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I am a Canadian citizen living in the US. I am a joint owner (50%) of a Canadian federal corporation that I started when I lived in Canada. The company is online, and receives income from people all over the world. I maintain the web application. My co-founder still lives in Canada and we file a corporate tax return.

How should I file my income taxes? I believe that I should pay myself with a dividend, but would I have to declare that income in Canada, or only the US (of which I am a resident)? Also, since we're already paying corporate tax, is there a way to avoid double taxation?

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  • If you are a resident of Canada for tax purposes, you must file a tax return in Canada declaring your world income. If you are a non-resident: "[...] you pay tax on income you receive from sources in Canada." Source: Canada Revenue Agency - Non-residents of Canada. Your situation is complex and you should seek professional advice. – Chris W. Rea Mar 12 '14 at 2:23
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You're in an area where a professional advice is a must. It is not only the taxes and reporting, but also an issue of international taxation.

US is very aggressive towards holdings in foreign lands. The tax rates for income from foreign corporations are higher than domestic, with less available deductions and credits, and less ability to avoid double taxation.

Get a good EA/CPA licensed in your state, who's proficient in working with Canadians and the US-Canadian tax treaty. Remember, that after reporting all the taxes - there are additional forms for you to file: 114, 5471, 8938, and possibly a bunch of others (form 8891 specific for Canadians, for example).

Welcome to the US. You're a foreigner, its a crime here. As a punishment, you'll have to author a small book (not kidding, my tax return was close to 100 pages at some point, more than Mitt Romney's, and I'm no millionaire...) every year.

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  • Ignoring the two grammar errors in "You're a foreigner, its a crime here", what's the "its" [sic] refer to? It isn't illegal to be a foreigner. Or are you being facetious? – Chris W. Rea Mar 12 '14 at 2:20
  • I am being facetious, although sometimes I do feel punished just for being an emigrant. Americans (i.e.: those who've lived in the US all their life) cannot even comprehend what the emigrants to the US or Americans living abroad have to go through every year. – littleadv Mar 12 '14 at 2:22
  • Yup, it's crazy. There are a good number of "Americans" living "abroad" here in Canada -- really, just people who happened to have been born in the USA but have always lived here, and due to that U.S. citizenship must report to the IRS every year. Look at this crap our banks have to do now: cbc.ca/news/politics/… – Chris W. Rea Mar 12 '14 at 2:35

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