How should a US resident who is a joint owner of a Canadian corporation file taxes?

Question

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?

Answer 1

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.