Working for US Company after "landing" in Canada as a PR - How do taxes work?

[barch88]

I'm a US Citizen and will be moving to Canada with my wife as soon as our application is processed, hopefully within the next 8 months or so. I have a job right across the border in the USA and I plan to continue to work for my US company and commute, at least until I can find a job/career in Canada.

I was told that I would only have to pay taxes to one country, and since I'm working in the USA, in my case this would be paying US taxes. How would I get the proper print-out for the Canadian Revenue Service confirming I've paid taxes, so they don't request me to pay twice. This won't be until 2018 when I go to file my taxes but I figure it'll be smart to get a head start on this.

 

[scylla]

You'll file taxes in both countries. However both countries will consider any taxes you have already paid to the other - so that will avoid double-taxation. If you file US taxes first, you'll declare the taxes you've paid to the US in your Canadian tax return. Generally speaking, taxes in Canada tend to be higher in the US. So if you pay taxes to the US - you may still have to pay some amount to Canada. My husband file his Canadian taxes first and then never has to pay anything from a US tax perspective (since his US taxes are lower than his Canadian).

 

[barch88]

You'll file taxes in both countries. However both countries will consider any taxes you have already paid to the other - so that will avoid double-taxation. If you file US taxes first, you'll declare the taxes you've paid to the US in your Canadian tax return. Generally speaking, taxes in Canada tend to be higher in the US. So if you pay taxes to the US - you may still have to pay some amount to Canada. My husband file his Canadian taxes first and then never has to pay anything from a US tax perspective (since his US taxes are lower than his Canadian).

thanks! This doesn't seem too bad. What happens if I find a job in Canada, do I still have to file taxes in the US?

 

[zardoz]

thanks! This doesn't seem too bad. What happens if I find a job in Canada, do I still have to file taxes in the US?

As a US citizen, you have to file taxes regardless of where you are or work. For this reason, some people are very keen to renounce US citizenship as soon as they can.

 

[747-captain]

thanks! This doesn't seem too bad. What happens if I find a job in Canada, do I still have to file taxes in the US?

As pointed out by zardoz, being a US citizen you are still obligated to pay taxes on your worldwide income. However keep in mind that the first approximately US$100,000 of worldwide income, not earned in the US, when you're not resident in the US, is exempt. So if you earned say $150,000, you owe taxes only on $50,000 (and the marginal tax rates will apply as if that was the only amount you earned)

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

In other words, while you will pay taxes as usual to Canada, you will have to file your US taxes, but in effect won't pay anything to the US, because of the US-Canada tax treaty that prevents double taxation, since the taxes you will owe on the $50,000 will be much lower than the taxes you already paid Canada on the entire $150,000.