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Reading Time: 3 minutes Digital content creators and online brands are always looking for ways to reduce the cost of their businesses. While there are many opportunities to reduce
Reading Time: 4 minutes Ever since the digital space became a new reality, there has been an increase in Canadian e-commerce retail sales. It rose from $21.975 billion in
Reading Time: 3 minutes Helping individuals and businesses pay their taxes is the primary responsibility of a tax consultant or tax accountant. Tax law, tax compliance, and tax planning
Reading Time: 4 minutes Every country has its policies regarding taxes. Some countries, for example, Monaco and Qatar, don’t tax income at all. Each country designs tax policies to
Reading Time: 5 minutes U.S taxpayers are required to report and pay taxes on their worldwide income. If you are a U.S. expat and living/working abroad, FBAR, FinCEN 114,
Reading Time: 3 minutes If you are an American citizen or a U.S. expat, and meet a certain income threshold, then you are supposed to report your foreign bank
Reading Time: 3 minutes Let’s be honest – nobody likes paying extra taxes. You don’t want to spend more than necessary money on taxes, just as you wouldn’t want
Reading Time: 2 minutes As apparent by the name, “International taxation” refers to the taxes applied on the income that businesses and companies earn by selling their product and
Reading Time: 3 minutes The e-commerce market is booming every day. It has given access to billions of consumers. More consumers, more revenues, and more profits – this is
As an international firm with offices in Houston and Toronto, our certified tax professionals can help you with US Tax compliance and tax consultancy for tax savings. We are here to help so contact us now.
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…or any US resident or citizen living anywhere else in the world, income tax returns need to be filed in the US using the customary Form 1040. This can be filed either separately or jointly (if married).
If you are employed by a US company in Canada, then you fall under the Canada US Income Tax Convention. This means that your employment income is exempt from taxation by Canada unless it is above $10,000 per year. If higher than $10,000, your income is exempt if:
The individual resided in Canada for less than 183 days in any Calendar year
The exemption is not borne by a Canadian citizen or a Canadian resident employer with a fixed base in Canada
If you are self employed US citizen/resident in Canada, aside from filing Form 1040 and Schedule C in the US to declare your worldwide earnings there are other things involved. Based on your current residence, you are required to either pay the US’s self-employment tax (15.3% for incomes up to $118,500) or Canadian Pension Plan (CPP) premiums to cover your social security taxes.
Whether you are considered employed or not in Canada is dependent on whether your primary work place falls under the definition of “Permanent Establishment” as per the Canada-US Tax Treaty.
As a proven resident of both countries, you are at risk for double taxation on your worldwide earnings if you are not careful. The Canada US Income Tax Convention provides solutions for this.
As a U.S citizen or resident alien having a tax home in a foreign country (i.e., place of business/employment permanently or indefinitely based in a foreign country) and meeting the criteria of either the Bona Fide Residence Test or Physical presence Test, you can elect “Foreign Earned Income Exclusion”.
Foreign housing cost is also excludable for payments made by an employer either on your behalf or as a reimbursement for incurred housing cost. This amount is taxable foreign earned income. (Availing this may in some cases offset your earned income exclusion).
Foreign Tax Credits (FTC): If you are a US citizen or expat paying foreign income taxes, the same foreign income will become a US tax liability. To alleviate that burden of 2-country double taxation, you are provided with appropriate tax credits on your US tax liability.
For assistance in planning and transferring your U.S. assets to Canada, please contact our colleague Phil Hogan, CPA, CA, CPA at (25) 661-9417 or phil@philhogan.com
