US Citizen residing in Canada, working in US

trydzynski · Post by **trydzynski** » Mon Mar 13, 2006 1:35 pm

Anyone in a similiar siruation? I am a US citizen living close to Canadian border with a permanent residence in US and work exclusively in US. My wife is a Canadian citizen with a residence in Canada and works exclusively in Canada.

I understand that the tax treaty is in effect so that taxation is applied fairly but I am not yet sure if I need to file in Canada or not. I have significant residential ties to both countries. My understanding is that the rules are not black and white on this subject.

It seems from a logical perspective that, since I get no benefits of Canadian residency, I should not owe taxes. But is that how the tax treaty sees it?

nelsona · Post by **nelsona** » Mon Mar 13, 2006 3:52 pm

Since you are a US citizen working in US, it would come down to how much time you spend in canada, and how regularly you visit there.

If you do not spend more than 183 days a year in Canada, you are a deemed non-resident, and thus do not have to report non-Cdn income to Canada. Unless your personally own revenue-generating property in canada, you shouldn't have to file a Cdn return.

Your spouse should indicate your world income on page 1 of her Cdn return, to avoid incorrectly receiving any undue credit (GST,etc).

As you may know, you should probably be filing a joint 1040 return in US with your spouse, excluding her Cdn wages by form 2555. this usually yeilds the lowest US taxrate on your income, and does not add any tax on her income.

trydzynski · Post by **trydzynski** » Mon Mar 13, 2006 10:44 pm

Would the situation be different if I obtained landed immigrant status in Canada, even if I spent less than half the yeart in Canada?

nelsona · Post by **nelsona** » Tue Mar 14, 2006 12:29 pm

Not really. Your US citizenship is the tipping point. Only getting Cdn citizenship (or spending more and more time in Canada) would tip you into Cdn taxation of world income.