    ReplyDelete

Post a Comment

Popular posts from this blog

sharia

This morning I see that Dalton McGuinty, Premier of Ontario, is banning the Muslim religious court known as sharia . This ends months of debate about whether sharia would be legal and binding in Ontario. I'm quoting at length from the story in today's Toronto Star because many US readers are likely not up on this. In a surprise announcement that caught both supporters and opponents of sharia law off guard, Premier Dalton McGuinty says he will move quickly to ban all religious arbitration in the province. McGuinty made the announcement in a telephone interview with The Canadian Press yesterday after months of debate and controversy surrounding use of Islamic sharia law in family arbitration. "I've come to the conclusion that the debate has gone on long enough," the premier told the news agency. "There will be no sharia law in Ontario. There will be no religious arbitration in Ontario. There will be one law for all Ontarians." The announcement prompted t...
Read more

can of worms

I'm opening a sticky subject here, my need to understand causing me to throw caution to the wind. It's about Alberta. Alberta vs. the rest of the Canada. The Globe And Mail runs something about Alberta's gripes every day, and I try to follow along. If it weren't for wmtc's resident Albertan , and the ensuing arguments in comments, I would've had no warning. It's not something Americans know about. As is, observing for more than a year, I have only the smallest of clues. Here's what I know. Please pardon my ignorance and oversimplification, but I have to start somewhere. The province of Alberta is rich, because it has oil. The province of Alberta is conservative, relative to the rest of Canada. Hmm. Funny how those two go together. Because of its great oil wealth, Alberta revenue helps fund services in the rest of Canada. (These are transfer payments?) Apparently many Albertans resent this. They want to keep Alberta's money in Alberta. They don't...
Read more

low confidence

I'm excited about today's no-confidence vote . Only three months after moving here, we'll get to see a government fall, a campaign, and an election, in a system very different from what we're accustomed to. Even the expression "the government will fall" strikes us as oddly dramatic and revolutionary. My sense of current Canadian politics, for what it's worth, tells me that very little will change from the upcoming election. I'd be surprised if the Liberals didn't win. So it's kind of cool to see this happening without a lot at stake. On a semi-tangential note, have I mentioned I'm completely down with "Corner Gas"? Excellent show; I love the deadpan humour. (Great website, too; check it out .) So was that really Finance Minister Ralph Goodale ragging on Brent Butt's camera last Saturday night?
Read more