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I am a Canadian/US dual citizen and recently moved to the US. I kept my existing job as it was a remote IT job. I am currently on payroll in Canada but would like to transition to paying taxes in the US starting 2023.

How exactly does my tax situation work?

Can I ask my employer to send my total gross amount without any deductions and then just pay all my US taxes for 2023 in 2024?

I have read of a person in a similar situation that opened an LLC, payed themselves through the LLC with proper deductions and that was that. My concern would be if there are additional tax obligations and I'd lose money doing it that way.

Does anyone have any insight on this scenario?

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  • In addition to federal taxes: What state do you now reside in? Most states have a state income tax. Some states also impose extra obligations on employers who have employees (or even contractors) in the state.
    – krubo
    Commented Sep 28, 2022 at 14:17

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would like to transition to paying taxes in the US starting 2023.

Surely, as a US citizen, you've been filing your US tax returns yearly until 2023 as well, right?

How exactly does my tax situation work?

Exactly the same as it did before, except you won't be able to claim FEIE or FTC (since your income is no longer foreign earned).

Can I ask my employer to send my total gross amount without any deductions and then just pay all my US taxes for 2023 in 2024?

Does your employer have a US entity? Are you working as an employee or a contractor? What's your tax status in Canada? These are all relevant questions that you need to answer.

I have read of a person in a similar situation that opened an LLC, payed themselves through the LLC with proper deductions and that was that.

LLC, at least in the US, is a "disregarded entity". That means it is not relevant for taxes. You can create an LLC and elect to treat it as a corporation, but even then you'd probably want an S-Corp to avoid double taxation, which means it would still be a disregarded entity. So I don't know what your friend did, but opening an LLC changes nothing for taxes.

Does anyone have any insight on this scenario?

Your licensed tax adviser would probably have some relevant insights.

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  • I have only been a dual citizen since 2019 and because of circumstances never needed to file a US tax return. Because of my recent move, and starting of this new job in the current tax year, my situation is not as simple as you're making it out to be.
    – AB27
    Commented Sep 28, 2022 at 3:07
  • @AB27 it is very simple, it's just new to you. Find a local CPA to do your taxes for a couple of years and then you'll get the gist.
    – littleadv
    Commented Sep 28, 2022 at 3:20
  • "opening an LLC changes nothing for taxes": doesn't it change payroll taxes (social security and so on in the US and their equivalents in Canada)? ...in that it's only possible for the employer/client to pay an LLC as a contractor, whereas a natural person can be paid as an employee or a contractor.
    – phoog
    Commented Sep 28, 2022 at 9:11
  • @phoog no, it doesn't. If the work is employment then opening LLC means nothing because the employee is still the same natural person. If the work is contract then switching to LLC will just put a different entity name on 1099 but would otherwise remain the exact same treatment.
    – littleadv
    Commented Sep 28, 2022 at 9:25
  • @AB27: "I have only been a dual citizen since 2019" Do you mean you became a US citizen in 2019? How did you become a US citizen? If you went through naturalization, then you must have been a US permanent resident for a number of years, and US permanent residents are subject to US taxes on their worldwide income too. If you mean you got a US passport in 2019 based on citizenship from birth from your parents, then you would have been subject to US taxes your whole life. Only in rare circumstances would you not have been subject to US taxes before becoming a US citizen.
    – user102008
    Commented Sep 28, 2022 at 17:29

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