How to File a U.S. Tax Return As a Resident in Canada
- 1). Exclude up to $85,700 in income by completing Form 2555 and including it when you file your annual tax form. To qualify for the Earned Income Exclusion, you will need to reside in Canada for at least 330 days of the past year, and file by the June 15 tax deadline.
- 2). Claim tax-free income in the United States, such as your Social Security benefits, for another exemption. If you receive this benefit as a U.S. citizen residing in Canada, you will not be taxed in the United States. It can be taxed in Canada, however, and deductions are allowed on your Social Security benefits.
- 3). Claim the Foreign Tax Credit as a way to avoid being taxed twice, claiming a deduction on the taxes you pay in Canada and vice versa. To claim Canadian taxes as a U.S. deduction, you will need to add the Form 1116 to your 1040NR filing. You can also claim taxes you paid in the United States as a deduction for your Canadian taxes.
- 4). File your taxes in the United States, by June 15. As a nonresident citizen, you receive an extension that allows time for the filing and return of your Canadian taxes and determination of the liability for both nations. If you owe taxes in the United States, however, interest will begin to accrue from the federal April 15 tax date.
