We are in the final stages (interviews in a month) and my husband raises the question about the what ifs - meaning what if he is offered an outstanding job opportunity back in Canada (he is in the entertainment industry so there is the potential), and it would mean only if he was making BIG $$ ($500K+). As American citizens we would be taxed on our "world income". So after paying nearly 50% of our income to the Canadian Government, how would the US government figure out how much we would owe to the US? If we were to net $250,000 in Canada, would the US account for what we paid already?
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One last question about ever moving back to the "old" country.....and taxes.
- Thread starter easybay
- Start date
sanjoseaug20
Registered Users (C)
You can take credit for taxes paid in another country ... as foreign tax credit ... form 1116.
You can exclude some income (range of 92K) from taxes if you are staying predominantly in the other country ... as foreign earned income exclusion.
You can not take both benefits, but choose one of these to reduce your taxes.
Besides income, there are housing and other exclusions available which can be applied before calculating US taxes.
I personally think you will owe a very small amount (if any) to US government, if you were paying 50% in taxes to Canada, but exact numbers will depend on how the income and taxes are categorized and whether you have other income besides "wages". Only earned income such as "wages" is excludable under foreign earned income exclusion, and interest and capital gains kind of things are not. Foreign tax credit might give a better deal.
How would the US government figure out ... you file the form, and you calculate the numbers. They will just rubber-stamp it, revise your calculations or audit it in very rare cases.
You can exclude some income (range of 92K) from taxes if you are staying predominantly in the other country ... as foreign earned income exclusion.
You can not take both benefits, but choose one of these to reduce your taxes.
Besides income, there are housing and other exclusions available which can be applied before calculating US taxes.
I personally think you will owe a very small amount (if any) to US government, if you were paying 50% in taxes to Canada, but exact numbers will depend on how the income and taxes are categorized and whether you have other income besides "wages". Only earned income such as "wages" is excludable under foreign earned income exclusion, and interest and capital gains kind of things are not. Foreign tax credit might give a better deal.
How would the US government figure out ... you file the form, and you calculate the numbers. They will just rubber-stamp it, revise your calculations or audit it in very rare cases.
TheRealCanadian
Volunteer Moderator
It's almost impossible for a US citizen making over six figures in Canada to have a tax liability to the IRS. Your foreign tax credits to CCRA should more than cover any US tax owed.
relating to this question, is it true that once you either choose foreign earned income exclusion or foreign tax credit, either of these alternatives, you choose it once and for all and can never change it?
i am asking because i am a naturalized USA citizen and i will move back to my native country permanently soon. at first years i will be employed but what if i found my new company and start to make big bucks later?
i am asking because i am a naturalized USA citizen and i will move back to my native country permanently soon. at first years i will be employed but what if i found my new company and start to make big bucks later?