Author Topic: US expat in CA double taxation and how to avoid  (Read 211 times)

HeadingNorth

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US expat in CA double taxation and how to avoid
« on: March 26, 2018, 04:09:54 PM »
Hi, I'm a US and CA citizen living full time in Canada. 

I file a US tax returns yearly and since I live in CA, I have to file a return here also.

All of my income in derived from 3 US sources, A) Social Security 21K, B) Interest and dividends 23K  and C) IRA distributions 21K

My total income in the US is around 65k USD  and my taxes are about 6k.

All my US income and tax paid is entered in a Foreign slip and after taking in account the exchange rate, that translates to about 84K in Income and 8k tax credit.

That still leaves me having to pay and additional 7K in Canada.

It seems to me that I'm paying twice for the same income.

Any help would be appreciated.

Thanks

HN

PS Foreign tax credit (form 1116) in the US is of no help as I have 0 income in CA.

Phil Hogan, CPA, CA, CPA (Colorado)

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Re: US expat in CA double taxation and how to avoid
« Reply #1 on: May 24, 2018, 08:42:51 PM »
Hi HN

Sorry for the delayed response.

I would have to take a look at the returns to be sure, however, let me give you some guidance:

Your social security will only be taxable in Canada and not reportable in the US (you will need to file 8833 treaty exemptions)

Assuming your US tax rate is below 15% and your rate in Canada is over 15% you'll get credit in Canada for all the US tax you pay on your IRA distribution and dividends. US interest will be tax free in the US and taxable in Canada (you'll need a resourced 1116 for the interest).

It's not odd that you are also paying Canadian tax, you do want to ensure however that you're getting credit for all the US tax paid on your Canadian tax return. Is this the case?

Also, note that your US investment accounts should be reported in detail on your T1135 (not the IRA) and the non-IRA investment account will likely need to come to Canada as the US broker is not likely licenced to handle Canadian residents.

Phil
Phil Hogan, CPA, CA, CPA (Colorado)
250-381-2400
Hutcheson.ca
phil@hutcheson.ca
* The information contained in these posts should not be construed as professional advice and is for informational purposes only.