US Citizen employed in US with PR in Canada

berdog88 · Post by **berdog88** » Tue Oct 13, 2009 12:37 pm

I moved to Canada this year, 2009 but my employer is based in the US. My employer is still paying me via US payroll (ie, US dollars, US tax deductions, etc). I married a Canadian citizen and have a daughter who is a dual citizen, I have PR status. My question is mainly centered around my taxes for this year. All of my earnings are US based (salary and bank accounts). How should I handle my personal taxes for 2009? My employer plans to switch me to the Canadian payroll begining in 2010. Is it okay for me just file taxes in the US or do I have to file certain forms in Canada also? Thank you for your help.

nelsona · Post by **nelsona** » Tue Oct 13, 2009 12:48 pm

Even though your employer has delayed putting you on Cdn payroll, you are subject to Cdn taxation on your world income from the day you moved to canada. You are a reurning resident, so follow that guide from CRA.

The wages earned while in canada will be considered Cdn sourced, so no foreign tax credit will be available on your Cdn return.

Carson · Post by **Carson** » Fri Oct 16, 2009 10:03 am

I have to echo Nelson's advice.

If you are performing services "in Canada" for your US employer, it is considered Canadian employment income. You should switch to Canadian payroll immediately. This of course may cause some complications for your employer with regards to taxation in Canada, but that's not your issue.

nelsona · Post by **nelsona** » Fri Oct 16, 2009 12:05 pm

... and they don't seem to mind this for next year so it shouldn't be a problem now.

berdog88 · Post by **berdog88** » Fri Oct 16, 2009 1:47 pm

So does that mean I will be double taxed here? In the sense that my salary is currently being deducted US taxes...will I then have to pay Canadian taxes also?

nelsona · Post by **nelsona** » Fri Oct 16, 2009 2:10 pm

Your Cdn-based income will be taxed in Canada.

All your income will be taxed in US, since you are a US citizen, and you will get credit on your 1040 for the tax you paid in Canada, by form 1116.

In future years, all your income will be taxed both in Canada and US, and you will either exclude your Cdn wages from your 1040 (using 2555) and/or take credit for Cdn tax paid using 1116.