Im a current resident of Canada and a citizen of Canada and the USA. For my US taxes I file foreign tax credits to offset any US taxes owed on my foreign income.
Question:
If I was to become a dual resident of the USA and Canada how will this affect my tax obligations?
Why I am asking:
I am applying for state ID to open a bank account in Michigan which requires state ID. This makes me question how this would affect my residency status and how it will affect my tax obligations.
Bonus Question:
I'll be earning some US source income (Bank interest / dividends). Would I be able conversely offset Canadian taxes owed by claiming foreign tax credits paid to the IRS? Canadian taxes are higher so Ill effectively be paying Canadian taxes instead of US taxes plus Canadian taxes.
Double-residency [Canada - USA]
Moderator: Mark T Serbinski CA CPA
There is no such thing as a dul resident of Canada and the US, but, essemtilly, if you live in Canada nad are a US citizen, you already are "dual" in the sense that you report ALL income , to BOTH countries, every year.
You would not be establishing MI residence just by getting a a license (you should not get a DL from a place where you do not live. So, what basis are you going to apply for state ID, without an address.
I'm not so sure that you need a DL to open a bank account anywhere in US,. Your SSN and US citizenship should suffice.
As to your other question. The US tax on bank interest cannot be clamed on your CDn return. Only the US tax on dividends would be allowed. It is the IRS that would allow you to reduce the US tax on that interest to zero, using a "re-sourced by treaty" 1116.
You would not be establishing MI residence just by getting a a license (you should not get a DL from a place where you do not live. So, what basis are you going to apply for state ID, without an address.
I'm not so sure that you need a DL to open a bank account anywhere in US,. Your SSN and US citizenship should suffice.
As to your other question. The US tax on bank interest cannot be clamed on your CDn return. Only the US tax on dividends would be allowed. It is the IRS that would allow you to reduce the US tax on that interest to zero, using a "re-sourced by treaty" 1116.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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speer
>You would not be establishing MI residence just by getting a a license (you should not get a DL from a place where you do not live. So, what basis are you going to apply for state ID, without an address.
I have the available doucments to be legible for State ID as following the chart here: http://www.michigan.gov/documents/sos/A ... 2146_7.pdf
>I'm not so sure that you need a DL to open a bank account anywhere in US,. Your SSN and US citizenship should suffice.
You are right Nelsona, it should not be an issue but I've been declined from a few branches in person by ill informed employees. With a state ID there should be no issue and it would open my ability to open these accounts online.
>As to your other question. The US tax on bank interest cannot be claimed on your CDn return. Only the US tax on dividends would be allowed. It is the IRS that would allow you to reduce the US tax on that interest to zero, using a "re-sourced by treaty" 1116.
Foreign taxed interest income cannot be claimed on my CDN return? So I would be paying tax in full to the IRS and the CRA?
Can you expand more on the last sentence on how I can best handle the situation? The bank interest are bank promotions for signing up with different US banks.
I have the available doucments to be legible for State ID as following the chart here: http://www.michigan.gov/documents/sos/A ... 2146_7.pdf
>I'm not so sure that you need a DL to open a bank account anywhere in US,. Your SSN and US citizenship should suffice.
You are right Nelsona, it should not be an issue but I've been declined from a few branches in person by ill informed employees. With a state ID there should be no issue and it would open my ability to open these accounts online.
>As to your other question. The US tax on bank interest cannot be claimed on your CDn return. Only the US tax on dividends would be allowed. It is the IRS that would allow you to reduce the US tax on that interest to zero, using a "re-sourced by treaty" 1116.
Foreign taxed interest income cannot be claimed on my CDN return? So I would be paying tax in full to the IRS and the CRA?
Can you expand more on the last sentence on how I can best handle the situation? The bank interest are bank promotions for signing up with different US banks.
Canada does not give credit for taxes paid to US only due to the fact that you are a US citizen. Bank interest is not taxable to non-residents of US, so you could not claim thios tax on your Cdn return. You would get relief by the "re-source" method, which I will not go into here. but have explained elsewhere,
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best