We have been preparing US income
tax returns for US Citizens and permanent residents living in Canada for over 15 years. As a US Citizen or permanent resident you are
required to file a US return each year regardless of the fact that you file
and pay taxes in your residence country. The expatriate earned income
exemption (currently approx $105,000) only can be claimed if you file a timely tax
return. It is not automatic if you fail to file your return. You can also offset
US taxes with foreign tax credits for the income taxes you pay in Canada on your
We have scores of clients located in Canda and know how to integrate your US taxes into the local income taxes
you pay. Any income tax you pay there can be claimed as a dollar
for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension
to file it until June 15th following the calendar year end. (You
cannot file using the Canadian fiscal year for US tax
purposes). You must pay any tax that may be due by April 15th in order to
avoid penalties and interest. You can get an extension to file (if you
request it) until October 15th.
There are other forms which must be filed
if you have foreign bank or financial accounts; foreign investment
company; or own 10% or more of a foreign corporation or foreign partnership.
If you do not file these form or file them late the IRS can impose penalties
of $10,000 or more per form. These penalties are due regardless of
whether you owe income taxes or not.
There are certain times you may wish to make
elections with respect to your Canadian corporation which
will give you US tax benefits. There are other situations where
forming a US corporation to receive your business income may be more
advantageous than using a corporation in your resident country. We can help
you with these decisions.
are self employed under the US-Canada social security
agreements you must either pay US social security or pay the social security
equivalent in your country of residence if you are self employed.
If you are a bona-fide employee you do not have to worry about paying US
social security on your wages.
participate in an RRSP you must file a form with the IRS to avoid having to pay
taxes on its earning each year, even though those earnings are exempt from tax
under Canada's tax law on you Canadian tax return.
We have helped hundreds of US expatriates around the world catch
up because they have failed to US returns for many years. Unfortunately,
unlike Australia, Canada, UK, etc. you must also file so long as you are a
US citizen or resident. You can if you follow proper IRS and State
Department procedures surrender your US Citizenship and therefore cut off
your obligation to pay US taxes in the future. You must surrender that
Citizenship for non-tax avoidance reasons and then can usually not return to
the US for more than 30 days per year for the subsequent ten years.
You can more read about the Canada/s income Taxes and
If you have not been filing, we can help you catch up. Most
often due to your high tax rates in Canada, and the foreign tax credits, you may
owe nothing on your US tax returns. There is not penalty for filing late if no
taxes are due. The penalties arise with respect to late filing certain
other reporting forms for foreign financial accounts, foreign corporation
ownership, etc. We can explain your exposure and help you move forward
with your US return filing requirement.
Let us help you with your US tax returns, US tax planning
and other US tax and legal concerns. Download our
expat tax questionnaire below
or email us to request a mini
consultation by phone, skype or email
I look forward to solving your tax concerns. Thanks
Don D. Nelson, Attorney, CPA