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International Tax, Cross-Border and Expatriate Tax Expert
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Do Canadian-US Dual Citizens Have to Pay Taxes in Both Countries?

I have dual citizenship in the USA and Canada. Do dual citizens pay taxes in both countries?

This is a tough one to an. Cross-border tax for Dual Citizens of the U.S. and Canada can get very complex and challenging especially for dual citizens residing in Canada. The dual citizenship has its perks but can become difficult when it comes to filing taxes in both the U.S. and Canada due to risks of double taxation, foreign reporting obligation, investments, retirement and continuous upkeep of the laws.

Most often, you will need to pay some taxes in both countries, but it depends on your assets. Regardless, there are a few key things to look out for.

There are 3 Main Tax Issues Impacting Dual US-Canadian Citizens You Should be Aware of…

  1. The financial reporting obligations beyond filing taxes for dual US-Canadian Citizens
    This impacts your Canadian bank accounts, Canadian retirement accounts, and Canadian financial assets, which require specific reporting (and come with heavy penalties up to 50% of the account if you don’t file properly)
  2. The obligations on US border cross-citizen tax-free accounts
    Some tax-free Canadian investment, retirement, and savings account are not tax-free in the US. There are some terms in the US-Canada Tax Treaty that gives special treatment to pensions and retirement accounts. Unfortunately, it’s a case-by-case basis for a lot of these.
  3. IRS Amnesty Programs for non-compliant US Nationals
    You might qualify for the Offshore Voluntary Disclosure Programs (OVDP)—Streamlined Foreign Offshore Procedures, which means overseas Americans can file overdue US Tax Returns and bypass penalties. There are some strict requirements, though.

While these obligations and requirements can lead to penalties if action is not taken, it is often difficult to resolve without the help of an accountant who specializes in Cross Border Tax. 

I go into further detail on this in our firm blog: 3 Important Tax Issues for a Dual-U.S. Canadian Citizen

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