# Dual-citizen that owns US LLCs and recently moved back to Canada



## imkane (Mar 31, 2013)

I'm a Canadian & American citizen that was living in the US for about 10 years, but recently moved back to Canada.

*I'm looking for a cross-border tax firm* that can handle both returns, as well as advise on the best legal structure for filing Canadian taxes and owning US businesses. Trying to avoid the dreaded "double taxation" situation 

Thanks in advance!


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## 255 (Sep 8, 2018)

imkane -- It's been a couple of days, since you posted; so I'll throw a few ideas for you to consider. First, I'm sorry I do not know of a "*cross-border tax firm* that can handle both returns, as well as advise on the best legal structure for filing Canadian taxes and owning US businesses," but I'm sure there are some.

Since you apparently own multiple US based LLCs -- I'm sure you are aware that you can choose the way they are taxed. For others, an LLC is a "State" entity and the US IRS does not have a specific form for tax filing.

Basically, if an LLC has a single member, it is a disregarded entity, by default, and it's income/expenses roll up to the owner (IRS form 1040, Schedule C for individuals or if owned by another entity, whatever the parent entity files, whether a trust, another LLC, etc.) This type of entity can also choose to be taxed as either a C-Corp. or an S-Corp. utilizing IRS form 8832 (to elect C-Corp. taxation) or form 2553 (to choose to be taxed as an S-Corp.)

Likewise a multi-member LLC is taxed as a partnership, by default, but can use the same forms to select the way it is taxed, C-Corp., S-Corp., partnership, or as a disregarded entity. There are restrictions, but you do have the ability to change your LLCs taxation scheme by filing the forms below:

Form 8832 (Rev. December 2013) (irs.gov) 

Form 2553 (Rev. December 2017) (irs.gov)

Your post doesn't indicate how your LLCs are taxed currently, or whether you are actually using these LLCs to generate income that you need to live on in Canada. You should definitely read the US-Canada Tax Treaty: 

CANADAWEB.PDF (irs.gov)

In general, to avoid double taxation, you'll file IRS form 2555 to exclude any foreign earned income (including any payments to you by an LLC taxed as a C-Corp.) with your US tax return. Alternatively (or on addition) you can file IRS form 1116 to get credit for taxes paid in Canada.

2020 Form 2555 (irs.gov) 

2019 Form 1116 (irs.gov)

I do not have knowledge about the Canadian Tax system, but I had a friend, in a similar situation, that had a US LLC when he moved back to Canada from the US. He formed a Canadian Company, I'm sorry I don't know what kind, specifically, but he included all he earned in the US LLC in the Canadian entity and received a 20 year tax deal for forming the Canadian company. This was 20 years ago. I think his LLC was taxed as a US partnership, so he transferred his personal ownership to his new Canadian Company -- so no US taxes. He was not American, only Canadian, so no CFC (controlled foreign corporation) rules on the US side. 

Bottom line, there is no "best" legal structure -- each person has different needs; fortunately, both the US and Canadian tax systems have various elections you can make to improve your individual tax situation. Cheers, 255


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## imkane (Mar 31, 2013)

Thanks @255 ! I'm aware of most of that, which is my I'm looking for a firm who can help guide me through the best path for my own requirements. There's a lot of variables to consider


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