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Posted on April 15, 2013

If I am an American living in Canada, do I need to file a US tax return?

Written by Avner Polatsek | @AvnerPolatsek

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Ask an accountant:


If I am a US citizen living in Canada, do I need to file a US tax return?


The short answer to this question is a simple, “Yes.” Americans living in Canada are required, by law, to file complete tax returns along with a report about their foreign bank and financial accounts (FBAR).

This subject has been a popular one, lately, as many Americans are just learning about these obligations and the consequences of not filing. Because US citizens living in Canada usually file their Canadian tax returns, most think that they are covered and don’t need to worry about anything south of the border.

Unfortunately, this is not the case. The IRS requires any US citizen to complete their tax returns and pay anything that they owe. Fortunately, what you’ve paid in your Canadian taxes works against what you would have paid in the US.

The process is really quite simple. The problem is that no one seems to know that, simple or not, they still have to file. In fact, neglecting to file tax returns can make you subject to sizeable fines, even if you owe very little or nothing at all.

Why do you have to file in both places?

So many people are confused because Canadian tax law requires you to file taxes where you live and American tax law requires you to file where you have citizenship. This doesn’t mean that you have to pay twice as much, but does mean that you need to do your due diligence and get your paperwork to the correct places.

I haven’t been filing! What do I do?

I have wonderful news for you! The IRS recently launched a process to forgive US citizens living abroad for unintentionally neglecting to file US tax returns and is waiving fines to qualifying Americans. In other words, if you act now, you can start fresh and not have to pay any overdue fees. The program is called the Streamlined Filing Compliance Procedure.

The best thing you can do is contact an accountant who deals directly with US citizens living in Canada. There is a fair amount of paperwork to go through, but the process has been made more efficient because of the sheer volume of people recently informed of the law.

Check out our full blog post on the Streamlined Filing Compliance Procedure, here.

Additional Information:

– Because you’re living abroad, you have an extra two months to file your US tax return, making the deadline: June 15.

– Check with your accountant to see if you can qualify for form 2555. This form attaches to your US tax return and can exclude up to $92,900 of income earned in Canada from your report if you have been living in Canada for 330 days of the last 12 months.

As always, we are happy to help with any questions you may have! Please contact us to set up an appointment with an accountant who specializes in US citizens living in Canada.