US Tax Obligations for Canadians Working In US

When you talk about tax obligation for Canadian working in the US, there remains a dichotomy in regards to the basis of taxation in the two countries. While taxation laws in Canada is fundamentally based on residency (which means Canadian residents are obligated to file and pay for their taxes in Canada on the basis of their worldwide income. The US taxation system is however, based fundamentally on citizenship.

US Citizens or Green Card Holders

According to tax laws for US green card holders and citizens who are residing abroad, they are obligated to file their US tax returns on a yearly basis irrespective of residency in light of their worldwide income. Therefore, a Canadian who holds a green card or an American citizenship is liable to file for both his US and Canada based tax returns (Canadian Income Tax Return T1 and a US Income Tax Return Form 1040).

The deadline for Form 1040 tax return is April 15. However, there is an automatic extension to June 15 for US citizens or green card holder living outside of the US. The dual tax filing obligation does not translate into more taxes being paid by Canadian individuals who file for their Form 1040. And that is primarily because the Canada-US Tax Treaty comes into effect, acting as a shield for a person from double taxation.

Residence

Canadians that don’t have a green card or a US citizenship may still be subject to US tax laws. This is solely determined by a ‘substantial presence test’, which presented by the US Internal Revenue Code. Under the test, US residency is calculated by the total number of days a Canadian green card holder or citizen has spent in the US. This number is derived looking at the individual’s history over the past 3 years and if the number of days spend equals 183 or goes over it, and if the individual has spent more than 30 days in the current year, then US residency will be established.
The substantial presence bears quite a lot of important for a majority of employees in the US, especially for ‘snowbirds’, who enjoy working in the summer in the US, escaping the harsh winters of Canada. If the substantial presence test is satisfied by a Canadian individual he or she will automatically be deemed as a resident of the country, this is done to include them in tax bracket – making it mandatory for them to pay their taxes.

US Gift and Estate Tax

US estate tax is in most case mandatory to be paid by Canadian individuals that are green card holders or have an American citizenship. To prevent US citizens from gifting their properties to their next of kin and not paying their real estate tax, they have to pay a gift tax.

All in all, these are some of the most important tax issues and obligations for Canadians seeking employment in the US. And it is important to always be professionally represented by a tax specialist when going over these tax obligations.

US Tax Obligations for Canadians Holding Real Property in US

If you’re a Canadian national and own US properties from which you also earn monthly rent, it will be mandatory for you to pay your US withholding tax, which is 30% of the gross rent. However, you can alternately choose to pay tax on your rental income if you receive the rent on a net basis. But in this case you are obligated to pay a US tax return at the end of the rental year – declaring your net rental income. If you elect to pay tax on your net rental income with Internal Revenue Service and provide all information of it to your tenant, you will not have to pay the 30% withholding tax. But your decision will be considered as permanent, and the decision can only be revoked in light of special circumstances defined by the IRS.

A majority of people of who own US property for rental purposes automatically assume that as their expenses are always likely to exceed the total rent they receive, they don’t have to file for their taxes or withhold the tax at source. The IRS has made it mandatory that the real estate agent or a property manager who collects the rent for the non-resident should be primarily responsible to ensuring that the taxes are paid and report to the IRS in case any tax withheld from the rental source of income.

Should the non-resident consistently fail in filing for his tax return, his property manager will be responsible for the due that remain outstanding, which also includes interest payments and other penalty charges. Moreover, the non-resident owner of the property will also lose all this right to claim any sort of deduction, which includes a 30% of the gross rent.

Furthermore, different from the Canadian tax structure, the US has made depreciation deduction mandatory. So, if you fail to file your tax returns, you will be deemed to claim the depreciation and will also be liable to recapture. Failing to file your withholding or rental income tax can also diminish your ability to move your passive activity expenses and losses forward, which primarily because of the fact that the IRS will have no prior record of those losses. As a direct result of that, on a potential sale of your property, you may have a taxable income payable – which translates into a recapture with no off-setting expenses carried forward.

The Bottom Line
When recession hit the American economy back in 2007-8, the debt load ridiculously increased to historical levels in the country. And the government tasked out to ensure that they can implement measure to increase tax revenues. And in order to do that, the US government started to impose tax restriction from non-residents and foreigners, making it obligatory for them to disclose all their financial details. And given how close US- Canadian borders are, a majority of foreigners that are taxes are Canadians.
And this means that it is crucial for them to remain cognizant of the tax situation of the US and seek experts and specialized tax advice.

