Living Abroad in Canada

[user243]

Hello, I currently only receive income through royalties which I receive a 1099-MISC by end of year from my agency. Canada is already making me pay quarterly payments. Do I also need to pay quarterly payments in the US because of the tax treaty and accounting for the foreign tax credit?

[LoriLeighEA]

Welcome to the Event, user243!

A U.S. citizen or green card holder living in Canada has to report their worldwide income to the Canada Revenue Agency (CRA) and to the U.S. Internal Revenue Service (IRS). If done properly, a taxpayer most often does not owe any taxes to the IRS thanks to the Canada-US Tax Treaty. This treaty allows a foreign taxpayer to use foreign tax credits against U.S. tax for the amount paid in Canada.

The US will give you a Foreign Tax Credit for the Taxes paid to Canada on income you earned there - but you may still owe some to the US, if you have other unearned income such as interest and dividends.

If you did make US quarterly tax payments, you would get a refund for the Canadian taxes paid on your Canadian income. You do not have to pay estimated taxes to the US. Here is an awesome link for more detailed information: The USA/Canada Tax Treaty Explained

[user243]

Hello LoriLeighEA,

Thank you! And yes I am aware that I need to file to the CRA and IRS, no worries there. Thank you as well for the link. So just to clarify, I do not need to worry about the estimated taxes or quarterly filing because of the tax treaty, I just file first with Canada and then with the IRS at normal tax time?

[LoriLeighEA]

You are very welcome, user243!

Yes, that is correct. If you have questions while filling out your US taxes, we can help you with that Foreign Tax Credit. Just give us a call! (you might get me.) Also, of course, we also have TurboTax Canada! 

[user243]

Sounds good, thank you so much, LoriLeighEA!