US citizen and taxes while living (and working) abroad?

[Hnhkrk]

Since I have my CPR, I will begin working soon. I knew that the US had some F*ed up tax laws regarding citizens living abroad... and I'm hoping I could get some insight?

If I'm being taxed on my groos income by Quebec, Canada, and the US I won't end up making ANYTHING.

 

[scylla]

Since you are a US citizen, you must file a US tax return annually regardless of where you live and where you work.

Now that you will be living in Canada and filing a Canadian tax return, the US will give you credit for any taxes paid in Canada and you won't be double-taxed on income or other earnings.

File your Canadian taxes first. When you file your US taxes, report the taxes already paid to Canada.

And yes - there is one way to legally avoid filing US taxes. Renounce your US citizenship once you have Canadian citizenship. Otherwise you're stuck.

 

[Hnhkrk]

Since you are a US citizen, you must file a US tax return annually regardless of where you live and where you work.

Now that you will be living in Canada and filing a Canadian tax return, the US will give you credit for any taxes paid in Canada and you won't be double-taxed on income or other earnings.

File your Canadian taxes first. When you file your US taxes, report the taxes already paid to Canada.

And yes - there is one way to legally avoid filing US taxes. Renounce your US citizenship once you have Canadian citizenship. Otherwise you're stuck.

So let me get this straight: I pay my Canadian taxes, and then I filed my US ones. The US will then pay my back for the income taxes I paid in Canada? That's hilarious. The US knows that they'll end up paying more more than I pay them... right?

And just to make it clear: I'm only going to be working a minimum wage job on the weekends, so I won't be making much at all.

 

[margobear96]

So let me get this straight: I pay my Canadian taxes, and then I filed my US ones. The US will then pay my back for the income taxes I paid in Canada? That's hilarious. The US knows that they'll end up paying more more than I pay them... right?

And just to make it clear: I'm only going to be working a minimum wage job on the weekends, so I won't be making much at all.

Ah, if only.... No, the US will NOT be paying you back Canadian income taxes. The US taxes worldwide income, but has tax treaties in place with pretty much every country. According to the tax treaty, the Canadian taxes you paid will be credited against your US TAX BILL. The IRS will not be cutting you a check for paying a foreign government more than what you owe the US. So, basically, if you live in a higher tax jurisdiction (e.g., Canada), you file your tax forms, but will probably not actually be paying any US taxes (unless you win the lottery or something). Personally, I wouldn't renounce citizenship just to get out of filing a form. If you live in a lower tax jurisdiction (e.g., Hong Kong), you'll have to file and pay US taxes.

 

[scylla]

Ah, if only.... No, the US will NOT be paying you back Canadian income taxes. The US taxes worldwide income, but has tax treaties in place with pretty much every country. According to the tax treaty, the Canadian taxes you paid will be credited against your US TAX BILL.

Exactly. All this means is that if you owe $10K in taxes to Canada and $11K in taxes to the US - you only have to pay the US $1K since you have already paid $10K to Canada.

 

[Hnhkrk]

Okay, that makes MUCH more sense... and also sets my mind at ease. Thanks so much!