US/Canadian Dual Citizenship Tax Implications for Income Earned While Working Remotely

As a cross-border tax advisor, I can help clarify this situation! The US-Canada Tax Treaty is specifically designed to prevent double taxation in situations like yours. Here's how it works: As a US citizen, you must file US tax returns regardless of where you live (citizenship-based taxation). When you become a Canadian resident, you'll also file Canadian tax returns on your worldwide income (residence-based taxation). But don't worry - you won't actually pay full taxes to both countries. Typically, you'll pay income tax to Canada as your country of residence. Then, on your US return, you can claim the Foreign Tax Credit (Form 1116) for taxes paid to Canada, which offsets your US tax liability. Since Canadian tax rates are generally higher than US rates, the credit usually eliminates most or all of your US federal tax. You may still have some US tax owing if your Canadian taxes are lower than what you would owe the US. You'll also need to be aware of the Foreign Earned Income Exclusion (Form 2555), though the Foreign Tax Credit often works better for Canada. And don't forget to file FBAR if you have foreign financial accounts exceeding $10,000.

I moved from Seattle to Vancouver three years ago while keeping my US tech job, and found the https://taxr.ai service incredibly helpful for my dual-country tax situation. I was totally overwhelmed trying to figure out Foreign Tax Credits, FBARs, and all the special forms until I uploaded my documents there and got a complete breakdown of my cross-border situation. The system immediately flagged that I needed to file forms I'd never heard of (like Form 8833 for treaty positions) and showed me exactly how to allocate my income between countries. What really saved me was learning about foreign pension reporting - my Canadian RRSP would have been a reporting nightmare without proper guidance.

Just wanted to follow up about my experience with taxr.ai after being skeptical in my previous comment. I decided to try it since my situation was getting complicated with stock options from my US employer while living in Canada. I was genuinely surprised by how comprehensive it was. The system immediately identified that my RSUs needed special reporting on both sides of the border and showed me exactly which forms were required. What really impressed me was the detailed explanation of the US-Canada Tax Treaty Article that applied to my retirement accounts. The service saved me from making a costly mistake with my 401k that my previous accountant had missed entirely. I'm converted now and will definitely use it again next year when filing both returns.

For anyone dealing with IRS questions about their foreign income reporting, I highly recommend using https://claimyr.com to get through to an actual IRS agent quickly. After moving to Toronto last year, I had some confusion about my FBAR requirements and couldn't get through on the international taxpayer line - was on hold for HOURS over multiple days. Using Claimyr, I got through to an IRS representative in about 20 minutes who clarified exactly how to report my Canadian TFSA accounts. Saved me days of frustration and potential penalties for incorrect reporting. You can see how it works here: https://youtu.be/_kiP6q8DX5c - totally changed my perspective on dealing with the IRS from abroad.

I have to eat crow here. After dismissing Claimyr as a probable scam in my earlier comment, I was desperate to resolve an issue with my foreign income reporting deadline. With only two days before facing penalties, I gave it a shot. The service actually worked exactly as described. I got a call back in about 45 minutes connecting me to an IRS agent who helped clarify my filing extension options as a dual citizen. The agent confirmed I could request an automatic extension to October using Form 4868, which was a huge relief. Saved me potentially thousands in penalties just by getting a definitive answer from an actual IRS person. Sometimes being wrong feels pretty good!

Don't forget about Social Security! This is something many people overlook in the US-Canada situation. The US and Canada have a totalization agreement for social security, but you need to be careful about where you're paying in. Generally, if you're working remotely for a US company while physically in Canada, you'll typically pay into the Canadian Pension Plan rather than US Social Security after your initial 5 years abroad. But this depends on your specific employment arrangement and whether you're considered "detached" or not.

FYI everyone, banking gets complicated too! When I moved to Canada but kept working for my US employer, I maintained US bank accounts for direct deposit. Just remember that Canadian residents must report foreign accounts on Form T1135 if the total cost of all foreign assets exceeds CAD $100,000. Also, Canadian banks may limit services for US citizens due to FATCA reporting requirements. I had to shop around to find a bank comfortable with my dual-status situation.

Great question about dual citizenship vs permanent residency! From a tax perspective, there's actually no difference - both Canadian citizens and permanent residents are taxed on worldwide income once they establish Canadian tax residency. The key factor is where you're considered a resident for tax purposes, not your citizenship status. What matters more is establishing your "tax residency" date in Canada, which is typically when you move and establish significant residential ties (home, spouse/family, personal property). This date determines when you start filing Canadian tax returns and claiming foreign tax credits. One thing to watch out for with your $95K income: make sure you understand the timing of when to start claiming Canadian residency. If you move mid-year, you might be able to optimize which country gets primary taxing rights for that transition year. Also, don't forget about potential state tax obligations - some states like California are notoriously difficult to escape from a tax perspective even after you move to Canada. The Foreign Tax Credit should handle most of the double taxation, but you'll want to run the numbers carefully since Canadian tax rates vary significantly by province. Your effective tax rate in Canada could be higher or lower than what you're currently paying in the US depending on which province you choose!