US-Canada Dual Citizenship
Updated on January 27, 2025
Reviewed By
Deborshi Choudhury, an IRS Enrolled Agent with 17 years of expat tax experience, specializes in U.S. tax preparation, tax planning, and tax advice for U.S. citizens and Green Card holders living and working in the UAE and Canada. *Schedule a consultation with Deborshi today.
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Table of Contents
Can I acquire dual citizenship in the US and Canada?
Yes, the US and Canada allow dual citizenship, so you can hold citizenship in both countries simultaneously without losing your original citizenship.
There are a handful of ways to acquire citizenship in both countries, each with its own set of requirements and rules. Holding dual US-Canadian citizenship comes with benefits and challenges, so it’s essential to consult the consulates and embassies of each country to ensure you follow all required regulations.
What does it mean to be a dual citizen?
It means being a lawful citizen of two countries simultaneously. In this case, you enjoy the rights and privileges of both nations. As a dual citizen, you can vote, work, study, and retire in either country. But dual citizenship is not just a matter of perks; it’s a melding of obligations, responsibilities, and legal norms.
The key challenge for dual citizens stems from taxation. Regardless of where they reside, US citizens are taxed on their worldwide income. This might complicate matters for a dual citizen living in Canada.
How is dual citizenship acquired?
Naturalization is a popular route for many. It involves immigrating to another country and fulfilling specific criteria, like residency duration, language proficiency, and a pledge to uphold the country’s constitution.
The most basic way to acquire citizenship is by birth. Suppose a child is born in the US to Canadian parents; that child can rightfully claim citizenship in both countries.
Then there’s citizenship by descent or jus sanguinis (right of blood). People can claim citizenship if their parents or grandparents hail from that country. In the context of US-Canadian dual citizenship, this would require having a direct ancestor from the other nation.
How do I get US citizenship as a Canadian?
Here is a general overview of the process of getting US citizenship through naturalization:
- Determine your eligibility: If you are not a citizen by birth or descent, you must apply for naturalization.
- Obtain lawful permanent residency: You should be at least 18 years old and have been a permanent resident (a green card holder) for at least five years.
- File Form N-400: This is the naturalization application, which you must submit to the US Citizenship and Immigration Services (USCIS).
- Pass the citizenship tests: Demonstrate proficiency in English and pass a civics test on the US government and history.
- Take the Oath of Allegiance: This is where you’ll officially become a US citizen. It’s a moment of pride and joy you’ll cherish forever.
How do I get Canadian citizenship as a US citizen?
Here is a general overview of the process of getting Canadian citizenship through naturalization:
- Determine your eligibility: If you are not a citizen by birth or descent, you must apply for naturalization.
- Obtain lawful permanent residency: You should have lived in Canada for at least three of the last five years, demonstrating proficiency in English or French and knowledge of Canada’s history, values, institutions, and responsibilities.
- Apply with Form CIT0002E: The application for Canadian citizenship, then take the citizenship test (unless you’re below 18 or above 54) and attend the citizenship ceremony.
- Pledge the Oath of Citizenship: Officially marking your entry into the Canadian citizenry. It’s a heartwarming moment when you become part of the Canadian family.
Our tax experts can assist with your US tax obligations in Canada. Contact us today.
What are the tax implications of US-Canada dual citizenship?
The US requires citizens to file a tax return yearly, no matter where they live. Individuals must report all types of income, such as wages, foreign investments, retirement pensions, and even tax-advantaged accounts.
Canadian taxes are based on residency, not citizenship, so if you live in Canada, you must report your worldwide income to the Canada Revenue Agency (CRA). But if you live in the US, you generally only pay Canadian taxes on income sourced from Canada.
Is there a potential for double taxation?
With the given tax implications, yes, there is. That’s why the Canada-US tax treaty comes to the rescue here, helping to prevent the same dollar from being taxed twice.
Moreover, you can utilize the Foreign Tax Credit (FTC) in the US, which allows you to offset taxes paid to Canada. The US also provides the Foreign Earned Income Exclusion (FEIE), which can exclude a part of your foreign income from US tax.
Do Canada-US dual citizens have to pay into both social security systems simultaneously?
No, Canada-US dual citizens benefit from the US-Canada totalization agreement, which prevents individuals from simultaneously paying into both countries’ social security systems.
Instead, contributions are made to the country’s system where they currently work. This agreement also allows dual citizens to combine work credits from both countries to qualify for social security benefits.
How can I improve my financial planning as a dual citizen?
With the complexities that dual citizenship brings, here are some ways to manage and potentially improve your financial planning to get ahead of the game:
- Understand your tax obligations in both countries: Each country’s obligations are equally important, even if you only reside in one. The US taxes citizens on their worldwide income, regardless of where they live. You can start by researching tax laws in both countries.
- Create a comprehensive cross-border plan: This plan should take into account differing tax laws, financial systems, investment strategies, retirement planning, and estate planning in multiple jurisdictions. Proper planning can minimize tax liabilities, reduce financial risks, and ensure your wealth is well-protected across borders.
- Consult with cross-border professionals: Working with professionals specializing in cross-border financial planning can save you time, money, and stress. You can work with:
- Cross-border tax advisors: For compliance with tax laws in both countries.
- Cross-border financial planners: For investment and retirement planning.
- Cross-border estate lawyers: For drafting wills and managing inheritance laws.
What are the consular considerations for dual citizens?
The US and Canada have different entry and exit rules when visiting the country. Here are some considerations a dual citizen may encounter when traveling or living in both coun
- Passport use: Both the US and Canada require using their issued passports to enter and exit the country. Failure to comply can lead to delays or complications during travel.
- Limited consular assistance: While in Canada, a US-Canada dual citizen is considered solely a Canadian citizen by the Canadian government, and vice versa in the US. This limits the ability of either country to provide consular assistance in the other’s territory.
- Military service and civic duties: Dual citizens may be subject to jury duty or military service obligations in both countries. While military service is unlikely in the current context, failing to comply with other civic duties, such as jury duty, could lead to penalties.
- Cross-border business and investments: Dual citizens engaging in cross-border business or owning investments in another country may face additional tax reporting and regulatory requirements, including compliance with the US Foreign Account Tax Compliance Act (FATCA).
- Employment in government or security-sensitive roles: Due to concerns about divided loyalties, dual citizens may face restrictions on employment opportunities in sensitive sectors such as intelligence, military, or law enforcement.
Can I renounce one of my citizenships as a dual citizen?
Yes, however, it’s not a decision to be taken lightly. The consequences of renouncing citizenship can be significant. You might lose the right to live and work freely in that country, which could affect your rights to benefits or services.
Renouncing citizenship involves formally applying to do so, usually at an embassy or consulate. It may include an interview to confirm that the decision is voluntary. In the US, renouncing citizenship also includes paying a substantial fee.
