# Venting: double taxation for business travel in the US



## KeithCAN1

Just came here to gripe. As a US citizen living in Canada, I found out that foreign income exclusion does not apply to my business trips to the US, even though my wages were all from a Canadian company. the US sees it as US income. So I assume I have to pay US taxes on it even though I already paid Canadian taxes on it. If that is true, that is nuts! Thought we could avoid double taxation, but I guess that is not the case??

Man, this is just brutal!


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## Bevdeforges

How much time do you spend in the US in a given calendar year? Basically, yes, you're supposed to pro-rate your income for the working days you spent in the US, and that comes out of your FEIE. But unless you have enough interest or other "passive" income to get you into taxable territory, you shouldn't be paying all that much tax on that. (You still get to take your personal exemption and your standard deduction against whatever taxable income is left after deducting the FEIE amount from total income.)

And if you are in the States over a weekend, you should only count standard work days in the number you deduct. The weekends you can reasonably claim to be "just a tourist."
Cheers,
Bev


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## KeithCAN1

I travel quite a bit to the US, both for work and to visit family. But for business, I spend anywhere from 5-15 days a year. These are days where I am actually in the US for work. I tend to stretch out my trips to sightsee or visit friends in the area around the business part so I assume those days where I am just hanging out does not apply.


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## Nononymous

Are you being paid by a US company, and is tax being withheld by the US? If not, 5-15 days just sounds like a few routine business trips on behalf of your Canadian employer. Why would that need to be reported?

That's about my average for US business trips each year. I'm willfully non-compliant so I don't file, but if I did I expect I'd never mention it.


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## KeithCAN1

I work for a Canadian branch of a American corporation. But the branch is considered a Canadian entity and taxes withheld by Canada. Apparently in the eyes of the US, my wages during my business trips are because of work in the US and hence not considered foreign income but US income. 

I'm reporting everything because I am working with my accountant to be compliant (doing the whole 6 back years or 1040/1040X). I imagine if you are trying to be compliant, they take a closer look at you so I'm trying to be as accurate as possible on everything so they can't find anything questionable.


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## Nononymous

Well, another reason to be happy about my decision. What a pain.


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## KeithCAN1

I'm finding out more and more what a pain it is. It is worse than my wildest dreams. Makes people really really question if keeping a US citizenship is worth it if you are a long time resident abroad. The reason why I need to keep it and be compliant is that there is a decent chance I will move back to the US for good. But I know people who have no desire to move back decide it is not worth the headache.


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## Nononymous

If you have Canadian citizenship, you can at least sleep nights knowing the US can't touch your assets in Canada. Makes them easier to ignore.


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## Bevdeforges

Five to fifteen days a year? Even if you only use "work days" in a year (i.e. 5*52 weeks), you'll wind up having to "declare" less than 6% of your salary as "days worked in the US" if you're doing the FEIE. Depending on what you're paid, that's easily covered by the personal exemption and standard deduction.

Or, depending on the tax rate in Canada, go the foreign tax credit route and while the paperwork is a royal PITA, you should wind up paying little or nothing in actual taxes.

Or, take the FEIE on your salary, and use your Canadian taxes paid to credit out anything left over. (As I hear it, Canadian income tax is normally something more than the US taxes - though I have never confirmed that.)

Yes, it's a PITA - and it gets worse when you don't have "earned income" and have to use tax credits to try and shelter pension or investment income. Or when you're in a country where VAT accounts for most of the government's revenues, so you pay plenty of taxes, but can only deduct or get credit for those formally called "income taxes."
Cheers,
Bev


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## KeithCAN1

Bevdeforges said:


> Five to fifteen days a year? Even if you only use "work days" in a year (i.e. 5*52 weeks), you'll wind up having to "declare" less than 6% of your salary as "days worked in the US" if you're doing the FEIE. Depending on what you're paid, that's easily covered by the personal exemption and standard deduction.
> 
> Or, depending on the tax rate in Canada, go the foreign tax credit route and while the paperwork is a royal PITA, you should wind up paying little or nothing in actual taxes.
> 
> Or, take the FEIE on your salary, and use your Canadian taxes paid to credit out anything left over. (As I hear it, Canadian income tax is normally something more than the US taxes - though I have never confirmed that.)
> 
> Yes, it's a PITA - and it gets worse when you don't have "earned income" and have to use tax credits to try and shelter pension or investment income. Or when you're in a country where VAT accounts for most of the government's revenues, so you pay plenty of taxes, but can only deduct or get credit for those formally called "income taxes."
> Cheers,
> Bev


Oh, I didn't realize the the FTC applies to any US income. I thought it just applied to only foreign income. You are correct, Canadian taxes are generally higher than the US. That makes me feel better. My accountant was only talking to me in context of FEIE so maybe I jumped the gun when I assumed I'd get double taxed. I do have pension and other investment income to try to use the FTC for so I may not have enough credits to go around but I guess i'll see.

Thanks!


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## Bevdeforges

Yeah, you can apply the FTC against taxes due in the US. If you combine the FTC with the FEIE it gets a bit complicated. (You can't use foreign taxes paid on the income you're excluding.) But you can definitely take both the FEIE and the FTC.
Cheers,
Bev


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## KeithCAN1

Well I've got an accountant handling all of this so they can figure it all out! 

Thanks Bev!


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## BBCWatcher

Moreover, any excess foreign tax credits can often be rolled over into other tax years (one year back and up to 10 years forward) so that can offset other U.S. taxes.


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