US Tax Obligations for US Citizens Living In Canada

Income tax laws significantly differ when you talk about the US and Canada. And one of the most striking differences between the two is the fact that while taxes in the US are primarily based on citizenship, tax laws in Canada are based on residency.
In simpler terms, what this actually means is, if a person is living in Canada as a full-time permanent individual, this individual is liable to pay taxes on his worldwide income, which he earns in Canada. It really doesn’t matter whether the person as US citizenship or is from another country, if he’s permanently living in Canada, he is obligated to be pay taxes in Canada.
If a resident from Canada or a Canadian citizen at some point in time leaves his home country to live in a different nation, cutting all ties with Canada, he will not be liable to pay taxes in Canada and won’t be subject to Canadian taxation laws and regulations.
US nationals however, have a lot more obligations when it comes to declaring their worldwide income when paying taxes in their home country – this is irrespective of wherever they live in the world. However, if the citizen has departed from his country, severing all ties with the US and begins to live in Canada as a full-time resident, they are still obligation to file for their income tax on a yearly basis with the IRS (Internal Revenue Service).
The only way they can escape paying taxes living in Canada is if they formally renounce their nationality, give up their passport and become Canadian citizen, if the person is to live in Canada. But this is a rather drastic measure to avoid filing for taxes, which most people don’t go for.
So, a US national who lives in Canada is subject to filing for his taxes in the US. They will have to go through the same filing procedures as they were when they lived in the US. And this essentially means, filling out the 1040 Form every single year, declaring all their worldwide income. They also have to do annually a separate filing for reporting foreign assets outside US (yearly FBAR Compliance).
The bottom line is US nationals residing in Canada have to file for a total of two tax returns every year. A tax return filed for the Canadian Revenue Agency because they live in Canada, and the second for the IRS as the individual is a US citizen.
The tax treaty signed between the two countries has a plethora of components, which are available as foreign tax credits. This is primarily to ensure that US citizen living in Canada refrains from duplicating taxes to both Canada and the US.

Finding the Best Tax Consultant

When it comes to filing and preparing taxes, some people prefer to do it themselves – they feel more comfortable with it. However, if you want to ensure you get every deduction you possibly can, then you need to rely on an expert tax consultant you has the experience and the knowledge to diligently file and look areas where he can possibly deduct an amount.

Regardless of the income and financial situation you are facing, a proficient and reliable tax consultant can considerably help you when it comes to saving money and at the same time steer-clear of any complications with the Canada Revenue Agency.

What can a Tax Consultant Really Do for You?

A professional tax consultant can do wonders for you in both short and long-term. For example, a Tax Consultant Mississauga and Brampton and Oakville can help you with planning every small and big aspect tax returns, your retirement strategy. Plus, he can also provide you with strategies and expert recommendations on your taxable investments as well as your deferred investments.
He can also provide you with streamlined strategies to enhance your refunds by locating key tax deductible areas you would have certainly missed otherwise.

Hiring the Right Tax Consultant

Before making the decision to hiring a tax consultant it is important that you first realize why you require his services. For example, if you need a Tax Consultant Mississauga and Brampton and Oakville for basic level preparation and filing assistance, you should hire a tax attorney on a more certified level. You have to find experts when it comes to providing tax advice and diligent preparation.
However, if your tax situation demands critical knowledge and experience – then it is strongly recommended that you hire a Professional Tax Accountant. Tax Accountants have a broader range of skills sets, which generally include specializing in tax, extensive academic qualifications and other credentials and continuing education experience.

Find and Selecting a Tax Consultant Mississauga and Brampton and Oakville

The foremost method of locating an experienced and professional tax accountant is to ask your friends and family. They can provide you with efficient recommendations, however, you can also search for a tax consultant yourself, but that requires some due diligence.
If you set out to finding a tax consultant yourself, it is important to consider a few things. First of all, you have to be absolutely sure that the tax consultant you are hiring has the experience and the knowledge in the type of work you have to take care of. For example, small-business taxation or personal income tax, etc.

Furthermore, look for someone who has a decent amount worth of experience under his belt – especially when it comes to his particular niche. Plus, you have to also ensure that the tax consultant you are considering has credentials to deal with Canada Revenue Agency, which essentially means you can be rest assured if there is a problem with your taxes, your tax matters will be taken care of with Canada Revenue Agency.

