Hello, I'm glad to have found this forum as it seems to be down my alley.
Scenario: I am the sole owner of a business that I just incorporated in January. I'm at the point where I'm trying to decide whether to pay myself in salary or dividends. Normally, I would choose dividends as I don't have to deal with payroll timewasting. I also don't care about CPP, and the extra RRSP room isn't super exciting. Dividends are very clean by comparison, especially as a one-shareholder corporation.
Unfortunately, I am now coming to grips with the extreme-burden of being a dual-citizen. In some ways, I wish I never got a Social Security Number (I've never even lived down south). Now, as I understand normal salaried income from Canada as a US Citizen is fine, as they don't look at anything under ~$100,000, and even for salary more than that the foreign tax credits from Canada would probably waive any fees from the IRS. But if I took money from my corporation as a dividend, would the same principles apply?
Basically: Does Uncle Sam want a cut of my non-eligible Canadian dividends? On top of what Trudeau is taking? If so, salary may be a better option as a dual-citizen. Let me know.
Taxation of Canadian Dividends as a US Citizen
Moderator: Mark T Serbinski CA CPA
The IRS "fees" you speak about are US federal taxes.
And whether or not you had an SSN, as a citizen you were always liable to report world income to US, if that is any consolation. Unlike Canada, you must file a US return even if you owe no taxes, if you make as little as US$5,000.
And you may alsdo have US corporate tax issues now too. you will need to see a cross-border specialist.
Wages:
They are reported to IRS, and yes you can then exclude them upto a limit when calculating your tax in US. You still have to file, and report these wages (and all other income) to get the exclusion.
Dividends:
They too are reportable along with all your other income, but you cannot exclude the income. Instead you can take credit for the Cdn tax you owe on all your income against the US tax on all your income. Dividend income may or may not have favourable tax treatment in US, but, in any case, the Cdn tax you pay would remove all US tax burden.
Almost all US citizens living in Canada pay no tax to IRS. So how you decide to derive your income will not matter from a US taxation point of view.
What is bothersome however (and is the reason many USC's renounce their citizenship) is the foreign account and investment reporting rules (become familiar with FBAR, FATCA, and PFIC) which make your US tax filings VERY complex (thus expensive) and fraught with possible mis-filing penalties.
And whether or not you had an SSN, as a citizen you were always liable to report world income to US, if that is any consolation. Unlike Canada, you must file a US return even if you owe no taxes, if you make as little as US$5,000.
And you may alsdo have US corporate tax issues now too. you will need to see a cross-border specialist.
Wages:
They are reported to IRS, and yes you can then exclude them upto a limit when calculating your tax in US. You still have to file, and report these wages (and all other income) to get the exclusion.
Dividends:
They too are reportable along with all your other income, but you cannot exclude the income. Instead you can take credit for the Cdn tax you owe on all your income against the US tax on all your income. Dividend income may or may not have favourable tax treatment in US, but, in any case, the Cdn tax you pay would remove all US tax burden.
Almost all US citizens living in Canada pay no tax to IRS. So how you decide to derive your income will not matter from a US taxation point of view.
What is bothersome however (and is the reason many USC's renounce their citizenship) is the foreign account and investment reporting rules (become familiar with FBAR, FATCA, and PFIC) which make your US tax filings VERY complex (thus expensive) and fraught with possible mis-filing penalties.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks for your reply. I am going through a Streamlined Filing Procedure now, and getting caught up to date with my back returns being prepared by an accountant familiar with US taxes. I know about FATCA and FBARs too.
Going forward I'm sure I can file my 2017 and beyond US personal taxes by myself. The corporation started in 2018 will cause some more difficulty. I will file appropriately when the time comes. Right now I just have to make a business decision on whether to pay salary or dividend, because that's happening right now.
It sounds like I wouldn't have an extra tax burden from Uncle Sam by paying myself dividends? Maybe I'll give that a try in the first year, so I don't have to worry about payroll complications and deductions from CPP and whatever in 2018.
Going forward I'm sure I can file my 2017 and beyond US personal taxes by myself. The corporation started in 2018 will cause some more difficulty. I will file appropriately when the time comes. Right now I just have to make a business decision on whether to pay salary or dividend, because that's happening right now.
It sounds like I wouldn't have an extra tax burden from Uncle Sam by paying myself dividends? Maybe I'll give that a try in the first year, so I don't have to worry about payroll complications and deductions from CPP and whatever in 2018.