I worked in a country with no income tax, do I still owe at home?
Very likely, because a home obligation is not created by the host country collecting something. It is created by your residence. If residence never broke, your worldwide income remains reportable at home, and the absence of host tax simply means there is no foreign tax to credit against it. Where people go wrong is in reading a posting that collects nothing locally as a filing holiday. The two questions are separate: whether you are still resident, and what the host state charged. Answer the first from your ties and intentions, the second from the host rules, then file accordingly.
Am I still resident at home after years on overseas contracts?
It depends on what you kept rather than on how long you were away. Residence tests look at where your home, family, registrations and financial life sit, and a contractor who kept a house, a family and a bank at home is usually still resident however many deployments he served. Long absence helps the argument but rarely wins it alone. The useful exercise is to list your connections year by year and see when, if ever, they thinned enough to break. That schedule is also what an authority asks for if it examines the position.
My pay comes from a third-country company and never reaches my home bank, is it taxable?
Where the money is paid from and where it lands do not decide the question. If you are resident at home, income is reportable there whatever the paying entity's nationality and whatever account receives it. What the contracting structure does affect is the character of the income, whether you are an employee or engaged on your own account, and which other state may tax it. It can also bring reporting obligations for the foreign account itself, separately from tax on the earnings. We normally start by tracing the contract chain, because the answer follows from who engaged whom.
Do I have to report my overseas bank accounts if I owe no tax?
Usually yes. Foreign-account reporting is generally an information obligation, triggered by holding or controlling the account rather than by owing tax on what it holds. A contractor paid into an account near the base, who then owes nothing because credits cover the tax, may still have the reporting duty for every year the account existed. The penalties attached to information returns are separate from any tax, which is why this is the part of a contractor's file that most often needs putting right. Gather the year-end and peak balances for each account before deciding anything else.
Does a posting with no local tax mean I need not file at home?
No. Filing and taxing are different obligations. A posting where no local tax is collected removes the foreign credit, not the home return, and in most cases the return is the only place your position can be recorded. Not filing also leaves the residence question open, so a later enquiry starts with no record of what you claimed or when. If you believe residence broke, that is a position to state on a return, with a date attached, rather than something to leave implied by silence.
Can I claim a credit for tax I never paid abroad?
No. A credit relieves double taxation, and there is nothing to relieve where the host state charged nothing. This surprises contractors who were told a posting carried no local tax and took that to mean no tax anywhere. Where a host state did charge something, the credit depends on the charge being a tax on income and on it being final rather than provisional, so the host assessment matters more than the payslip deduction. Keep whatever the host authority issued; a payroll deduction with no assessment behind it is the hardest kind of claim to support.
I have not filed for several years while living abroad — what are my options?
Both countries have routes back, and using one before they contact you is what preserves the relief. On the US side there are procedures aimed at taxpayers whose failure was not wilful, including one designed for people living outside the country, and separate procedures for late account reports and information returns alone. Canada has its voluntary disclosures programme and taxpayer relief for penalties and interest. Filing quietly and hoping is the one approach with no protection attached to it. See catch-up filing.
What is double taxation?
Double taxation means the same income being taxed by two authorities. It comes in two forms: juridical, where two countries each tax one person on one amount, and economic, where two different people are taxed on the same underlying profit — a company on its earnings and a shareholder on the dividend paid out of them. Relief comes from a treaty, a foreign tax credit, or an exemption, and which one applies depends on the income type. How to avoid double taxation sets out the routes.
