An American plans to follow his Canadian wife back home to Canada for love. The IRS might follow him for life.

“The combined effect of the two systems appears to place me in a worse position than either a U.S.-based physician or a Canadian physician. This is because I am unable to fully use the standard physician tax structuring available in either system without friction or mismatch between the two tax regimes.”

— Brandon, an American physician planning to relocate to Canada

Dear Congress,

I am a U.S. physician currently practicing in the Upper Midwest and planning to relocate to Canada with my Canadian spouse to continue my clinical work there — but I dread the cost and complexity of being an American abroad.

In Canada, my practice will be structured through a small professional corporation, which is the standard model for physicians there. Current U.S. tax law will places me in a particularly difficult position. Even though my work and income would be fully Canadian-based, I remain subject to U.S. citizenship-based taxation and complex anti-deferral rules that do not align well with Canadian professional corporation structures. In practice, this creates significant compliance burden and a risk of overlapping taxation, with limited ability to fully reconcile credits in a straightforward way.

What makes this situation especially challenging is that the combined effect of the two systems appears to place me in a worse position than either a U.S.-based physician or a Canadian physician. This is because I am unable to fully use the standard physician tax structuring available in either system without friction or mismatch between the two tax regimes.

As a result, I am effectively caught between systems that were not designed to interact in this context, despite engaging in ordinary clinical work as a practicing physician rather than operating a passive or multinational structure.

As residence-based taxation legislation is being considered, I would strongly encourage Congress to pay attention to how these rules apply to individuals in situations like mine to ensure that physicians and similar professionals working abroad are not inadvertently put at a disadvantage by misaligned definitions of business income and foreign corporation treatment.

Sincerely,

Brandon