Frequently Asked Tax Questions And Answers
Keyword: Permanent Resident
13.1 Aliens and U.S. Citizens Living Abroad: Canadian & U.S. Tax Issues
United States citizens living abroad are required to file annual U.S. income tax returns and report their worldwide income if they meet the minimum income filing requirements for their filing status and age. You must contact the Canadian Government to determine whether you must file a Canadian tax return and pay Canadian taxes. For the United States income tax return, you will have options available to you to claim a foreign tax credit or exclude some or all of your foreign earned income.
References:
- Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- Publication 514, Foreign Tax Credit for Individuals
- Publication 597, Information on the United States-Canada Income Tax Treaty
You must comply with both U.S. and Canadian filing requirements. In the United States, you generally are required to file a return if you have income from the performance of personal services within the United States. However, under certain circumstances, that income may be exempt from payment of U.S. tax pursuant to the U.S.-Canada income tax treaty. You need to determine what type of visa you have, and how that impacts your residency status in the United States. If, based on the tax code and your visa status you are treated as a U.S. resident, then your entitlement to treaty benefits will be impacted. You must contact the Canadian government to determine whether you must file a Canadian tax return and pay Canadian taxes.
References:
- Publication 519, U.S. Tax Guide for Aliens
- Publication 597, Information on the United States-Canada Income Tax Treaty
- Publication 901, U.S. Tax Treaties
To claim the foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction, you must have foreign earned income, your tax home must be in a foreign country, and you must be one of the following:
- A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
- A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
- A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.
U.S. tax law does not specifically require a foreign resident visa or work visa for this purpose, but you should comply with the other country's laws.
References:
- Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
- Publication 514, Foreign Tax Credit for Individuals
- Form 2555 (PDF), Foreign Earned Income
- Form 2555EZ (PDF), Foreign Earned Income Exclusion
- Form 1116 (PDF), Foreign Tax Credit
- Tax Topic 853, Foreign Earned Income Exclusion - General