# Any downside of Dual Citizenship?



## Texas Scrambler (Sep 27, 2011)

I am an American living and working in Canada. I am on the final steps of gaining Canadian citizenship and want to check if there is any downside of USA - Canada dual citizenship?

I only see net benefits but maybe I am missing something.


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## concerned_canuck (Sep 26, 2011)

Texas Scrambler said:


> I am an American living and working in Canada. I am on the final steps of gaining Canadian citizenship and want to check if there is any downside of USA - Canada dual citizenship?
> 
> I only see net benefits but maybe I am missing something.


The primary downside is being exposed to two separate tax regimes. As a resident in Canada you must file Canadian income tax and as a citizen of the US you must file US income taxes. So everything you do tax-wise has to be considered from two viewpoints as each system as it's own rules. However, due to the tax treaty someone with few investments and savings, just earning income in Canada will probably be fine. 

However, if you have investments earning income (dividends and capital gains) or want to hold an RRSP, RESP, TFSA, etc. then things get trickier. Google "renunciationguide" to see some rationale why dual-citizenship can be a bad thing from a tax perspective. You should contact a US/Canadian tax professional to analyze your personal situation to help decide. Don't forget to consider your situation in the future too.

If you have family ties back to the US, particularly if you expect an inheritance one day, then keeping US citizenship is probably the best path. However, some of us have no real ties and never want to live or work there. In that case, renouncing US citizenship can greatly simply tax planning.


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## Auld Yin (Mar 10, 2009)

concerned_canuck said:


> The primary downside is being exposed to two separate tax regimes. As a resident in Canada you must file Canadian income tax and as a citizen of the US you must file US income taxes. So everything you do tax-wise has to be considered from two viewpoints as each system as it's own rules. However, due to the tax treaty someone with few investments and savings, just earning income in Canada will probably be fine.
> 
> However, if you have investments earning income (dividends and capital gains) or want to hold an RRSP, RESP, TFSA, etc. then things get trickier. Google "renunciationguide" to see some rationale why dual-citizenship can be a bad thing from a tax perspective. You should contact a US/Canadian tax professional to analyze your personal situation to help decide. Don't forget to consider your situation in the future too.
> 
> ...


This is excellent advice. To be on the brink of gaining Canadian citizenship suggests you've been here three years or more. It is to be hoped you've filed US Tax Returns during this period as the IRS is reportedly coming after any US Citizen who's living "offshore" and hasn't filed.


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## Peg (Sep 22, 2011)

The US also has an Estate Tax which Canada does not. There is currently a minimum estate value but it may be lowered. I know of dual citizens who have structured all of their finances to avoid the US gov getting any of their money.

The FBAR regulations are also messy - if you are a signing authority or have a power of attorney they want that information as well. 

I am in the process of completing all of my US returns and, to me, it is more complicated than the Canadian returns. And I'm a math person who doesn't mind doing Cdn tax returns... 

It will cost money to get financial and legal advice; it will cost money to file returns in both countries (either your lost time or what you pay to someone) and potentially it could cost you if you do not structure your finances correctly.

I thought I had given up my US citizenship and do not want to live there so, for me, renunication is the route.


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