All U.S citizens and Green Card holders working in Canada must file a tax return.
All U.S tax returns must be filed by April 15. If you owe money to IRS it must be paid by this date.
U.S citizens and residents are entitled to 2 month automatic extension if they are living in Canada.
For an additional 4 month extension you must file form 4868.
For an additional 2 month extension you need to write to IRS by October 15 of the tax year in which you are filing and explain your reason for requesting extension.
Address to write for additional extension:
Department of Treasury
Internal Revenue Service
Austin, TX 73301 – 0045
You need to file your U.S tax return on form 1040. Additional forms may also be required depending on your individual circumstances.
Following is a list of additional forms that a taxpayer living abroad may require:
Schedule A – Itemized Deductions
Schedule B – Interest and dividends income
Schedule C – Business income or loss
Schedule D – Capital gain or loss
Schedule E – Supplemental income or loss
Form 1116 – Foreign tax credit
Form 2555 – Foreign Earned income exclusion
All income reported on U.S tax return should be in U.S dollars.
For Canadian tax purposes, each taxpayer must file a separate return. For US tax purposes, you have the option of filing a joint return with your spouse. If your spouse has little or no income, but you’re paying tax to the United States, filing a joint return will generally be beneficial.
If you are a U.S. citizen or resident alien, the rules for filing income tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.
Canada and U.S. have a bilateral agreement to resolve issues involving double taxation of passive and active income. Tax treaties generally determine the amount of tax that a country can apply to a taxpayer’s income and wealth.