How to Get CPA Help
Reading Time: 3 minutes Managing your business or personal finances can get complicated quickly, and it’s common for individuals and businesses to reach a point where they realize they
July 4, 2023
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All of the information you need, right here, right now.
Reading Time: 3 minutes Managing your business or personal finances can get complicated quickly, and it’s common for individuals and businesses to reach a point where they realize they
Reading Time: < 1 minutes We’re excited t share some new Tax Facts and Filing Statistics in a new infographic! Take a look at the information below to see how
Reading Time: 4 minutes 2021 Tax Season is officially over! You definitely deserve to embrace that relief that one of the most stressful times of year is over. 2021
Reading Time: 6 minutes When it comes to dealing with multiple countries and their financial systems, things can get complicated quickly! Luckily, for individuals there are a few pieces
Reading Time: 3 minutes If you’ve dipped into the world of Bitcoin and cryptocurrency, you’ve probably faced some questions in the past few years about how this will impact
Reading Time: 3 minutes Cryptocurrency is presently one of the highly favored currencies in the market, which holds a significant market capital. While people are capable of making transactions
Reading Time: 2 minutes We always recommend working with a qualified crypto accountant for managing your cryptocurrency assets, business, or tax liability. If you’d prefer to go the software
Reading Time: 3 minutes In order to report crypto on your taxes, you’ll need to understand a few key details about how it works. In this article, we’ll walk
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