After spending significant time vacationing in the US, Canadian citizens who enjoy a cross border lifestyle may choose to move to the US permanently. Eventually, they may even become US citizens. There are also more than one million US citizens who are already residents and citizens of Canada. Dual citizens of the US and Canada face complicated tax compliance issues and are subject to tax laws on both sides of the border. Tax Partners has specialized expertise assisting dual citizens to determine their tax obligations in the US and Canada.
While dual citizenship is positive from an immigration perspective, due to an important difference between the US and Canadian tax systems, dual citizenship can lead to double taxation: the US taxes its citizens regardless of where they are domiciled while Canada generally taxes its citizens based on residency. This means that US citizens living in Canada are subject to the US tax regime, but if they are determined to be Canadian residents for tax purposes, they will also be subject to the Canadian tax act. The Canada-US Tax Treaty may provide some relief in certain circumstances. The Tax Partners team can help dual citizens understand the tax acts and treaty between Canada and the US in order to ensure that they are tax-compliant.
Our team also works with Canadians who become US citizens and residents. We help these clients familiarize themselves with issues such as Canadian departure tax and the possible obligation to pay income tax to Canada on Canadian-source income earned after departure.
The Tax Partners team regularly assists dual citizens with a variety of other issues as well, including the tax-efficient sale of significant assets, such as businesses and principal residences; succession planning for intergenerational wealth transfer for US citizens in Canada; the preparation of wills, trusts and other estate planning documents for dual citizens to ensure optimal tax treatment and settlement of cross border estates; and the tax implications and procedures for renouncing US citizenship for those dual citizens who choose to expatriate.