US Tax Filing For Americans Living in Canada

Income Tax For American in Canada

Income Tax For American in Canada

American living and working in Canada? All US citizens and green card holders living in Canada need to file tax returns to the IRS. Income that is subject to tax includes, salaries & wages. Also subject is dividend, interests, capital gains, rental income and other types of income. Income Tax For American in Canada

Penalty for non-filing and payment of taxes 

Are you a green cardholder? The consequences of non-filing could include  non-renewal of your green card. Or even denial of your application for citizenship!

Date of filing For Americans in Canada

Federal tax returns due before April 15.  But if you have no tax due and you are presently residing overseas, you are given until June 15 to file your Federal tax returns. If you fail to file on time, you can request for another six month extension.

Exclusion of Foreign Income

You are an American and you meet the “Physical Presence Test” or the “Bona Fide Resident Test” . If so  Foreign Housing Exclusion  and Foreign Earned Income Exclusion might apply.

Generally, foreign earned income embraces salaries, wages, professional fees or other payments obtained for personal services executed or done overseas

  • Car, home, and a range of other reimbursements and allowances called “Non cash income”
  • Rent expense that include rent of accessories and furniture
  • Repairs
  • Fair market value of employer provided housing
  • Utilities except telephone charges
  • Residential Parking
  • Fees for obtaining a lease hold that is not refundable
  • The maximum Foreign Earned Income Exclusion for tax year 2020 is $107,600.

FBAR Penalties

As a US person you are required to file Form 114, or FBAR (Report of Foreign Bank and Financial Accounts) where you need to list down your foreign financial accounts with a combined annual total of $10,000 in any calendar year.

Do you have undisclosed foreign assets?  The 2011 OVDI or Offshore Voluntary Disclosure Initiative allowed you to report this on or before August 31, 2011. However, due to the overwhelming interest in the program, the program changed in 2012 and now extended.

You have not filed US Tax returns yet?  You can still  qualify for the Offshore Voluntary Disclosure program. The IRS may end the program at any time so best to file now. The 2012 OVDP has a higher penalty rate than the previous programs, but offers clear benefits to encourage taxpayers to disclose foreign accounts now . Otherwise, risk detection by the IRS and possible criminal prosecution.

The IRS is resolutely determined to find you. There is nowhere for you to hide since the IRS has the means to obtain this information either through tax treaties or from reports of whistleblowers. Now,  with FATCA , Canadian banks will share you information  to the IRS.

Income Tax file For American Living in Canada

Again, are you an American living and working in Canada? contact Capital Tax can help you file your U.S. Taxes.

For more information on Income Tax file For American Living in Canada. Please see the following articles

Pay up or surrender your U.S. passport

FBAR Deadline


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