US/CAD dual resident, practicing in Canada- tax question

[Meshuga3]

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First of all, apologies for double posting if you also saw this question on premed101. I'm just trying to maximize the number of people who see it in the hopes I'll get a response. Here goes:

Hi,

I'm not sure which forum to post this in- or if this is even a great site to ask the question on- but I thought I'd put it here. Feel free to re-direct if there's a more appropriate spot for it.

I'm a US citizen in the process of obtaining Canadian permanent residency (my wife and I lived here for many, many years before I started med school and citizenship was always the plan), and I plan to return to Canada for residency/practice. I'm trying to get some idea of what this will mean in terms of financial outlook since my loan burden is rather high (thanks to a US medical education). Specifically, I'm wondering if anyone on this forum is a US citizen currently practicing in Canada, and if so, if they can comment on what that status does for your tax return each year. I know Canada and the States have a tax treaty that is supposed to eliminate double taxation (i.e. you only pay taxes to the country in which you're a resident), but I recall the cap on that treaty is 80,000- and I hope to be making more than that as a physician.

So- what is the deal with double taxation? Are American physicians working in Canada taxed twice on income above 80,000? And if so, what is the rate? Essentially, I suppose I'm wondering if I'll have to give up my US citizenship in order to be financially secure practicing in Canada.

Oh, and- if this is a totally inappropriate forum for this question, but someone on here knows an American citizen practicing in Canada with whom they could put me in touch, I'd really appreciate the info... We're pretty well looked after in the States as far as career advice for the States goes, but nobody has been able to answer any of my questions about returning to Canada to practice.

 

[clifftacopter]

I've never lived in Canada, so I can't comment on the physician issue... but I have a fair amount of experience dealing with tax law.

Technically double taxation exists, but in reality it doesn't have an effect. The United States only taxes you in actuality if you are paying less in taxes in your resident country than you would be paying in the US. As Canada has higher taxes across the board, you wouldn't need to worry about this. If you were in a place that had a lower tax burden than the US, then the US would require you to make up the difference. Regardless you MUST file your US tax return every year... you will just end up not paying anything as the US will let you use the taxes you had to pay in Canada as a write-off.

As a side-note: it's actually ILLEGAL to revoke your US citizenship in order to avoid paying the US government taxes. You can get extradited to the US and charged (although probably unlikely) for it.

 

[MeowMix]

I can`t comment on your specific question, but as a dual citizen who chose medical residency in the US (med school also in US), I know that loan repayment options in Canada truly suck. Most of what I`ve seen is a max of C$10K per yr, compared to US$30K in the US. Unless you want to live with your loans for a very, very long time, or you plan to become a dermatologist, you might think about the financial consequences of this decision for your first 5 yrs of practice. They will far outweigh tax consequences.

I don`t know if it`s true that you have to file a US return every year if you live in Canada. I have lived in the US for over 20 years now and have never had to file a Canadian tax return on my US income (and I do have a real accountant for my tax return). As far as I know, a Canadian citizen living in Canada with Canada-only income just files a Canadian tax return.