Future kids. What would their citizenship be?

[screech339]

I'm curious about the taxes if we have dual citizenship. I would like to get dual citizenship one day and my husband (American) wants dual as well. Would we have to pay taxes in Canada and the US? What if neither of us had property in the US or earned any money there - would we still have to pay? I've heard that a lot of people renounce their US citizenship simply because it's too expensive to have both Canadian and US based on their tax fees.

Usually US citizens in canada only pay the taxes in Canada and due to tax treaty between Canada / US, the taxes paid in Canada are considered credited in US due to higher tax rates in Canada than US. If in the event Canada tax is ever lower then US, you will have to pay the tax difference to US.

But remember you have to file it for rest of your life until you renounce US citizenship.

For those who have already renounced it it is usually because they have been outside US for so long, they don't see any benefit in keeping US citizen. Notice the spike in renouncing their citizenship after Obama introduced Obamacare. They know they will have to pay more taxes to cover this. Why do they want to pay for Obamacare tax while living outside US.

Screech339

 

[lleahdoll]

Usually US citizens in canada only pay the taxes in Canada and due to tax treaty between Canada / US, the taxes paid in Canada are considered credited in US due to higher tax rates in Canada than US. If in the event Canada tax is ever lower then US, you will have to pay the tax difference to US.

But remember you have to file it for rest of your life until you renounce US citizenship.

For those who have already renounced it it is usually because they have been outside US for so long, they don't see any benefit in keeping US citizen. Notice the spike in renouncing their citizenship after Obama introduced Obamacare. They know they will have to pay more taxes to cover this. Why do they want to pay for Obamacare tax while living outside US.

Screech339

Yes! That's what I read about! The tax treaty!
I guess it's definitely something to consider before becoming a duel citizen. Of course you can live a totally normal life just staying a PR.

I will def be hiring a tax account or something in the future that knows all this!

 

[screech339]

Yes! That's what I read about! The tax treaty!
I guess it's definitely something to consider before becoming a duel citizen. Of course you can live a totally normal life just staying a PR.

I will def be hiring a tax account or something in the future that knows all this!

Yes the tax treaty makes a big difference. However if you were to pay more taxes in US as if you were living there over Canada, you have to pay the difference. Other big issues is house ownership. If you sell principle house in Canada, you pay no tax on the profit. But you will likely have to pay the Us tax on the profit in US as they are not tax exempt there.

Screech339

 

[ovasquez1]

No problem! I like to know information even if I may not use it for awhile. lol

I def want my future kiddos to have duel citizenship. And I hope to have Canadian citizenship after living here 3 years with PR. Then all I'd have to worry about is getting my hubsy American citizenship.
I'd love to be able to have the option to move around. Considering all my family is in the US.
Even if we didn't move around, my kids could have the option to move to the US when they're 18 if they wanted to.

you read my mind ....that's exactly what I was thinking

I'm curious about the taxes if we have dual citizenship. I would like to get dual citizenship one day and my husband (American) wants dual as well. Would we have to pay taxes in Canada and the US? What if neither of us had property in the US or earned any money there - would we still have to pay? I've heard that a lot of people renounce their US citizenship simply because it's too expensive to have both Canadian and US based on their tax fees.

thanks for asking that question...I wondering about that as well

Usually US citizens in canada only pay the taxes in Canada and due to tax treaty between Canada / US, the taxes paid in Canada are considered credited in US due to higher tax rates in Canada than US. If in the event Canada tax is ever lower then US, you will have to pay the tax difference to US.

But remember you have to file it for rest of your life until you renounce US citizenship.

For those who have already renounced it it is usually because they have been outside US for so long, they don't see any benefit in keeping US citizen. Notice the spike in renouncing their citizenship after Obama introduced Obamacare. They know they will have to pay more taxes to cover this. Why do they want to pay for Obamacare tax while living outside US.

Screech339

thanks for answering...I definitely want to keep my citizenship....even if I had to pay more...I really like Canada but the US is my home...

 

[OhCanadiana]

Yes! That's what I read about! The tax treaty!
I guess it's definitely something to consider before becoming a duel citizen. Of course you can live a totally normal life just staying a PR.

I will def be hiring a tax account or something in the future that knows all this!

Naturalizing as a Canadian wouldn't affect your US tax obligations at all (vs. being a Canadian PR). You (and eventually your children) will need to complete a US tax return and a Canadian tax return (as long as you are living in Canada). As you go through it, you'll get credit for the taxes paid to Canada per the Tax Treaty (assuming Canada is your primary residence) and will need to pay any differential (usually nothing).

Note that you may need to submit Form 8938 and a FinCen FBAR form depending on the balance of funds you have in accounts abroad (even now if you co-sign, for example). Lots of paperwork...

Also, double check the implications of financial instruments on both sides (e.g., retirement accounts are treated differently across the border).

