Dual Citizen, Need to File Taxes in Both Countries? (US/Canada)

March 17, 2024 7:42 PM

My spouse was born and raised in the US, as a US citizen. We just legally determined that they are also a Canadian citizen. Do they need to file taxes in both countries?

Last year they got a Canadian passport and a SIN (Canadian version of the US SSN), but we still live in the US and file US taxes. I think they need to file taxes in Canada in addition to the US.

Does anyone have a recommendation for the type of an appropriate tax professional to ask about this? Or any personal reference of such a professional?

Thank you.

posted by happy_cat to Law & Government (12 answers total)

The US is fairly unique in requiring US citizens abroad to file taxes even when they don't earn an income in the US. Canada doesn't require citizens to file if they are tax residents elsewhere. Always a good idea to check with a tax professional, but I'm Canadian, live abroad, haven't earned an income in Canada in 15+ years, and have not filed a tax return in that time, with the approval of my tax accountant.
posted by third word on a random page at 7:55 PM on March 17

Obviously check with a competent professional but broadly speaking yes, file both sets of taxes because Canada is going to want to know if you have any Canada-sourced income and will get grumpy if you don’t at least file (source: me, who got cornered at an airport several years after having left Canada).

Having to file is not the same as having to pay.
posted by aramaic at 7:56 PM on March 17

It is not necessary to file Canadian taxes unless you have Canadian income or a presence in Canada (property, registered savings accounts, etc). Like third world on a random page, I didn’t file Canadian taxes when I lived in the USA, along with most of my Canadian colleagues. Gary Gauvin is a reputable accountant if you need a professional opinion.
posted by shock muppet at 8:12 PM on March 17

As others have said, no countries except the US (and Eritrea) have a policy of citizenship-based taxation, unless your spouse has some financial connection to Canada, they do not need to file.
posted by nanny's striped stocking at 12:50 AM on March 18

I am a Canadian citizen and have lived abroad for many years. I only filed taxes in my country of residence. Your partner won't need to file Canadian taxes unless they have Canadian source income (like on a rental property there). The fact that they are a citizen is irrelevant.

You're thinking about this from an American perspective, where all US citizens have to file taxes every year no matter where they live. As others have pointed us, that is a quirk of the US system rather than a general rule.
posted by Chausette at 2:11 AM on March 18

Another Canadian who has lived abroad here, and I'm agreeing with (almost) everybody else here that there's no need to file Canadian taxes in your situation. I lived elsewhere for 15+ years, moved back a couple years ago and started filing taxes again, and I had no troubles for not having filed while I was out of the country.
posted by number9dream at 6:25 AM on March 18

There is a way to get the CRA to sign off on your residency status, so that you have an official note on your file that you are not in Canada and thus avoid any questions about why you weren't filing if/when one eventually moves back to Canada.

Taxation for Canadians travelling, living or working outside Canada.

But yes in general the consensus has it, US is weird, Canada does not expect you to file just for being Canadian, only if you have Canadian-sourced income.
posted by tiamat at 6:29 AM on March 18

Just for future reference, in case you ever move back the other way, while the US does make US citizens residing full-time in other countries file a US tax return, they have various tax treaties in place with other countries that allow exemptions/caps on taxes on various categories of income.

Most commonly, these allow those folks to avoid paying double taxes on retirement incomes. Other categories of income like rental income may have flat rates or caps.

It can be different depending on the country and I've been reading up on those of other countries more pertinent to me, but here is the link to the US tax treaties with Canada.
posted by DirtyOldTown at 7:17 AM on March 18

Just for future reference, in case you ever move back the other way, while the US does make US citizens residing full-time in other countries file a US tax return, they have various tax treaties in place with other countries that allow exemptions/caps on taxes on various categories of income.

Not to hijack the thread, but if you are considering moving to Canada someday, I'd recommend doing a lot of research and consulting with a knowledgeable cross-border accountant about how to plan for retirement abroad in an IRS-compliant way. From what I understand, Canada is one of the few countries where it is feasible for a US citizen to have a somewhat normal financial life... but yeah, if I had fully known what a hell this issue would make my life and my non-US spouse's life, I would probably have made some very different choices.
posted by nanny's striped stocking at 8:11 AM on March 18

Thank you all so much, you have answered my question and correctly guessed possible next questions. I appreciate it.
posted by happy_cat at 4:21 PM on March 18

@shock muppet, I will check out Gary Gauvin. Thank you for the link.
posted by happy_cat at 4:22 PM on March 18

@nanny's striped stocking, thank you. We both have always lived in the US and are considering moving to Canada, sooner or later. I will definitely want to prepare regarding income tax, retirement accounts, Social Security, Canada pension, access to medical care, and even whether or not there's a way to buy a house (if we can afford it) with no Canadian credit history and possibly no jobs. That's a lot to weed through, but I am worried about exactly the hell you went through. If you have any references for professionals that eventually helped you through the above subjects, I would welcome their info. In any case, thank you for your comment!
posted by happy_cat at 4:27 PM on March 18