U.S. Personal Taxes – Expats & Non-Residence
U.S. income tax preparation can be difficult to understand and often even harder to find assistance in navigating the various forms and deadlines. If you’re already an expatriate, you have more to think about than adjusting to our Canadian winters. Although it may be temping, you must not ignore your U.S. taxes.
Every U.S. citizen is required to pay tax on their worldwide income regardless of whether they are living in the U.S. This means you must file a tax return with the IRS.
The tax situation for expatriates is often complicated and frustrating. Many variables affect how much expatriates pay the IRS. Preparing your own income tax returns can be a task that leaves you with more questions than answers. Whether you like it or not, today’s tax laws are so complicated that filing a relatively simple return can be confusing. It’s just too easy to overlook deductions and credits to which you are entitled. Even if you use a computer software program, there’s no substitute for the assistance of an experienced tax professional. That’s why the team at TMAPC is here to help.
To ensure a smooth tax filing process, you must be well informed. If you take up residence in a foreign country without exploring the tax ramifications, you may find yourself paying more than you expect to the U.S. government or your home state as well as penalties and interest.
Some of the important considerations include:
- Amount of foreign earned income. You can deduct a substantial amount in earned foreign income from your U.S. taxes.
- Your host country. Many countries have tax treaties or conventions with the United States, which will dictate how you file your U.S. taxes.
- Which state you most recently lived in. Some states do not have income taxes; others make it difficult to sever your ties with that state.
- Rental income and dividends/interest from assets in the U.S. You must pay taxes on these exactly as if you were living in the U.S.
- Whether you are self-employed. You may have to pay self-employment tax on your income, even if you can exclude it as foreign earned income on your income taxes.
- Your holdings in a foreign bank accounts and investments. Any interest in or authority over a foreign financial account over a certain amount must be reported to the U.S. Treasury Department. Failure to disclose these balances could result in substantial penalties.
Our Tax Services
Although the IRS offers numerous deductions, credits and exclusions to expats, taking advantage of them is not straightforward.
Some exclusions vary by country, while others can only be claimed for a portion of the year. In addition, each requires supporting forms and worksheets which can be more than cumbersome to prepare.
For U.S. citizens who have already settled here, we offer the following tax services:
Canadians and US Income Tax – Non-resident Tax Returns
- U.S. Tax Returns - We prepare your U.S. income tax return, including the most common schedules and forms.
- State Tax Returns - Depending on which state you most recently lived in, you may need to file a state return.
- Small Business Tax Returns - We assist small business owners, self-employed individuals or folks with significant rental property with their returns.
- Offshore Voluntary Disclosure Program - It's not uncommon for expats to fall behind on their taxes. For U.S. citizens who have not filed their tax returns, the IRS has created a program to bring you back into compliance. Not filing returns is a felony. We work with experts in this area to ensure that you can get caught up and out of trouble with the IRS.
- Foreign Corporation Ownership Reporting - If you have an ownership interest in a foreign corporation, you may need to add forms to your return to disclose information to the IRS. The penalties for failing to disclose this information START at $10,000. We can help guide you through the proper reporting.
- Foreign Bank Account Reporting (FBAR) – U.S. citizens who have bank accounts with balances exceeding $10,000 U.S. must report these holdings to the U.S. Treasury department. We file the FBAR forms for individuals who meet these requirements.
- Consulting - If you're unsure of your need to file federal or state tax returns, give us a call. We help you get clear on your situation.
There are many situations where a Canadian citizen will need to file a U.S. income tax return.Working in the U.S.
- Many Canadians live in communities that border the U.S. and cross the border to work. Because you are working in the U.S., you will be required to file a U.S. Income Tax return. The U.S. tax rules differ significantly from the Canadian rules. And the taxes you pay in the U.S. will impact the taxes you pay in Canada.Land Ownership, Rental Properties and Selling Real Estate
- Land ownership in the U.S. also brings a confusing tax world to Canadians. Many Canadians own real estate in the U.S. The U.S. treats revenue generated from the sale or use of real estate different than most income. Whether you are a snow bird selling a vacation home or owner of a U.S. rental property, you need to be aware of the different tax policies.Casino Winnings
- Many Canadians find themselves with a tax situation because they won money at a U.S. casino. Unlike Canada, the U.S. taxes casino and lottery winnings. However, the tax is on the net wins less losses. The casino must withhold 30% of any slot machine win over $1,200. We can help you get your money back!Other Special Tax Situations
- There are special situations that further complicate filing your tax returns in the U.S. and Canada. Students, teachers, artists and professional athletes have special provisions in the U.S. – Canada Income Tax Treaty. We can help guide you through issues.Assistance in Canada
- Once we have completed your U.S. income tax returns, you will need the assistance of an accountant in Canada to help you complete your Canadian income tax return. We can work with your accountant in Canada or we can provide you with the expertise in Canadian and Cross Border taxes.
Every day the massive computer center at the IRS is getting more sophisticated; it's just a matter of time before they catch up with you.
This is not a situation to take lightly – failing to file your tax returns is a criminal offense. If you do not file, you can be prosecuted and punished with potential jail time, one year for each year not filed. Why risk potentially losing your freedom for failing to file your tax returns?
Let us give you the peace of mind you deserve by helping you get in compliance with the law. If you voluntarily file your delinquent returns you'll likely avoid further problems other than having to pay the interest and penalties.
If you wait for the IRS to file your returns for you, they are filed in the best interest of the government, usually with little or none of the deductions you are entitled to.
There’s no need for expats or non-residence taxpayers to pay more than required or to suffer under penalties and interest, just because the process is more confusing for them. Let us help you navigate the tricky waters of U.S. taxes.