Tax Filling as an Expat

As a US citizen living in Canada, be sure you have all of the facts before submitting your taxes. A US citizen living in Canada may also be required to file an informative return on your assets held in overseas bank accounts in addition to usual income tax return. Knowing which tax rules apply to you and comprehending your tax filing options is a lot to keep track of, especially when filing taxes as an American living in Ottawa, Montreal or Toronto.

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US TAX FILLING

Normally, countries use place of residency to determine whether you are subject to tax, but as a U.S. citizen, you are subject to tax even if you are living outside the USA such as in Canada.

AS a US citizen lining in CANADA, you should fill an annual US Tax return that reports your worldwide income. This return is known a Form 1040. Only filling this does not mean you are free from filing a Canadian tax return. Along with the Form 1040, there are other mandatory US informational filling requirements. The most common and the important of these additional requirements is a summary of your financial investments. If you have one or more accounts (including registered investment accounts) in a foreign (meaning non-US) country and the aggregate value of those accounts is over $10,000 you are expected to file a Report of Foreign Bank and Financial Accounts (“FBAR”) using Form FINCen 114E.

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FILLING REQUIREMENTS

If you are a U.S. citizen or resident alien living or traveling outside the United States, you generally are required to file income tax returns, estate tax returns, and gift tax returns and pay estimated tax in the same way as those residing in the United States. Your income, filing status, and age generally determine whether you must file a return. Generally, you must file a return if your gross income from worldwide sources is at least the amount shown for your filing status in the Filing Requirements.

FOREIGN CURRENCY

You must express the amounts you report on your U.S. tax return in U.S. dollars. If you receive all or part of your income or pay some or all your expenses in foreign currency, you must translate the foreign currency into U.S. dollars.

GROSS INCOME

Gross income includes all income you receive in the form of money, goods, property, and services that is not exempt from tax. In determining whether you must file a return, you must consider as gross income any income that you exclude as foreign earned income or as a foreign housing amount.

REPORT OF FOREIGN BAND AND FINANCIAL ACCOUNTS

FinCEN Report 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (formerly TD F 90-22.1), must be filed if you had a financial interest in, or signature or other authority over, any bank, securities, or other financial account(s) in a foreign country, the aggregate value of which exceeds $10,000 at any time during the calendar year. You do not have to file the report if the assets are with a U.S. military banking facility operated by a U.S. financial institution or if the combined assets in the account(s) are $10,000 or less during the entire year.

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What Americans living in Canada should know about U.S. taxes

What to know before you start

If you are a U.S. citizen living outside of the United States, you’ll need to file with the IRS. And some non-U.S. citizens still need to file.

When do I need to file by?

The U.S. filing deadline is May 17th. However, if you live outside the U.S. then you have until June 15th to file but interest will accrue from May 17th if your return has a balance due.

Will I owe taxes?

Not neccessarily. Filing a U.S. tax return doesn’t mean you will owe any taxes to the government in Canada or the U.S. Our experts will help you get the most from your return.

Am I Required to File US Taxes in Canada?

Yes! US citizens are required to file US taxes in Canada on worldwide income. It does not matter if you have already paid taxes in Canada. You still must file US expat taxes. If you haven't filed for many years, you may need to file under the Streamlined Process.

What rates can I expect in Canada as a resident?

2021 Federal Income Tax Rates in Canada (Taxable income in Canadian dollars)

  • 15% on the first $49,020 of taxable income, plus

  • 20.5% on the next over $49,020 up to $98,040, plus

  • 26% on the next over $98,040 up to $151,978, plus

  • 29% on the next over $151,978 up to $216,511, plus

  • 33% of taxable income over $216,511

US Expat Income Tax Obligations

The US requires you to report your worldwide income on your tax return. All income is generally subject to taxation