Yes, as a U.S. citizen or Green Card holder, you must still file U.S. taxes on your worldwide income even after moving to Canada, but you won't necessarily pay double taxes due to mechanisms like the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC) under the U.S.-Canada Tax Treaty, which helps prevent paying tax on the same income to both countries. You'll file taxes in Canada based on residency, and in the U.S. based on citizenship, utilizing treaty benefits to reduce or eliminate U.S. tax liability on income already taxed by Canada.
As a U.S. citizen, you're required to file U.S. taxes regardless of where you live. The United States is one of only two countries in the world that taxes based on citizenship rather than residence. At the same time, if you're a Canadian tax resident, you must file Canadian taxes on your worldwide income.
The 183-day rule
When you calculate the number of days you stayed in Canada during the tax year, include each day or part of a day that you stayed in Canada. These include: days that you attended a Canadian university or college. days that you worked in Canada.
Suppose you're a U.S. citizen living in Toronto, working for a Canadian employer. You pay Canadian taxes on your salary. Thanks to the treaty, you can use the taxes paid in Canada to offset your U.S. tax liability, so you're not taxed twice on the same income.
For a $70,000 income in Canada (using 2025 rates), you'll pay roughly $13,000 to $20,000 in total taxes (federal, provincial, CPP, EI), depending on your province, resulting in a take-home pay around $50,000-$59,000, with federal tax around 14.5% or 20.5% depending on the portion, plus provincial tax and deductions like CPP and EI.
Basic Groceries
It's a win for everyone that basic necessities like groceries are not taxed in Canada. These zero-rated items ensure that Canadians of all income levels can access the essentials without an added tax burden.
Everyday tax strategies for Canadians: 5 things to get right
Top 5% The threshold amount for those who are in the top 5% is $162,210 annually. Those who fall into the top 5% category are also part of the upper middle class. They earn slightly more than the top 10%, who aren't that much above the average Canadian.
Taxing Canadian-source income. As a non-resident of Canada, you are subject to Canadian income tax on most Canadian-source income paid or credited to you during the year unless all or part of it is exempt under a tax treaty.
The Good News: Most Expats Face Zero Penalties
The IRS only penalizes late filing when you owe taxes and don't file on time. Given that 62% of expats owe nothing, most late filers face no financial penalties at all.
Canada's 90% rule helps non-residents and recent immigrants claim full federal tax credits (like the Basic Personal Amount) if 90% or more of their net worldwide income for the relevant tax year is from Canadian sources; otherwise, credits are prorated (reduced) based on their Canadian residency period, ensuring fairness for those who weren't residents all year.
You Must File an Income Tax Return, if:
I'm a U.S. citizen living and working outside of the United States for many years. Do I still need to file a U.S. tax return? Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live.
Who is eligible for this tax credit? To be eligible for the $7,500 Multigenerational Home Renovation Tax Credit in Canada, you usually need to meet the following criteria: You must be a homeowner in Canada. The resident of the renovated unit must be a family member who is a senior or an adult with a disability.
If you want to avoid a tax bill, check your withholding often and adjust it when your situation changes. Changes in your life, such as marriage, divorce, working a second job, running a side business, or receiving any other income without withholding can affect the amount of tax you owe.
Regardless of your citizenship, you have to pay Canadian income tax if you live and work in Canada. The U.S. bases taxation on both your residence and citizenship status.
Who Is Exempt From Canadian Taxes? There are two main instances where you would be exempt from paying taxes in Canada: Low income and the Disability tax credit.
According to a new study published by the Fraser Institute, in 2024 the average Canadian family (including single people) paid $48,306 in total taxes. Given the average family's total cash income was $114,289 in 2024, this means families paid 42.3 per cent of their incomes in taxes levied by all levels of government.
In California, a household can be considered middle class if it makes between $63,674 and $191,042. However, that range can change at the city level. SmartAsset used U.S. Census Bureau's 2023 American Community Survey 1-year data and analyzed the median household income in 100 of the largest U.S. cities and all states.
Unemployment compensation generally is taxable. Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.