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US Taxes
If you are a U.S. citizen, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad.
Your income, filing status, and age generally determine whether you must file an income tax return. Generally, you must file a return every year if your gross income from worldwide sources is at least the amount shown for your filing status in the following table.
| Filing Status |
Amount |
| Single |
$7,800 |
| 65 or older |
$8,950 |
| Head of household |
$10,050 |
| 65 or older |
$11,200 |
| Qualifying widow(er) |
$12,550 |
| 65 or older |
$13,500 |
| Married filing jointly |
$15,600 |
| Not living with spouse at end of year |
$3,050 |
| One spouse 65 or older |
$16,550 |
| Both spouses 65 or older |
$17,500 |
| Married filing separately |
$3,050 |
In nutshell if you are a U.S. citizen resident in Canada, you must file two returns each year, declaring your world-wide income on each: a Canadian return because you live here, and a U.S. return because you are a U.S. citizen. But that does not mean double taxation. according to tax treaties between Canada & US there are certain deductions and credits which will save you from double taxation. Softron can help you in preparing both the returns so that you will pay the least taxes. Here are some of the frequently asked questions.
Frequently Asked Questions
I am a U.S. citizen working for a U.S. firm in Canada. Is any part of my wages or expenses tax deductible?
U.S. citizens are taxed on their worldwide income, no matter where they work. Some taxpayers may qualify for the foreign earned income exclusion and some other deductions, if their principal residence is in Canada and they lived in Canada for at least 330 days. If the taxpayer is temporarily away from his or her principal residence in the United States on business (less than a year), the taxpayer may qualify to deduct away from home expenses (for travel, meals, and lodging ) but would not qualify for the foreign earned income exclusion.
I am a U.S. citizen living and working in Canada. Can I have a tax credit on my U.S. taxes for the taxes I pay to the foreign country?
The foreign tax credit is intended to relieve U.S. taxpayers of the double tax burden when their Canadian income is taxed by both the United States and Canada.
Generally, only income taxes paid in Canada qualify for the foreign tax credit. You can choose to take the amount of any qualified foreign taxes paid during the year as a foreign tax credit or as an itemized deduction.
To choose the foreign tax credit you must generally complete Form 1116 (Foreign Tax Credit) and attach it to your Form 1040.
You may not take either a credit or a deduction for taxes paid on income you exclude under the foreign earned income exclusion or the foreign housing exclusion. There is no double taxation in this situation because the income is not subject to U.S. tax.
I am an American citizen residing in Canada. I receive U. S. social security benefits. Do I have to pay tax on it to both countries?
Under Canada - U.S. tax treaty, the Canadian and US governments agreed to a residence-based system under which social security benefits are taxable exclusively in the country where the recipient resides. As a result, there is no tax on US Social Security benefits in US for you.
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