I live in Canada full time, do I still file a US return?
Yes, for as long as the card is valid. Holding it makes you a US filer on worldwide income regardless of where you live, and Canada will tax you as a Canadian resident on the same income at the same time. Both systems apply; neither steps back on its own. What stops the same income being taxed twice is relief claimed on a return, which means it has to be computed and claimed rather than assumed. The practical consequence is two filing obligations every year, on different year ends and different rules, each of which has to be prepared with the other in view.
Does my Canadian salary have to go on the US return?
Worldwide income means worldwide, so Canadian employment income sits in the US computation even though it was earned in Canada, taxed in Canada, and never went near the United States. The relief mechanisms operate after that, reducing or removing the US tax on it. Two things follow. The Canadian figures have to be translated onto the US basis, which does not always map neatly, and pension contributions, benefits and stock awards are the usual friction. And the relief has to be claimed on a filed return, so a year not filed is a year with the income in and the relief out.
If I give up my green card do my US filings stop?
Not automatically, and not from the date you decide. Abandoning the card is a formal act, and the year in which it happens still has to be filed; it is usually the most involved year in the whole sequence. For someone who has held the card a long time, giving it up carries its own tax consequences that are separate from the ordinary filing, which is why the decision is worked through before it is taken rather than after. Where the surrender falls within a tax year can matter as much as the decision itself.
Can I just claim I am a Canadian resident under the treaty?
It is not a box to tick. A treaty position taken while holding a card interacts with the immigration consequences of claiming it, so the tax analysis and the immigration position have to be settled together, normally with immigration counsel involved. In practice that means the question is never only whether the position is available and advantageous on the tax figures. It is also what asserting it does to the status you are trying to keep. People who take the position on tax advice alone sometimes find they have answered a different question from the one they were asking.
I have not filed US returns since moving to Canada, where do I start?
With the years themselves. Because the card kept you a US filer throughout, every unfiled year is a resident year with worldwide income in it, not a non-resident year with nothing to report, so the set of returns is larger than people expect and relief for Canadian tax is what usually brings the liability down. We establish which years are open, what Canadian tax was paid in each, and what the card's status was throughout, and then decide the route for bringing them in. The order of the filings is part of the advice, not an afterthought.
Which return do I prepare first, the Canadian one or the US one?
They are prepared together and finalised in the order that lets the relief be computed, because each return's relief depends on tax paid in the other country. In practice that means taking both computations to a near-final state, settling which country taxes what, and then closing them in sequence rather than filing one and revisiting it later. Preparing them independently, often by advisers in each country who never speak to each other, is what produces the awkward position where both returns are defensible on their own and together they claim relief that does not reconcile.
Does the foreign earned income exclusion cover capital gains, dividends or a pension?
No. It covers earned income — pay for services performed abroad — and nothing else. Investment income, rental income, capital gains, pensions and social security all stay fully taxable, relieved if at all by the foreign tax credit or a treaty article. This is the single most common misreading of it: people exclude a salary, assume the rest followed, and discover the gap when the investment income is assessed. See exclusion against credit.
Can I take the foreign tax credit and the Foreign Earned Income Exclusion together?
On the same income, no — you cannot exclude income and then claim credit for foreign tax on the part you excluded. You can use both in one return on *different* income: exclude qualifying earned income, then claim credit for foreign tax on what remains, such as investment income or earnings above the cap. Which combination leaves you better off is an arithmetic question on your figures. Our FEIE vs foreign tax credit calculator works it through.