Last but not least, it is also a wise decision to compare difference companies providing tax consultancy, and you select the one without a blemish on its record. Interview the selected candidates; ask for their accolades and experience.

In all, these are some of the important elements that go into selecting and hiring a Tax Consultant Mississauga and Brampton and Oakville.

How to Hone-in On a Corporate Tax Accountant Mississauga, Brampton and Oakville

So, you’ve just been through the nasty ordeal of filing your taxes, huh? Wished you employed the services of a corporate tax accountant? If you’re current accountant end up increasing the endeavour of filing taxes for you then it is high time that you consider hiring an experienced and highly professional corporate tax accountant Mississauga, Brampton and Oakville.
However, before doing so it will be a good idea to consider the following pointers to ensure you make all the right choices when employing and incorporating the services of a professional tax accountant. So, here goes:
But we move any further, let’s just shine some light on why it is becoming pertinent to hire a qualified and efficient tax accountant, day by day.

A tax accountant can help save a lot of time and provide intelligent solutions to the complex of tax problems. Not to mention he can help clear the cloud of confusion and conundrums when it comes to accurately, adequately and efficiently managing your finances as well as taxes. However, it is important to understand that a qualified, academically accomplished and experience corporate tax accountant can also help provide numerous other benefits to your organization as well, which mainly include:

Become a Trusted Advisor/ Financial Consul – More than just a person who can help you efficiently and effectively file taxes and diligently prepare for the tax season way before anyone else does; a tax accountant can also incorporate the role of a trusted business advisor for your small business venture, helping your supervise your cash flow, offer financial strategies aimed at expanding your business and assess all short and long-term risks.

Becoming a Balanced Scale When it comes to Business and Personal Needs – Numerous small business ventures, primarily sole proprietorships and emerging businesses realize the fact that most of their business and personal needs are more or less closely mitted together. This is where are corporate tax accountant comes in, acting your advisor, helping you to make businesses centric decisions.
Finding a Corporate Tax Accountant Mississauga, Brampton and Oakville
When it comes to efficiently and effectively searching for a qualified tax accountant, one the best ways to ensure you make the right pick is through referrals. And the most viable way you can hire a tax accountant through referrals is networking. Go to your local events hosted by the Chamber of Commerce in you province, talk to your peers and ask them for qualified referrals.

Screening the Candidates
When you’ve successfully shortlisted all potential candidates, plan a free consultation session, which can help you identify the strengths and weaknesses of all your candidates. Among some of the most important things is asking them all the right questions, which include:

What is your background and experience working for small businesses?
This is where you assess the candidate’s abilities to meet a company’s dynamic and complex accounting requirements along with the necessary resources to manage them. A corporate tax accountant who knows this is more than qualified to file and prepare taxes for your small business venture.

Can you elaborate on your experience within the industry?
This is where you probe him to elaborate on the industry he has been a part of, a good accountant will always know everything about the industry – and a majority of tax accountants are also specialists in different niches, such as franchising, export, real estate, etc.

The Bottom Line
In all, you have to realize that in the end of everything it always going to be you who is responsible for filing and preparing taxes. Do not consider hiring tax accountants who promise things that are way too good to be true.

Canadian and US personal tax preparation laws are vary considerably. Income tax in Canada is based on residency regulations, whereas in the US income tax forms need to be completed based on citizenship rules.
If you are US citizen currently working and living in Canada, you need to be aware that you are still obligated to file a US income tax return.
In southern Ontario, you can get help with US personal tax preparation in Mississauga, Brampton and Oakville.

General Rules
US citizens need to report annually their worldwide income to the IRA, regardless of where they live. For instance, if you have obtained a permanent resident card in Canada and live here full-time with your family, you are required to file a personal US income tax return. The only escape clause you have is to renounce your US citizenship. For the vast majority, this is neither practical nor desirable.
Unfortunately for US citizens living in Canada, you need to file to income tax returns every year (a Canadian and a US one). The two countries have a tax treaty that governs foreign tax credits to help ensure you do not end up being double-taxed on the same income.
Additional Forms
Form 1040 is the principal form you have to file when completing your US tax return. In many cases there will be additional requirements such as Form 2555 and 1116. A few specific forms that need to be completed are detailed in this article, but this is not a comprehensive list. Each person’s circumstances need to be evaluated and a professional tax accountant can help you with your US personal tax preparation in Mississauga, Brampton and Oakville.

