Canadian Tax Filing Requirements for Americans

Cross Border Taxes for Americans in Canada

Our international tax accountants and advisors specialize in Canadian and American cross-border tax preparation and tax issue resolution.

International Tax Filing Requirements for Americans

If you are a U.S. citizen or a green card holder living abroad you are:

  • required to file an annual U.S. tax return, regardless of where in the world you live or how long you have been living outside the U.S.
  • required to comply with the tax filing requirements of your country of residence
  • required to report your worldwide income from all sources

There are substantial penalties for failure to file a return; and failure to file a return and pay the taxes due may result in the denial of a passport renewal application

 Opportunities and Obligations

In addition to the many obligations and filing responsibilities there are also significant opportunities to reduce or eliminate your U.S. tax liabilities by applying tax credits for taxes paid in Canada or applying other provisions of the Canadian and US tax systems and treaties.

Here are some areas that require consideration:

  • If you have not filed tax returns for many years, or have never filed a U.S. tax return, file your returns as soon as possible, even if you do not owe any tax. To claim certain exclusions and tax credits to reduce your tax liability and to avoid penalties, voluntarily file your return
  • Foreign Earned Income. You can elect to exclude a portion of your foreign earned income to reduce or eliminate your U.S. tax liabilities provided election is made on a tax return that has been filed on time. Failure to file on time can result in exemptions being denied
  • Housing Exclusion. If your employer has paid  all, or a portion of your foreign housing costs or if you are self-employed, you may be able to claim a foreign housing deduction
  • Foreign Tax Credits. You may claim a dollar-for-dollar credit against your U.S. tax liability for tax paid to Canada on income that has not been excluded
  • Income Exempted by Treaty. U.S. Social Security benefits, Canadian CPP and OAS are exempt, by treaty, from U.S. tax for residents of Canada providing certain requirements are fulfilled
  • U.S. Reporting Requirements for Canadian RRSPs and RRIFs. Income recognition from RRSP’s and RRIF’s can be deferred until distributed to the plan beneficiaries provided appropriate attachments are submitted with your U.S. tax return
  • Foreign Bank Accounts. The identity and location of foreign financial accounts, with balances exceeding certain limits, must be disclosed and reported. Failure to do so may result in fines and serious penalties.

Aylett Grant LLP specialize in international taxes and can help you to:

  • File the necessary tax returns to keep you current with the I.R.S.
  • Maximize the benefits of claiming the foreign earned income exclusion versus the foreign tax credit
  • Claim the treaty exemptions and benefits applicable to your tax situation
  • Complete the form required to defer income earned within RRSP accounts
  • File the required disclosure forms for foreign bank accounts