US Citizenship Concerns

W

WonderingK

New Member
Hello! I have been eligible for nearly a year for my US Citizenship, and I have (almost) decided it is time to apply. My only concern in doing so is the *potential* for me to want to return to Canada at SOME point in the future. My parents are still there, and I don't know if I will ever be ready to say 100% for sure that I do not want to return to Canada. However, I keep reading about all the tax implications of taking dual citizenship -- or being an American citizen living in Canada... so I am afraid that becoming a US citizen and then finding myself in a situation where I needed to move back to Canada would be detrimental.

My situation is: My husband is a USC, and I am almost at year 4 of my PR. Right now, we both live and work in the U.S., and I would like to become a USC. I am a teacher, making approximately 40,000/yr, and my husband earns about the same.

So IF we were to find a necessity to move to Canada, would I be better off as a USC, or would I be better off just going to Canada, relinquishing my green card, and then doing the whole green card process again when (or if) we returned to the U.S.?

Some things I'm reading suggest that the tax implications for average earners is minimal/nonexistent, but others sound scary, talking about severe tax rates on retirement and investment income. I am young now, but would US citizenship/living in Canada put my future retirement savings/income at substantial tax risk?

Any advice or guidance, or even just other similar experiences would be a huge help! Thanks so much!
 
You will not lose your Canadian citizenship when you become a US citizen. Tax implications remain the same, there is no double taxation between US and Canada.
 
If you are a US citizen living in Canada, you still have to file US tax returns to report your worldwide income, however you can use the tax paid to Canada to eliminate most or all of the US taxation on Canadian income.
 
substantial aaessem

Jackolantern said:
If you are a US citizen living in Canada, you still have to file US tax returns to report your worldwide income, however you can use the tax paid to Canada to eliminate most or all of the US taxation on Canadian income.
Click to expand...


Thanks... That's what I thought. Doesn't sound so frightening with the exclusions and credits, but some websites make it sound absolutely terrifying and somewhat impossible! As I said, I am currently living and working in the US, but the more reading I was doing, the more scared I became about the potential impacts of US citizenship if I ever returned to Canada. I figured I better clear up my understanding before submitting my application!

Thanks again!
 
Since Canada taxes WAY more than the US does, I doubt you'd ever have an issue with owing tax to Uncle Sam if you moved back.

When my now-ex husband first came to the US, and our kids and I stayed behind for the first 2 years (trying to sell the house) - Canada tried to collect tax on his US income... they wanted $33K CDN. He didn't actually owe it to Canada - but it took me 2 years and a lot of correspondence to get it sorted out. He only made $35K US at the time (exchange on the dollar was good when converting US to CDN but not *that* good LOL). It was a nightmare to get it fixed - but I did, on my own. He came to the US on a work visa... so potential tax bugaboos aren't limited to "citizens" of one or the other (or both).

A good CPA can keep you right with both governments. And no, there is no double-taxation (at least not yet LOL!)
 
No double taxation, of course. You just pay the higher rate of the two. The burden would be not an extra pay but rather having to file the US tax returns each year (whether or not you need to pay Uncle Sam or not). The question you have to ask yourself to see if that burden is worth while is what's your main motivation for naturalizing that you don't get with a GC... Surely not the voting rights or the jury duty that makes you opt for USC.. On the other hand, if you were to go back to Canada and then want to come back to US - obtaining a new GC should be just a technical procedure for you as married to a USC. It's not like you'll have to find an employer, apply for a Labor Certificate, rely on visa quotas to adjust your status, wait 5 years to naturalize... All those hardships are "reserved" only to EB's so really tough call the Pro's Vs the Con's in your case..
 
Last edited by a moderator:
chico74 said:
No double taxation, of course. You just pay the higher rate of the two. The burden would be not an extra pay but rather having to file the US tax returns each year (whether or not you need to pay Uncle Sam or not). The question you have to ask yourself to see if that burden is worth while is what's your main motivation for naturalizing that you don't get with a GC... Surely not the voting rights or the jury duty that makes you opt for USC.. On the other hand, if you were to go back to Canada and then want to come back to US - obtaining a new GC should be just a technical procedure for you as married to a USC. It's not like you'll have to find an employer, apply for a Labor Certificate, rely on visa quotas to adjust your status, wait 5 years to naturalize... All those hardships are "reserved" only to EB's so really tough call the Pro's Vs the Con's in your case..
Click to expand...

Thanks for your replies, everyone! I guess this is where I'm hitting some uncertainty. If I remain in the US, I would like the voting rights and the sense of permanence here; and if I leave the US in the future, it would be nice not to have to worry about the costs of reapplying for residency when/if I return. However, also if I move to Canada, I wouldn't want to complicate my financial situation due to US citizenship... and it's hard to predict how all these factors will come into play! I guess I just have to think about it and decide! Thanks again for the replies and information!
 
My personal experience was the complete opposite. No pain whatsover. I left Canada for good in 2003. I had to file a Canadian tax return for the year 2003, and I was given proper credit for US taxes paid. In January 2004 I informed Revenue Canada that I no longer live in Canada and have no financial ties to Canada. I got a letter from them confirming my non-resident status and that was the end of it.

Grashoppr said:
When my now-ex husband first came to the US, and our kids and I stayed behind for the first 2 years (trying to sell the house) - Canada tried to collect tax on his US income... they wanted $33K CDN. He didn't actually owe it to Canada - but it took me 2 years and a lot of correspondence to get it sorted out.
Click to expand...
 
Triple Citizen said:
My personal experience was the complete opposite. No pain whatsover. I left Canada for good in 2003. I had to file a Canadian tax return for the year 2003, and I was given proper credit for US taxes paid. In January 2004 I informed Revenue Canada that I no longer live in Canada and have no financial ties to Canada. I got a letter from them confirming my non-resident status and that was the end of it.
Click to expand...

The difference is that Grashoppr's ex apparently had not permanently left Canada at that time -- still had a house and spouse and kids in Canada for 2 years, and was in the US on a temporary visa. Whereas you ended all major ties to Canada by 2004 (and had a US green card?), so it was much easier for you to make a convincing case that you should no longer be subject to Canadian taxation.
 
Last edited by a moderator:
Aware of that. I just wanted to let others know that Revenue Canada is not that bad...all the time :)

Jackolantern said:
The difference is that Grashoppr's ex apparently had not permanently left Canada at that time -- still had a house and spouse and kids in Canada for 2 years, and was in the US on a temporary visa.
Click to expand...
 
You must log in or register to reply here.
Top