US Non Resident Taxes - US Citizens Living in Canada

US Citizen Living Abroad - Income Tax Filing Requirement  

All US citizens must file US income tax return each year, disclosing worldwide income, whether a person lives inside or outside the United States.  This means if you are a U.S. citizen living in Canada, then you must file an individual tax return in the United States.  This applies even if you have no residential ties in the US or have not visited US in the longest time.  

Earned Income Exclusion  

When US citizens are working and living abroad, then they may be eligible to exclude foreign earned income i.e. employment or self-employment income earned outside the United States.  This amount is limited to $USD 91,400 for 2009.  US citizens may also be eligible to exclude compensation with respect to certain foreign housing costs.  

Foreign Tax Credits  

US citizens who are living and working in a foreign country such as Canada, pay tax liability to a foreign tax authority such as CRA in Canada.  This tax liability may be  claimed as  foreign tax credits on the US tax return.      

When to File and Pay  

The due date to file an income tax return is April 15.  If a person lives outside the United States, then an automatic two month extension is granted to file an income tax return.  The extended due date is June 15.  The tax liability shown on the tax return must be paid by April 15.      

A tax return postmarked by the delivery service on or before the due date is deemed to have been filed by the due date.    

Nonresident Alien Spouse Treated As a Resident  

If you are married and one spouse is a resident alien and the other spouse nonresident alien, then the nonresident alien spouse may elect to be treated as a US resident alien provided the nonresident alien spouse has social security number or ITIN.    

What Should You Do If You Have Not Filed Your Tax Returns  

If you have not been filing your tax returns when due, you should file your tax returns under voluntary disclosure.  Failure to do so could result in severe penalties and you may be considered for various enforcement actions including criminal prosecution.