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Reading Time: 5 minutes Bookkeeping involves dealing with a lot of numbers, which is why it is advised to establish routine checks for your accounting books to avoid anomalies.
Reading Time: 4 minutes Accounting clerks and bookkeepers both contribute to the management of a company’s financial records and share the responsibility for documenting, confirming, and reporting business transactions.
Reading Time: 4 minutes It’s always a good idea to conduct random audits of your company’s financial books to make sure that your company’s data is stored in the
Reading Time: 5 minutes The IRS received over $4.1 trillion in tax revenue in 2021. If you don’t pay the full amount owed on your taxes, you will be
Reading Time: 3 minutes People around the world have started to work from home as it is convenient. Small business owners who work from home could significantly reduce their
Reading Time: 4 minutes Any improvement that significantly increases the value of your home and extends its useful life is considered a home improvement. If you tear down your
Reading Time: 6 minutes A financial audit ensures that the financial statements are prepared in accordance with the applicable reporting framework (GAAP). It increases the confidence of the public,
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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
