Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

We are in the highest tax rate in the US and are considering

Customer Question
a move to Canada....
We are in the highest tax rate in the US and are considering a move to Canada. I was born in Canada but am a naturalized US citizen. They told me I could live in Canada for a year to regain my Canadian citizenship and I am considering it. However, there are 2 questions:
Do they mean 6 months and a day minimum?
How much (%age) do taxes go up? I assume that any residual income I make from the US would be taxed in Canada but not in the US.
Thanks!
Submitted: 8 years ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 7 minutes by:
11/1/2009
Tax Professional: Merlo, Accountant replied 8 years ago
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
HelloCustomer

Your question really involves two different areas of expertise -- one regarding Canadian citizenship law and one regarding taxes. I can help you with the tax end of your question.

If you are a US citizen, then even if you move to Canada, you will continue to be liable for tax in the United States on your worldwide income. Any income you have from the US or from Canada or from any other country will still need to be reported on a US tax return which you will still be required to file each year.

If you move to Canada and stay there permanently, then any EARNED income which you have from another country may be excluded on your US tax return, up to the allowed annual exclusion, which is currently $91,400. However any other income you have from interest or dividends or retirement or other unearned income sources has no exclusion which applies.

You can also claim a credit on your US tax return for any taxes you pay to Canada on the same income that you report on your US return. However, if it ends up that the US tax rate is higher than the Canadian tax rate, you still in effect end up paying the higher rate.

The only way to not pay taxes on your worldwide income would be to renounce your US citizenship. In that case, your worldwide income would not be subject to tax, but any income you have from a US source continues to be taxable here in the US.

If this was helpful please press the Accept button.

Thank youCustomerbr />
Ask Your Own Tax Question
Customer reply replied 8 years ago
If I were to become a Canadian citizen and still receiving money from the US (pension), how would that be taxed--Canadian/Ontario rates? Thanks
Tax Professional: Merlo, Accountant replied 8 years ago
HelloCustomer

If you become a resident of Canada and you receive a pension from a US source, the pension is taxable in Canada but is also reportable in the US. However, as long as you reside in Canada, the maximum tax that the US can impose on that pension is 15%. After calculating the tax due to the US, you could then also claim the foreign tax paid to Canada on that same pension.

The tax rate you will pay in Canada depends on your total income for the year and is based on the following brackets:

  • 15% on the first $40,726 of taxable income, +
  • 22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
  • 26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
  • 29% of taxable income over $126,264.
Since the maximum you can be taxed in the US on that pension income is 15%, and since that is the lowest rate of tax in Canada, what that means is that your US tax liability would virtually end up being zeroed out, and you would only pay tax to Canada based on the above rates.

If this was helpful please press the Accept button.

Thank youCustomerbr />

Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Verified
Merlo and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask Merlo Your Own Question
Merlo
Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9,783
9,783 Satisfied Customers
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad

Merlo is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
My question is: Is the foreign tax credit 100% Offset to the
Hi, my question is: Is the foreign tax credit 100% Offset to the Alternative Minimum Tax, if there are only foreign income? … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,980 satisfied customers
My question is how to change the tax rate on the Panasonic
My name is ***** ***** My question is how to change the tax rate on the Panasonic 7500? thank you … read more
taxmanrog
taxmanrog
Master\u0027s Degree
775 satisfied customers
Interested in information about new tax laws and their
Interested in information about new tax laws and their effect on S Corporations … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If you are a single member S-Corp and taxable income is over
If you are a single member S-Corp and taxable income is over $315K and business is a service industry so would not get the 20% deduction under new tax reform, would changing to a C-Corp help pay less … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Will the new tax rates for businesses apply to sole
Will the new tax rates for businesses apply to sole proprietor medical practices? … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
I plan to declare some foreign interest and dividends
I plan to declare some foreign interest and dividends totaling about 3000 pounds in each of the last 3 years, on some of which i suffered withholding tax at source. I have not been submitting an annua… read more
taxmanrog
taxmanrog
Master\u0027s Degree
775 satisfied customers
If my only income is state pension and rental income from
Hi If my only income is state pension and rental income from property, can I claim marriage allowance from my wife as I am not employed or self employed but still complete a tax return and pay tax at … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I am presently retired and receive a pension from the State
I am presently retired and receive a pension from the State of MA although i live in CT. My wife is planning on retiring in June of 2018 and will receive a pension from the state of CT. I also receive… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Assuming a Medicare tax rate of 1.45% and monthly gross
Assuming a Medicare tax rate of 1.45% and monthly gross wages of $2,500, the amount recorded in Medicare Tax Payable for one quarter for the employee's payroll deduction is… read more
taxmanrog
taxmanrog
Master\u0027s Degree
775 satisfied customers
A 71 YEAR OLD TAXPAYER IS RETIRED (NO EARNED INCOME) AND HAS
A 71 YEAR OLD TAXPAYER IS RETIRED (NO EARNED INCOME) AND HAS A 401K WITH HIS PRIOR EMPLOYER FROM WHICH HE HAS BEGUN TO TAKE HIS MRD. HE WOULD LIKE TO TAKE THE 401K BALANCE AND MOVE IT TO A ROTH IRA. H… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,074 satisfied customers
What are the taxes rates 2016 for term gains in irrevocable
what are the taxes rates 2016 for long term gains in irrevocable trusts … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,074 satisfied customers
How much is UK Corporation Tax on foreign dividends received
Hi Tony,How much is UK Corporation Tax on foreign dividends received from Honk Kong subsidiary?The recipient of such dividends is UK based Limited company. Are these foreign dividends exempt for a "sm… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Suppose my taxable income in 220,000 this year and the tax
Suppose my taxable income in 220,000 this year and the tax rate is X up to 200K, but Y for 200and over, do I pay Y on the full 220K or just that above 200K? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Given that the current 1041 tax rate on 401(k) income is
Given that the current 1041 tax rate on 401(k) income is $3206 + 39.6% over $12,400, what will be the new tax rate and will it apply for 2017?… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Under current law a 100,000 taxable income pays $10,365 plus
Under current law a 100,000 taxable income pays $10,365 plus 25% of the amount exceeding $79,400 i.e. about $16,000. Under tax reform will the tax be $25,000? … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
What would the federal and state tax rate percentages be for
What would the federal and state tax rate percentages be for a $7700 IRA early withdrawal in Ohio?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Us citizen living and working in colombia SA earned income
us citizen living and working in colombia SA earned income and unearned how do i report the interest and dividends are these tax at he same rate or can you also exclude them like the earned income … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,074 satisfied customers
What is the income tax rate if it is not withdrawn from the
Hi! What is the income tax rate if it is not withdrawn from the LLC? The owner has not withdrawn any balance from the business all the amount reinvested into the business. Thank you!… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x