Tax obligations of U.S. citizen retiring to Canada

[Tam Shendler]

I am a U.S. citizen, have reached retirement age, and am interested in moving to Canada to spend my retirement years there. I could work in Canada, but my dividend and investment income should be enough to sustain me, albeit on a modest level.

This is my understanding from what I've read, and please correct any part of what follows that isn't true:

* As a U.S. citizen, I must continue to pay U.S. taxes on my world income (e.g., the dividend and investment income)

* If I become a Canadian permanent resident, I will also have a Canadian tax bill on my world income

but

* I can deduct the U.S. taxes I pay from my Canadian tax bill.

This last item is especially important. If I were hit with a double tax bill -- if I were to have to pay taxes on dividend/investment income in the U.S. and in Canada -- that would be enough to persuade me to stay within the fifty states.

 

[Leon]

There's a tax treaty so you shouldn't have to pay double taxes. I think you should talk to an accountant who specializes in US/Canada taxation.

I think your biggest hurdle would be getting PR. You have to figure out how you want to apply. There is no application class for retirees. There is another member of this board, NeedleArtist, who had the same idea. In the end, he decided to go back to school so he entered Canada on a student visa. If you complete 2 year studies and then get a work permit and work for a year, you can apply for your PR under Canadian experience class. In some provinces, you can apply faster, after 2 year studies with a job offer under their provincial nominee program.

If you were to get a job and a work permit, you could also apply for PR through provincial nominee program with employer support or under Canadian experience class after 2 years of work.

If you do not get PR, you can only stay as a tourist for up to 6 months at a time, you would not qualify for health care and the immigration officers could at any time deny you entry to come back to Canada if they think you are spending too much time.

 

[Tam Shendler]

Thanks very much for the reply, Leon. I pay for my own health care plan costs now and would expect to do the same in Canada ... but would not want to move in only six months!

I could return to school; that is an option for me.

Thank you again for the advice.