Our team aims to support clients in navigating Canada Revenue Agency (CRA) and Internal Revenue Service (IRS) regulations. With our specialized expertise and unwavering commitment to excellence, we stand as your trusted partner in navigating the complex landscape of US tax compliance while living abroad.
Living abroad brings a host of opportunities and experiences, but it also comes with the responsibility of staying compliant with tax regulations. Proper tax compliance is not just a legal obligation; it’s a crucial step in safeguarding your financial well-being.
Understanding your tax residency is vital. Dual residency challenges can arise for Canadians living in the U.S. The Treaty Tie-Breaker Rules in the Canada-U.S. Tax Treaty provide guidance in resolving such situations.
Expatriates can benefit from FEIE, allowing the exclusion of foreign-earned income from U.S. taxation. Eligibility and proper documentation are crucial for maximizing this tax advantage.
Canadian residents with U.S. financial ties must meet reporting obligations, including FBAR and Form 8938. Failure to comply may lead to penalties.
Navigating social security and pensions across borders is critical. Coordination between Canadian and U.S. pension plans is essential for optimizing benefits and avoiding unnecessary tax burdens.
As a Canadian national working temporarily in the USA, you may need to file a U.S. tax return. The appropriate form depends on your specific circumstances:
The penalties for not filing the Report of Foreign Bank and Financial Accounts (FBAR), FinCEN Form 114, can be significant. The penalties are as follows:
As a Canadian national who moved to the USA, you will likely need to file a U.S. tax return for the year of your move. Here are some general steps you may want to consider:
As a U.S. green card holder residing and working abroad, you need to report your global income on Form 1040. There are provisions like the foreign earned income exclusion and foreign tax credits to manage potential double taxation.
US citizens must file personal tax returns, since their worldwide income needs to be reported. The only way to be exempt from reporting foreign income is to renounce your US citizenship. However, if you do, please be aware of the expatriation tax that can apply to you if you are a “covered expatriate”.
As a Canadian resident working temporarily in the USA, you must report your U.S. wages to the Canada Revenue Agency. However, you are entitled to a foreign tax credit and can claim social security taxes, medicare premiums and federal and state income taxes imposed on your US wages as foreign taxes paid.
Yes, if you are also a resident for US tax purposes. RRSP and TFSA are reportable accounts on the FBAR (Report of Foreign Bank and Financial Accounts) when you meet the US$10,000 reporting threshold. Contributions to RRSP are not deductible for US tax purposes. Earnings in RRSP are still exempt. TFSA is considered a regular bank account therefore earnings within are taxable for US purposes.
The gift tax in the U.S. is typically paid by the person making the gift (the donor). There’s an annual exclusion for each donee who you transfer gifts to. The annual exclusion is indexed for inflation ($17,000 for 2023). Certain gifts, like transfers to spouses or qualified charities and transfers to pay for tuition and medical expenses of someone else, are exempt.
U.S. residents receiving gifts from non-resident aliens must report the receipt of foreign gifts if the total gifts received from that particular non-resident has exceeded $100,000 for the year. File Form 3520 separately from your personal income tax return by the due date (April 15) or extended due date (Oct 15). Consulting with a tax professional is recommended if you think that you are subject to Form 3520
The federal estate tax return (Form 706) and the federal estate income tax return (Form 1041) serve different purposes and are filed under different circumstances:
Due to the US-Canada tax convention, a Canadian corporation needs to file federal income taxes only if they have a permanent establishment (PE) in the US. A PE generally means an office or employee in the US. If they do, they need to file Form 1120-F to report the earnings attributable to the US PE.
A Canadian corporation with U.S. sales may need to file state-level taxes in states where it has a substantial presence (nexus). This includes state income taxes on income attributable to the state and potential obligations for collecting and remitting state sales taxes. Depending on each state, there could be physical nexus (physical presence in the state via office lease or employee hire) and economic nexus (amount of sales in the state) rules applicable to the Canadian corporation.
Yes, as a Canadian resident who owns a U.S. Limited Liability Company (LLC), you generally need to report the LLC’s earnings to the Internal Revenue Service (IRS) in the United States. The LLC is treated as a flow-through entity by default, which means that the owner reports the earnings made by the LLC personally (on Form 1040NR). However, the LLC can elect to be taxed as a corporation. In that case, the LLC files taxes itself to report its earnings (on Form 1120).
Revenue Canada treats a U.S. LLC as a foreign corporation, a separate existence from their owners. Depending on the ownership structure and the amount of activity in the LLC, the Canadian owner may have to file Form T1134 in respect to the foreign corporation. Please refer to the T1134 info on our website for further details.
