Taxation of Canadians Living and/or Working in the United States*
* Copyright ©2008 by Mark T. Serbinski, C.A., C.P.A.. Mr. Serbinski is a Chartered Accountant licensed in Ontario and a partner in the firm of
Serbinski Partners PC, Chartered Accountants, Toronto, Ontario as well as a Certified Public Accountant licensed in Illinois and a principal in the firm of Mark T. Serbinski , Certified Public Accountants in
Chicago, Illinois. Admitted to practice before the Internal Revenue Service, Mr. Serbinski practices international tax and acts as a consultant to the profession.
1.01 Introduction:
While Canada imposes income taxes on residents of Canada, the income tax system in the United States is based on either citizenship or
residence. Therefore, Canadians who live or work in the United States may find themselves subject to taxation on their world income in both Canada and the U.S. The income tax system in the U.S. is
administered by the Internal Revenue Service, and is considered one of the most complex systems of taxation in the world. While some similar regulations exist, many legal reporting, compliance and filing
requirements in the U.S. are considerably different from Canadian rules, and, generally, more paperwork is required to achieve objectives similar to those Canadians are familiar with.
Even though a person may be exempt from income taxation in the U.S. as a result of provisions contained in the
Canada-United States Income Tax Convention, 1980 and the 1995 Protocol (Treaty) or other exemptions, in many cases an income tax return or other forms may still have to be filed to establish the exemption being
claimed. Failure to file U.S. income tax forms and elections in an accurate and prescribed manner and on a timely basis may result in a denial of the exemption being sought (therefore possibly resulting in
double taxation if the person is also taxable in Canada), denial of otherwise deductible expenses, interest, and penalties for inaccurate, incomplete or non filed forms or returns. Therefore, in situations
where a Canadian intends to live or work in the U.S., obtain any U.S. visa, conduct a U.S. business, own U.S. investments or real estate, or even vacation in the U.S. for extended periods, experienced tax advisors
should be consulted prior to the commencement of U.S. activities.
The sections which follow are intended to provide a very brief summary only of some of the income tax topics relevant to
Canadians in the U.S. and do not constitute a complete analysis of the tax law and planning opportunities available. Accordingly, competent international tax advice should be sought prior to acting on any of
the information contained herein.
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