I'm a US citizen living and working in Canada. Do I need to pay taxes for both countries?

meochaidha — Tue, 04 Jun 2019 23:32:45 GMT

When US TurboTax asks me which states I lived in during 2016, do I say I lived in a "Foreign or US Possession?"

Yes - U.S. citizens and residents are subject to U.S. fed...

JohnR1 — Tue, 04 Jun 2019 23:32:46 GMT

Yes - U.S. citizens and residents are subject to U.S. federal taxation, irrespective of whether they are working in the U.S. or in a foreign country. So your income earned in Canada will be subject both to U.S. federal and Canadian federal and provincial taxation.

However, there are provisions in the U.S. tax code to mitigate double taxation of income earned by U.S. citizens and residents working abroad - you can qualify for a foreign earned income exclusion under 1 of 2 tests, the Bona Fide Residence Test or the Physical Presence Test, as well as a foreign housing exclusion or deduction, for your Canadian housing costs. You can also take a foreign tax credit for the Canadian taxes paid on your unexcluded income earned in Canada, to the extent it is double taxed both by Canada and the U.S.

TurboTax supports filing Form 2555, Foreign Earned Income, to calculate your foreign earned income exclusion and foreign housing exclusion or deduction, as well as Form 1116, Foreign Tax Credit.

The Deluxe, Premier and Self-Employed versions of TurboTax Online all support Form 2555 and Form 1116 (not Federal Free), as well as all versions of TurboTax Desktop, for Windows or Mac.

Please see the following TurboTax FAQ, "What are Forms 2555 and 2555-EZ used for?", for instructions on how to enter information in TurboTax about your (or your spouse's) foreign earned income:

https://ttlc.intuit.com/replies/3301984

To see where to enter in TurboTax Online foreign income taxes which you paid or accrued in 2016, for purposes of claiming the Foreign Tax Credit on Form 1116, please see the following TurboTax FAQ, "Where do I enter the foreign tax credit (Form 1116) or deduction?":

https://ttlc.intuit.com/replies/3302405

You would indicate "Foreign" to the question asking about which states you lived in.

topic I'm a US citizen living and working in Canada. Do I need to pay taxes for both countries? in Deductions & credits

I'm a US citizen living and working in Canada. Do I need to pay taxes for both countries?

Yes - U.S. citizens and residents are subject to U.S. fed...