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Reading Time: 4 minutes A CPA provides expertise in the financial industry. Businesses often hire them to manage tax planning, financial forecasting, and defending any issues in front of
Reading Time: 3 minutes The short explanation lies in the statement all CPAs are accountants, but not all accountants are CPAs. While it’s easy to get the two confused,
Reading Time: 6 minutes Employee classification ultimately affects how you issue payroll. Each team member will be paid differently depending on whether they are a full-time or part-time employee,
Reading Time: 5 minutes If you don’t file your taxes on time, you will be liable to pay penalties in addition to the taxes you owe. This statement may
Reading Time: 5 minutes Keeping records of your sales, purchases, and expenses is not only a good business practice, it’s essential. Your receipt and record keeping practices impact every
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Reading Time: 4 minutes Each tax season, many business owners and individuals discover they owe the IRS late filing penalties and/or late payment penalties. But, more often than not,
Reading Time: 5 minutes Filing your tax returns can be a very overwhelming process. The situation can add to the complexity when you file an extension for your tax
Reading Time: 3 minutes With inflation going up, people get pushed into higher income tax brackets as well. To regulate the impact of inflation, the income tax bracket gets
Reading Time: 3 minutes As the new year is approaching, the deadline to file your tax for 2023 is near. It is estimated that the IRS starts accepting tax
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.
Empower your organization by putting your finances to work. Our experts help you navigate urgent challenges and a fluctuating economy while improving shareholder value and maximizing business performance.
…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
