US taxes, Canadian PR

[trackgal1]

Hello,

Wondering if anyone is familiar with filling US taxes while residing in Canada as a PR. I plan to keep dual citizenship, and I understand that I can fill out a form with my taxes for foreign paid taxes and since Canadian taxes are higher than the US taxes, I likely won't owe anything to the US. However, I've heard rumors of if you have more than $10,000 in a foreign bank as a US citizen you may have to pay extra taxes on that and such. Wondering if anyone can enlighten me or share their experience. I'd also like to start putting away into retirement funds and I'm not quite sure where to start. Any suggestions would be welcome.

 

[northern sunshine]

I don't know if it's taxed differently, but they're probably referring to a form called the FBAR, which is an additional form that you need to submit around the same time as taxes are due in the US when you have $10k or more in a foreign bank account.

With regards to retirement accounts, I was advised NOT to open a TFSA, as the US will tax you on it, making it totally pointless. You can invest in an RRSP, though, as it's formally recognized. I'm hoping that the NAFTA talks will make having a TFSA an option for US Citizens living in Canada in the near future.

I got a lot of advice from some people in a reddit thread a few weeks ago-- here's some of what they said:

You might find the 1040Abroad blog helpful for figuring out how to navigate your American taxes. You can buy the author's ebook on Amazon for $10, which I definitely found worthwhile for planning my own taxes.

If you currently use any of the free filing service for American taxes, you should be aware that they likely won't serve you well when abroad. I couldn't find any who would allow me to file Form 2555, which needs to be filed if you have foreign income. But since my taxes are simple I was able to get away with printing and manually filling out the forms and sending them to the IRS via registered mail. A cross-border specialist is important if you're looking to use a CPA instead. Thankfully us expats get an automatic extension to June 30 to file taxes.

Also bear in mind you will need to file a yearly FBAR, separate from your taxes but due around the same time, for any foreign accounts worth more than $10,000 USD.

Make sure you claim your ROTH to the CRA by the June after you move here and I believe you can withdraw tax free upon retirement, but can no longer contribute to it.

Keep track of your maximum CA bank account balances for the FBAR filing along with your US taxes.

I brought a copy of my equivax credit report (800+) from the states and a letter from my banker When I went to open bank accounts; That got me an Unsecured BMO credit card with $5000 limit and great rate on my mortgage.

1. For Canada taxes, if you ever get above $100K CAD in assets (not including 401K), you'll need to file a T1135; kinda similar to the FBAR.
   
   
2. If you're having trouble opening a Canadian bank account or credit card, you can ask them to check your US credit score. (Went through that for a mortgage pre-approval.)