Int'l Taxes For Dummies

[khairyexpat]

WARNING: I'm making this up from personal layman experience.

Tax Purposes Definitions :
1. Resident (temporary, permanent, citizen) = Non tourist.
2. DEEMED Resident = Once Resident before but now temporary Resident elsewhere.
3. NON Resident = Once Resident before but now permanent Resident elsewhere.
4. WWI = World Wide Income.

Say I'm a Canadian who went to work in the US .
I pay US taxes on the money I make in the US, as a US Resident.
I pay Canada on my WWI (my US income) as a Canadian Deemed Resident. And in the same time (simultaneously) I claim a credit for what I've already paid to IRS. Net result is more or less zero (could be different depending on your individual details). (i.e. you only pay once).

Complicate things bit further.
Say I had a rental property in Canada (while I was working in the US).
I pay Canada taxes on my Canadian rental income as a Deemed Resident.
I pay the US on my WWI (my Canadian rental income) as a US Resident. And in the same time (simultaneously) I claim a credit for what I've already paid to CRA. Net result is more or less zero (could be different depending on your individual details). (i.e. you only pay once).

I'm not an accountant. But this is what I figured out after so many years and thousands of repeated questions.
They write the law (100's of thousands of pages), and they refuse to explain it to you. ....... Crazy.

N.B.1:
You can elect your Residency according to your best knowledge, but they (CRA, IRS, AFIP ... etc etc ) can declare you otherwise.
They're the judge & prosecuter.

N.B. 2:
Once Resident once in a country, you will never ever cut ties with that country (for tax purposes) till you die. (I was trying & thinking I can pay US taxes and escape Canadian taxes ... turned out to be a fantasy)

N.B. 3:
Theoretically speaking, you have to (for the rest of your life) file taxes to each & every single country you resided in.

 

[ghost]

If you are a legal resident of Argentina then you are not a resident of the US. You are still a citizen of Canada. If you earn in Ar and are paid by an AR company then you do not pay US taxes. And you are subject to file in your home country ...Canada. And you are subject to taxes in AR. Likely to be net zero in Canada and 35% or more in AR. I'm not educated in Canadian taxes but he US allows about $90K in in foreign income before there is a tax obligation. Thyat being said....it's pretty difficult to make $90K USD in Argentina. Self employed or employer, maybe. Oppps or politician.

 

[Canick]

deemed resident means you plan on returning to "home country"? when i moved residency to argentina from canada, I left canada for good (as far as they know) and as such do not have to file taxes for life as you say in both countries.
if i chose to return to canada, they will examine my situation as see if i owe taxes as you describe.
this is also based on a point system (if while gone i had dependants, property, bank accounts, drivers licence, social clubs memberships etc in canada PLUS the length of time i was away.)
if i go work for a few years and leave everything still in place then I DO have to file. If i go for x years (8-10) and return, there was no need to file, and I only need to report if asked by CRA (canada's IRS).
let me know if you think i have incorrect information so i can fire my team of canadian accountants lol!

 

[khairyexpat]

If you are a legal resident of Argentina then you are not a resident of the US.

Ghost: Initial common normal human thinking, "If I am resident of one country, then I'm NOT resident of a second country".

Crazy as it may seem at first glance, but it is worth repeating, ... they are NOT the same. For Tax Purposes, you could be Resident of more than one country. I listed definitions of (the magic) resident for tax purposes. Very very different from normal human being definition of resident.

 

[khairyexpat]

deemed resident means you plan on returning to "home country"? when i moved residency to argentina from canada, I left canada for good (as far as they know) and as such do not have to file taxes for life as you say in both countries.
if i chose to return to canada, they will examine my situation as see if i owe taxes as you describe.
this is also based on a point system (if while gone i had dependants, property, bank accounts, drivers licence, social clubs memberships etc in canada PLUS the length of time i was away.)
if i go work for a few years and leave everything still in place then I DO have to file. If i go for x years (8-10) and return, there was no need to file, and I only need to report if asked by CRA (canada's IRS).
let me know if you think i have incorrect information so i can fire my team of canadian accountants lol!

I'm going to repeat myself, ... intentionally ... just to drive a point home ... (not to annoy)

The magic word is Resident for Tax Purposes.

In taxes there is no such a thing as "home country".

Even if one has no intention of going back "home country", .... he/she has to file Canadian taxes every year as a Canadian Non Resident for Tax Purposes.

Canadian Non Resident for Tax Purposes, just classifies you under a different set of rules of Canadian Tax Law.
IT DOES NOT GET YOU OFF THE HOOK FROM FILING CANADIAN TAXES.
You file different tax forms for Non Residents. You don't file as Deemed Resident, you file as Non Resident.

It took me literally years of asking and arguing, till one day it dawned on me. I never used a tax professional. I figured it out myself.
For tax purposes you could be resident of more than one country concurrently in the same time, ... yes sir.... that is the bottom line. .. magic. I put a WARNING: .... my own personal experience ... just a layman regular Joe tax payer understanding of taxes.

If you don't owe them, it might not be worth wasting your time or their's. (officially you have to file).
If you owe them, .... rest assured they'll be after you.

Let me know, if this make sense, ... or you want to add to it ..

 

[Canick]

can you provide any links to this. i would love you to prove your point.
that as a canadian citizen even if i never set foot in canada again, i still have to file taxes in canada for the rest of my life EVEN IF I HAVE NO INCOME FROM CANADA (or canadian sources). (i dont buy it, so prove me wrong please)
i think it is only if you have income...but would seriously love some clarity on this.

 

[khairyexpat]

(i dont buy it, so prove me wrong please)

I'm not trying to prove any thing.

I learned a ton from this forum, and members who shared their own experiences.
I'm only sharing mine. My humble contribution.

I held off on paying taxes for 5 years, till I understood this.
Then I filed all accumulated 5 years worth of IRS and 5 years worth of CRA taxes late, all together with penalties. Was a nightmare.

 

[ghost]

Ghost: Initial common normal human thinking, "If I am resident of one country, then I'm NOT resident of a second country".

Crazy as it may seem at first glance, but it is worth repeating, ... they are NOT the same. For Tax Purposes, you could be Resident of more than one country. I listed definitions of (the magic) resident for tax purposes. Very very different from normal human being definition of resident.

Hey. Have it your way. Be a resident everywhere you wish. My accountants enjoyed your statement and are laughing their asses off. Why bother to ask if you have the answer? Just curious.

 

[khairyexpat]

Hey. Have it your way. Be a resident everywhere you wish. My accountants enjoyed your statement and are laughing their asses off. Why bother to ask if you have the answer? Just curious.

I was not asking. Neither did I answer.
I just volunteered my personal experience, as a curtsey, hopefully it may be helpful to someone.

Canada Revenue Agency have Income Tax Forms for Non-Residents & Deemed-Residents to file.
Their web site is easy to find.

OK. SORRY. ... I'M VERY SORRY I VOLUNTEERED TRYING TO BE HELPFUL.

I'LL NOT DO IT AGAIN.

 

[internationalguy]

Hey. Have it your way. Be a resident everywhere you wish. My accountants enjoyed your statement and are laughing their asses off. Why bother to ask if you have the answer? Just curious.

There's no need to be rude. He truly was trying to help. He wasn't asking a question. He posted this and the Immigration for dummies because he was trying to help. Not only that, he has a very valid point. More than one country at a time can claim you're a resident FOR TAX purposes for many different reasons, on top of your home country. Didn't your mom ever teach you that if you had nothing nice to say you shouldn't say anything at all?