Foreign Bank Account Reporting (FBAR)
As a US citizen, you will most likely be asked to complete a FBAR form submitted to the Financial Crimes Enforcement Network (FinCen). The form essentially details your holdings in Canadian banks and other financial and investment accounts.
The form has to be completed and submitted online via the Bank Secrecy Act (BSA) E-filing system.
Failure to file this form, whether intentionally or not, can lead to severe financial penalties. You can end up being billed for the greater of $100,000 or 50% of your account holdings if you do not adequately report your Canadian bank and investment accounts.

Foreign Account Tax Compliance Act (FACTA)
FACTA was introduced in 2014 and requires financial institutions outside the US to report on accounts held by US citizens.
Under this legislation, US citizens are also required to complete Form 8938 (Statement of Specified Foreign Financial Assets). The US government uses the information supplied on this form to verify that US citizens are declaring all their income on the US tax return, including investment income.
This is an excellent example why it is so critical you get professional help for your personal tax situation as a US citizen living in Canada.

Other Rules
There are many other detailed US rules regarding the tax treatment of Canadian tax savings accounts, including RESP, RRSP, RRIF and TFSA. To learn about these rules and to ensure you are neither being double taxed nor being assessed penalties and interest (for failing to report financial information) speak to a Canadian Tax Accountant who specializes in Canada-US tax personal tax preparation.
American citizens currently residing in southern Ontario can get professional help with their US Personal Tax Preparation in Mississauga, Brampton and Oakville.

Whether you are the owner of a corporation, an independent contractor or willfully employed in a profession of your choice, none of you can escape tax season. Mostly, people only have to worry about their personal taxes, but corporate owners have the added burden of ensuring their corporate tax returns are also completed accurately and on time. Trying to file your own taxes is possible nowadays with powerful software which asks all the right questions and is programmed to optimize your credits and tax breaks.

Tax Regulations

However, do-it-yourself tax preparation is only possible if your tax situation is relatively simple (you are an employee without many investments or other possible credits). This situation applies to a limited number of people. For the rest of us, a detailed knowledge of tax rules, at least the ones that apply to our situation, is absolutely necessary if we want to save ourselves from paying too much tax. Yet, have you ever tried to pick up a tax book and read tax regulations? Even accountants shudder at the idea! There are precious few people who enjoy torturing themselves as such.
Corporate tax rules are even more convoluted than personal tax rules and the worst part is every successive government changes the rules based on their election platform, so a credit which you took advantage of in the current year may disappear by the time it’s time to file next year’s personal or corporate tax return.
Experienced Accountants
The Mississauga and Brampton area is fortunate to be one of North America’s most diverse and wealthy neighborhoods. Accountants in this geographic area encounter all kinds of personal and corporate situations which call for unique tax solutions.

Clients’ circumstances offer a huge range including:
• Employed bachelors with investment properties
• A couple where each partner is in a highly skilled profession and there is a lot of discretionary income and few tax credits to take advantage of
• Families with young children
• Families with university bound dependents
• Start-up family businesses
• Businesses owners looking to sell their lifelong work
• Retirees thinking about the most advantageous methods to withdraw their retirement savings
• Families requiring estate planning due to a deceased member.

Even with this detailed list, there are countless other situations in Mississauga and Brampton encountered by chartered accountants.

Benefit to Individuals and Businesses

The benefit for people looking for professional help with personal and corporate tax preparation in Mississauga and Brampton is that you can draw upon the experience of some of the most skilled chartered accountants in the country.
A chartered accounting firm can greatly help reduce your personal taxes and increase the money available to you now for discretionary expenses or to be invested for an emergency or your retirement. Chartered accountants can even guide you to the best retirement vehicles for you based on your individual tax situation.

Businesses have a huge incentive to reduce their tax burden as every dollar you save can be used to reinvest within your business and increase future income. Money legally pried away from the federal and provincial governments can come in handy to increase your marketing budget or invest in modern equipment that will increase the efficiency of your operations, improving quality and reducing costs.
Save yourself the hassle of preparing taxes and risk losing thousands of dollars paid in taxes you can reduce legally by hiring professional chartered accountants for tax preparation in Mississauga and Brampton.

The economic engine of Canada is fueled in large part by small and medium sized enterprises (SME), but owners of these businesses are mostly baby boomers. The elder boomers have already reached retirement age while the youngest ones in the group are now over 50 years old. This implies that a good portion of SMEs will be put up for sale in the next few years as the kids of baby boomers (millennial generation) have mostly carved their own careers away from the limelight of the family business.
Unfortunately, many business owners do not fully comprehend the value of their organization when they put it up for sale. A common refrain that accountants in Mississauga and Brampton hear is the regret expressed by those selling their businesses. This is a frequent occurrence since too many people believe their business is only worth what the other party is willing to fork over to purchase it.
This is not the right way to frame the sale of your company. You would never think this way when it comes to your family home. As you spend a lot of time in your home, spending money and efforts to maintain and update it, you know best the value of your house and would not sell it for a minimum acceptable price. This is exactly the same situation with your business, because only you know the value of the intangibles in your business.
Agreeing on the value of tangible assets is relatively a simple task, but it is those intangibles that can really drive up the selling price of your business to its proper value. Items like the importance of your customer list, contracts in place with large customers, agreements with suppliers, reputation of your business, skills of your employees are all worth a certain amount and are often sold at a discount by SME owners.
Chartered accountants can help you quantify these values and give you a better estimate. This can empower you and give you confidence during negotiations with a potential buyer. By consulting an accountant in Mississauga and Brampton before you even reach the decision to sell, you can take steps to increase the value of the business as you approach retirement. Based on the guidance and advice you receive from an accountant, you can implement policies and processes which may enable you to fetch a higher price for your lifelong work.
Potential purchasers can also benefit from consultations with professional accountants to ensure they do not pay more than the market value for a business. If you cannot see the value of intangibles, but really like a business, perhaps a meeting with an accountant will help confirm or alleviate your concerns as to the seller’s valuation of his or her business.
The Toronto area is the biggest economic zone in Canada, therefore, accountants in Mississauga and Brampton encounter an abundance of SMEs which are put up for sale, and have a lot of experience in valuating businesses. We recommend you consult or retain the services of a qualified professional accountant if you are thinking of selling your business.

Don’t use False Guarantees

Always don’t use a tax preparation office that guarantees that you simply large refund with no even reviewing ones financial information. They could be trying to deceive you. Alternatively, they might possess the intention of utilizing false claims to acquire you a refund whatever. All of your tax professionals are dedicated to getting you the biggest refund possible, and can typically provide a free of charge estimate over the product.

Ask What They want

When you carry out call and speak to a tax preparer on the phone you should ask them what they require from you. It is a huge red flag when they tell you they do not need many facts from you, or when they rush you journey phone. In order to offer you an estimate they ought to ask you a range of questions to figure out what credits and deductions you be entitled to.

Know what you may need

Depending on just how complicated your place a burden on return is, possibly you have to seek out an established qualified to put together it. If you can be a wage earning employee , nor own a home, then most tax preparers is going to be able to help you get started. However, if you’ve got a complicated business return, then you should call around and locate a professional familiar with business taxes.

Find Multiple Quotes

It may be beneficial to get quotes from a number of local tax offices. Just like together with most purchases, you need to be weary of anyone who gives you a drastically lower (or high) price, as either one could be a red flag.

Check with

One of the best ways to get a reliable place a burden on preparation service will be by asking good friends, family, and coworkers regarding recommendations. Just be sure to let them know an associate referred you, as much tax offices deliver incentives for word-of-mouth.

Ask for Credentials

Although it is illegal to supply any tax services without proper credentials, there are cases across the nation where unqualified scammers have roofed uninformed taxpayers. Should you be dubious about some sort of tax preparer, then feel absolve to ask to see their credentials. They should be more than happy to show you, and most places a burden on offices actually exhibit their credentials in an easy to understand location.

Are many people Updated?

Since the IRS code is consistently being modified, you’ll want to make sure you hire a specialist who is up-to-date on all new IRS tax legislation changes.

Are many people Available?

It is important to get a trustworthy tax preparer that’s going to be also available if you want them. If they by no means return your calls, or emails, then it might be a red hole. Your tax returns are crucial, and you are able to easily get hands on the person you pay to organize them.

Ask in relation to Service Fees

Always inquire about service fees prior to give a place a burden on preparer your discreet financial information. They are able to give you a good upfront price quote good type of return you may need prepared. The IRS alerts taxpayers against using the services of tax preparers that bases their fees on the percentage of one’s IRS refund, as it might be motivation to enable them to take illegal deductions on your behalf.