Canadian resident US citizen declaring taxes

Hi there,

I am a US citizen living in Canada with candian residency. I am an owner/director of a company in Canada and work for that company in Canada for the whole year. I also have a company in the USA. The company in the USA makes all of its money from companies in Europe. At the end of the year, can I submit all income made in Canada on the Canadian tax return. And then, the money made for the US Company, I would do a US tax return for that company as well as the Canadian company?

Or do I have to declare all the World Wide income made from both companies on a Canadian and US Income tax return?

Is there a way for me to set up a contract between the US company and the European companies whereby I do not have to declare my US company on my Canadian Tax return? i.e. work in canada for less than 6 months? I do not want to have to pay Canadian Income taxes on everything.

Your question is too vague, define "company". Are you just a sole trader or are they corporations?

But basically, Tax 101 is that you must declare all worldwide income and pay taxes on it in the country where you reside, you avoid double taxation by claiming foreign tax credits (assuming there is one). Corporations and companies generally are considered resident in the place they do business, so if you are the main person who does the work for those companies they are resident in Canada as well, although that is a bit more of an iffy one, say for example you do all the work for the US corporation while you're in the US, plus you're a US citizen so you have to file a 1040 every year regardless of where you live.

Depending on how you've structured it you (or the company) can claim foreign tax credits. However Canadian corporation tax is actually lower than in the US (usually, depends on the bracket), so in fact you're better off being in Canada than the US, it's the personal income taxes that are higher in Canada.

It's hard to answer your question really because your business structure sounds awfully complex.

One thing I will say though is that putting your tax home in the US is not an option if the Canadian company is a CCPC, because the person who controls the corporation must be resident in Canada. In addition, you cannot use S-corporations in the US for the same reason.

What I would suggest is that you need to talk to a really good cross-border accountant, which usually means a really good Canadian accountant who is familiar with the various tax treaties that would be involved, because from the sounds of it there would be several.