3

Here's my timeline:

  1. Canadian citizen, by birth, moved to US in 2003.
  2. Living in US, granted greencard from June, 2011.
  3. Returned to Canada in December, 2013 (permanently)
  4. Relinquished Greencard, May 2015
  5. Self-employed, since returning to Canada

From what I understand, I must file a dual-status tax return in the US for 2015, since I am both a resident (greencard holder for part of the year), and non-resident for the rest of the year. However, if I report my self-employment income in the US, I am subject to US self-employment tax, which I can't figure out how to report in the Foreign Tax Credit form (1116). Likewise, if I pay the US the self-employment tax, I can't figure out how to report this as a credit to the CRA.

It 'feels' like I should not need to pay any tax to the US - all my income (and tax liability) should be in Canada, however, I am aware the rules for these types of things are generally non-intuitive. Is there some way to claim exemption from self-employment tax to the IRS?

1

I am subject to US self-employment tax, which I can't figure out how to report in the Foreign Tax Credit form (1116

Form 1116 has nothing to do with the SE tax, it is a credit for a foreign income tax. For self-employment tax - see Schedule SE.

I can't figure out how to report this as a credit to the CRA

Similarly, it is not an income tax in the US, rather a social security tax. You should probably look at the totalization treaty.

  • Thanks for your response, and the treaty link - although, I'm still not quite sure how to translate it into my tax situation. Should I get certification of CRA taxes on my self-employment income (cra-arc.gc.ca/E/pbg/tf/cpt56/cpt56-13b.pdf?) – MuertoExcobito Apr 9 '16 at 15:46
  • @MuertoExcobito I have no experience with totalization treaties, my country doesn't have one. I guess you should talk to a CPA/EA who's experienced with Canadian expats. – littleadv Apr 9 '16 at 15:56

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.