Transparent, Flat-Fee Pricing and Hassle-Free Experience of Filing U.S. Tax Returns in Canada
U.S. tax filing in Canada comes with its own set of complications. Filing two sets of taxes can feel a little overwhelming. Knowing which tax rules affect you and understanding your tax filing options is a lot to stay on top of.
American citizens living in Canada will likely face tax pressure from both the U.S.-based Internal Revenue Service (IRS) and its counterpart in Canada, the Canada Revenue Agency (CRA). Filing Taxes is a cross-border accounting firm in Toronto that specializes in Canada-US tax planning and preparation. Whether you want to visit an office or file online, our expert cross-border tax accountants will take care of it for you.
Do US citizens living in Canada have to file US tax returns?
All US citizens living in Canada should be filing an annual US tax return that reports worldwide income. You’re taxed on all your income, including income from your wages, dividends, and interest, and rental properties. The US assesses taxability based upon citizenship, not where you reside. In other words, no matter where you live, if you are a US citizen you are expected to file a US income tax return. That doesn’t necessarily mean you’ll end up paying tax to the US, but it does mean there are filing requirements and, importantly, the potential for very substantial penalties if you fail to meet those filing requirements. The United States is among only a few governments that tax international income earned by their citizens, as well as permanent residents, residing overseas. There are, however, some provisions that help protect from possible double taxation.
How do I file a US tax return in Canada?
A US citizen residing in Canada you should be filing a US individual income tax return (Form 1040) to report worldwide income on an annual basis, in addition to the Canadian income tax return filed as a tax resident of Canada. Although income is reported in both Canada and the US, double taxation is generally mitigated through the use of foreign tax credits.
Do US citizens living in Canada have to pay Canadian taxes?
U.S. citizen residents of Canada must file two returns each year – a Canadian income tax return because they reside in Canada, and a U.S. return based on being a U.S. citizen. The Tax Treaty between Canada and the U.S.A. has several mechanisms available known as foreign tax credits, to make sure the person does not have to pay duplicate taxes to both countries.
Do I have to declare US income in Canada?
All income that you have earned from foreign and domestic sources must be declared on your personal tax return. Depending on the type of income such as capital gains, investment, or rental property you need to report it in the same manner as you would if it was sourced from within Canada.
How can the US avoid double taxation in Canada?
The purpose of the Canada-US Tax Treaty is to avoid double taxation and prevent fiscal evasion concerning taxes on income and capital. The solution for US expats to avoid double taxation on their income arising in Canada is to claim US tax credits to the same value as Canadian income taxes that they've already paid.
When is the deadline to file your U.S. taxes?
- Filing deadline for expats that owe: May 17th
- Filing deadline for expats: June 15th
- Filing deadline by requesting extension: October 15th
- Deadline to pay tax due: May 17th
What happens if you don't pay US taxes while living abroad?
U.S. tax penalties are steep and can result in fines, a revoked passport, or even jail time. If you’re tempted to skip filing your U.S. taxes or additional financial reporting, you’ll pay the price later. Canada is one country that complies with Foreign Account Tax Compliance Act (FATCA) reporting—meaning Canada and the U.S. can exchange information about an individual’s financial accounts. Considering the hefty fines and penalties that come from not reporting your assets (upwards of $10,000 in fines per year), it’s worth it to have an expert cross-border tax accountant go through your documents to make sure you’re reporting the correct amount.
Can I file taxes for previous years in the USA?
To use the IRS expat tax amnesty program, you need to certify that your past failure to file was non-willful. You can do that by
- filing the last 3 years of federal tax returns and
- providing 6 years of Report of Foreign Bank and Financial Accounts (FBAR),
- and paying any tax that may be due.
If the IRS agrees that you are eligible for the program, then there will be no penalties imposed. We offer a range of options for those who wish to file for previous years,
What if I used to be a U.S. citizen but have renounced my citizenship?
Once you renounce your US citizenship, you will no longer have to pay US taxes. You need to pay an exit tax if you qualify as a covered expatriate. The exit tax is an attempt by the US government to consolidate your US tax affairs. Our Tax Experts will help you prepare your final expatriate return to meet all U.S. Tax Code rules and regulations.
Does the US and Canada share tax info?
US- Canada Tax treaty is a bilateral agreement between two states, officially known as tax conventions. There are four main purposes of a US- Canada tax treaty:
- Eliminate and/or reduce double taxation;
- Facilitate the exchange of information;
- Allocate and limit taxing powers between two sovereign nations; and
- Assist with the collection of tax income.
Cross-border tax made easy – How Filing Taxes can help US Citizens living in Canada with taxes?
Canadian and U.S. income tax rules are very complex. With the unique rules pertaining to cross border rules, it is often a very daunting task to accurately complete the U.S. income tax return.
Our expert Cross border accountants in Toronto are providing full cross-border tax services for individuals and businesses to become cross-border compliant and maximize the tax benefit. Particularly with the complexities associated with US tax regulations and the significant penalties for non-compliance, it is imperative to strategically and proactively manage both corporate and personal taxation requirements to prevent outsized tax liabilities or double taxation and avoid costly penalty fees.
We are cross-border tax consultants to a range of clients, from people looking to move to or from Canada, to investors deploying capital abroad, to entrepreneurs seeking to expand their business into the US. We help clients file their taxes in the US, including the preparation of the Form 1040 individual income tax return and supporting schedules. We also assist in filing Canadian income tax returns and helping clients realize the full benefits of the US-Canada Income Tax Convention.
We have years of combined experience preparing and filing U.S. income tax filings for clients living in Canada. We make sure that your cross-border taxes are done right the first time. At Filing Taxes our professional accountants stay up to date with the ever-changing world of cross-border tax laws.
What do we offer?
If thinking about Filing U.S. Tax Returns in Canada makes your head spin, you can rest easy—Filing Taxes is here to help.
With constantly changing laws and regulations, entrusting your cross-border tax services to our qualified team at Filing Taxes saves you both time and money. Our services include but are not limited to:
- US Personal Income Tax Compliance & Preparation Services
- US Personal Income Tax Planning & Consulting Services
- US Corporate Tax Compliance & Preparation Services
- US Corporate Tax Planning & Consulting Services
In addition to corporate and individual cross-border tax services, Filing Taxes also provides Canadian residents and U.S. citizens with non-resident tax filing services.
Why Choose Us?
Thousands of U.S. expats living in Canada have chosen Filing Taxes to handle their cross-border taxes for peace of mind. Having developed an exceptional track record of success with corporations and individuals with cross-border taxation needs, we can design robust tax solutions that align with our client's strategic priorities, conditions, and financial objectives. Our team is recognized for their subject matter expertise and comprehensive knowledge of cross-border tax planning, preparation, and compliance as seasoned experts.
We remain committed and ready to provide you with customized strategies that maximize your tax efficiency and enable you to stay compliant in evolving tax landscapes. To get started, connect with us today to discuss how we can assist you with your cross-border tax needs.
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