 

[lleahdoll]

thanks for answering...I definitely want to keep my citizenship....even if I had to pay more...I really like Canada but the US is my home...

Exactly. I wouldn't want to renounce my citizenship and a few years later we decide we want to move there.

Naturalizing as a Canadian wouldn't affect your US tax obligations at all (vs. being a Canadian PR). You (and eventually your children) will need to complete a US tax return and a Canadian tax return (as long as you are living in Canada). As you go through it, you'll get credit for the taxes paid to Canada per the Tax Treaty (assuming Canada is your primary residence) and will need to pay any differential (usually nothing).

Note that you may need to submit Form 8938 and a FinCen FBAR form depending on the balance of funds you have in accounts abroad (even now if you co-sign, for example). Lots of paperwork...

What exactly are Form 8938 and FinCen FBAR form for????
I am a newb on taxes as I've never had to file them in the US thus far.

 

[screech339]

Naturalizing as a Canadian wouldn't affect your US tax obligations at all (vs. being a Canadian PR). You (and eventually your children) will need to complete a US tax return and a Canadian tax return (as long as you are living in Canada). As you go through it, you'll get credit for the taxes paid to Canada per the Tax Treaty (assuming Canada is your primary residence) and will need to pay any differential (usually nothing).

Note that you may need to submit Form 8938 and a FinCen FBAR form depending on the balance of funds you have in accounts abroad (even now if you co-sign, for example). Lots of paperwork...

Not only that. You must file form 8891 for each RRSP or RRIF account you have in Canada. To make matters worst, you cannot submit it electronically with your income tax as 8891 forms are not available in electronic form. So you have to file your US taxes by mail every year you own RRSP/RRIF.

Screech339

 

[lleahdoll]

Not only that. You must file form 8891 for each RRSP or RRIF account you have in Canada. To make matters worst, you cannot submit it electronically with your income tax as 8891 forms are not available in electronic form. So you have to file your US taxes by mail every year you own RRSP/RRIF.

Screech339

What are RRSP and RRIF??

 

[screech339]

Exactly. I wouldn't want to renounce my citizenship and a few years later we decide we want to move there.

What exactly are Form 8938 and FinCen FBAR form for????
I am a newb on taxes as I've never had to file them in the US thus far.

You never had to file those forms since they deal with foreign accounts. When you open a bank account and or RRSP you now to report that to US. Anytime you have more than 10,000 dollars in your foreign account, you must report all your fincianial money of all your bank accounts / even joint accounts to US.

Now compare that to Canada rules that you must report it to Canada if you have more than 100,000 in foreign accounts. And you wondered why a lot of US Canadians are mad as hell about this.

Screech339

 

[screech339]

What are RRSP and RRIF??

RRSP is registered retirement savings plan. It is the same as 401K and IRA US version something you would be more familiar with.

RRIF is registered retirement income fund.

 

[lleahdoll]

Definitely hiring an account of some sort...
Tax season is going to be stressful lol

 

[screech339]

Definitely hiring an account of some sort...
Tax season is going to be stressful lol

Hiring an accountant can be quite pricey too. We had a H&R accountant that dealt with US taxes. They charge around 300 bucks to do US taxes no matter how simple it is. So hard to justify spending 300 if you are not going to get any refund to pay for the difference.

 

[lleahdoll]

Hiring an accountant can be quite pricey too. We had a H&R accountant that dealt with US taxes. They charge around 300 bucks to do US taxes no matter how simple it is. So hard to justify spending 300 if you are not going to get any refund to pay for the difference.

you're right. But I know nothing in the tax area. So I'd probably mess something up. Wouldn't want to risk that.
To each their own though!

 

[atrivera]

I work for H&R Block, and while I don't prepare US taxes, I do know some basic information about how the tax treaty works. US citizens who live abroad are absolutely required to file their US taxes every year, regardless of whether they actually earn any income in the states. However, as long as they earn less than about $90,000, they are given a tax exemption as they've paid taxes elsewhere. US citizens are also required to do an FBAR, if they have any accounts holding $10,000 or more at any time during the year. Additionally, things like Tax Free Savings Accounts in Canada are not deemed as tax free in the states, and the interest can be taxed by the IRS. Knowing all of this, I would not recommend having your children maintain their US citizenship unless you see it as a major asset. It is a definite drawback to have to file two returns every year, one Canadian and one US, along with having to pay approximately $150-300 for their US return alone. Additionally, programs like Turbo-Tax and even the H&R Block software cannot file US non-resident returns, forcing you to go into a knowledgeable accountant or H&R Block and pay to have your taxes done.

 

[keesio]

Regarding US tax obligations for US citizens, there is a whole thread here:
http://www.canadavisa.com/canada-immigration-discussion-board/us-citizen-filing-for-taxes-in-the-us-t184395.0.html

As you can see, I've ranted quite a bit on there