2019  & earlier US  INCOME TAX RETURN RETURN PREPARATION AND PLANNING FOR US EXPATRIATES  & CITIZENS LIVING IN CANADA

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 Canadian return.

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.

If you 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.

When you 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  Procedures HERE.

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