Americans that move to Canada
Moving to Canada for Work? Moving to Canada for Love?
Have you lived in the US your whole life? Have you recently moved up to Canada for work or for a life partner? Making a move across the border is exciting and it opens up a whole new world. Unfortunately it also has some tax and immigration complexities that you need to be aware of and manage.
The first item to highlight is that your US tax obligations don’t go away when you move to Canada. As a US citizen, you still need to file US federal tax returns every year. These returns become more complicated once in Canada, as you now have Canadian earnings and assets that are reportable. In addition to your income tax filings, the US Treasury Dept also wants to know about your foreign asset holdings. This information is reportable on the FBAR and on Form 8938 (once you meet the reporting thresholds). From a US state income tax standpoint, if your former state charged state income taxes, you will need to complete a state tax return in your move year. This will probably be a part year state income tax return. Thereafter you future state income tax obligations may fall away, unless you continue to have state source income and assets.
Moving on to the Canadian side, in a move year, you will need to complete a part year resident tax return. This will be required at both a federal and provincial level. In future years you will be required to complete annual Canadian income tax filings reporting worldwide income. You may also be subject to additional T1135 (foreign income verification statement) reporting where you continue to hold reportable assets in the US.
This is a lot to digest and its only an outline of some of the more important factors to consider. We can assist in explaining this further and with all your related reporting requirements.
Canadians who move to the US
Moving to the US for Work? Moving to the US for Love?
Canadians moving to the US have a number of factors to consider and incorporate into their tax filings.
On the Canadian side, the first step in this process is a residency determination to determine whether you have emigrated from Canada. If you have emigrated you will need to complete a part year resident tax filing and you need to tell the CRA your date of emigration. There is also a deemed disposition of property calculation that needs to be completed, as well as additional disclosures related to properties you hold when you leave. Where there is no change of residency you continue to have an ongoing Canadian tax filing obligation to report worldwide income each year.
On the US side, your residency determination impacts how you need to file US returns. If you have not emigrated from Canada, a non resident set of US tax filings may be appropriate. If your residency has changed, you will need to file a residency tax filing on the US side (either via a dual status return or a full year resident return), together with a potential state income tax return and FBAR filing.
This is a lot to digest and its only an outline of some of the more important factors to consider. We can assist in explaining this further and with all your related reporting requirements.
Americans who have never filed US Taxes
Dual Citizen Never Filed US Taxes Before?
Are you a dual citizen, born in Canada, who didn’t know you needed to file US taxes. Has the knowledge that you needed to file every year got you concerned? Good news. The IRS recognizes that certain folks are in this category and they have a catch up program for you. Its called the foreign offshore streamlined filing procedure. It involves filing back taxes, overdue FBAR filings, and a certification letter and its not automatically subject to any penalties.
Once your are caught up on theses filings you will continue to have an annual filing requirement to the US. This consists of both federal income tax return and FBAR filings. This is a lot to digest and its only an outline of some of the more important factors to consider. We can assist in explaining this further and with all your related reporting requirements.
Cross Border Taxes
To learn more about some of the intricacies involved in cross border taxes click here. To learn more about cross border tax accountants click here.
Our Team
Richard Markman, the owner and key operations person at US Taxes Toronto, lived in the United States for nearly 20 years. He is a US Certified Public Accountant in the State of California. He also holds an active CPA license in the Province of Ontario, Canada. Our business focus is on cross border taxes and we also have a comprehensive understanding of how and when to apply the US-Canada Tax Treaty. Gives us a call to learn more about our services.
How Can US Taxes Toronto Help?
We can assist with the preparation of your US and Canadian Tax Filings. Our Cross Border Tax Accountants provides hands on ongoing support throughout this process, so that preparing and completing your tax filing is convenient and easy. If you would like to get more information on how we can help please reach out to us via our contact page.