U.S. Citizens Residing in Canada
U.S. citizens residing in Canada must file U.S. and Canadian income tax returns every year. The U.S. return is the same return used by residents living in the United States (i.e. Form 1040). Many U.S. citizens (and their Canadian tax practitioners) are unaware of the pitfalls and requirements of being a U.S. citizen living in Canada. In order to complete the U.S. return correctly, and quite often the Canadian return as well, a detailed understanding of the Canada-U.S. Tax Treaty is often required.
There are an ever increasing number of situations where a U.S. citizen may undertake a strategy to minimize Canadian taxes without fully considering the U.S. tax consequences of such a plan. In some cases, the Canadian taxes saved or deferred can be wiped out by an increase in U.S. taxes. Areas of concern can include:
U.S. INCOME TAX RETURNS: