taxes, u.s. edition
US citizens, no matter where they live, have to file US tax returns. You have to show all your income, no matter in what country it's earned. However, unless you're in a fairly high income bracket, you'll be exempt from US tax.
If you live in a country with a tax treaty with the US - such as Canada - you also receive a credit for taxes you've already paid in that country. So you shouldn't be taxed twice on the same income.
The year you move, however, is tricky. Because we lived in the US and worked for US companies during most of 2005, our income is not yet exempt. In addition, we have to declare whatever we earned in Canada, and get credit for any taxes paid on that.
To complicate things further, my freelance work is for U.S. companies, so I still have some US income, and no taxes are withheld from that in advance.
Each word of every sentence on this post represents a form to fill out and a barely comprehensible instruction book to follow.
We also have to file Canadian tax returns. From what I've heard, these are much more straightforward. (We haven't done them yet; I'll let you know.) Also, this will be the first time we fill out one tax form for both of us. Because we are not legally married, according to U.S. tax law, we're single.
Filling out two sets of tax forms every year, and continuing to grapple with the convoluted US system even if we don't pay US taxes, is incentive enough to try to give up my US citizenship as soon as I'm eligible.
We have to be Permanent Residents of Canada for three years before we can apply for Canadian citizenship, and then - of course - it takes some time to get it. I've heard that it's not so easy to give up citizenship. But I'll tell you, it might be worth the effort.
If you live in a country with a tax treaty with the US - such as Canada - you also receive a credit for taxes you've already paid in that country. So you shouldn't be taxed twice on the same income.
The year you move, however, is tricky. Because we lived in the US and worked for US companies during most of 2005, our income is not yet exempt. In addition, we have to declare whatever we earned in Canada, and get credit for any taxes paid on that.
To complicate things further, my freelance work is for U.S. companies, so I still have some US income, and no taxes are withheld from that in advance.
Each word of every sentence on this post represents a form to fill out and a barely comprehensible instruction book to follow.
We also have to file Canadian tax returns. From what I've heard, these are much more straightforward. (We haven't done them yet; I'll let you know.) Also, this will be the first time we fill out one tax form for both of us. Because we are not legally married, according to U.S. tax law, we're single.
Filling out two sets of tax forms every year, and continuing to grapple with the convoluted US system even if we don't pay US taxes, is incentive enough to try to give up my US citizenship as soon as I'm eligible.
We have to be Permanent Residents of Canada for three years before we can apply for Canadian citizenship, and then - of course - it takes some time to get it. I've heard that it's not so easy to give up citizenship. But I'll tell you, it might be worth the effort.
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