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 or Toronto.
With Tohme Accounting You may rest assured that you’ve discovered the correct competence for your US expat taxes in Canada.
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.
With Tohme Accounting you don’t need to look into these details, because we at Tohme Accounting are offering you our US Tax Filling Service to handle this professionally and accurately at our end.
A US citizen living in Canada is not automatically left paying tax twice on the same income, thanks to the Foreign Tax Credit that Samer Tohme, CPA applies for clients across Ottawa and Toronto. Canadian tax paid during the year generally becomes the foreign tax credit claimed on the US return using Form 1116, which credits US tax dollar for dollar rather than leaving the same income taxed in both countries. This relief must be claimed actively, it is not automatic just because both returns are filed, and the sequence in which the two returns are filed also matters. Coordinating both returns together is essential to claiming this correctly, which is why Samer Tohme, CPA reviews US and Canadian filings side by side rather than in isolation, working alongside personal tax services for clients who need both returns handled together. For business owners who are also incorporated, the same coordination applies to corporate tax filing obligations. Schedule a Free Consultation to review how the Foreign Tax Credit applies to your situation.
That’s why when you work with a Corporate Tax Company, we will take the hit and face all the obstacles to get it fixed, done properly, and in conclusion letting you enjoy the result. We will be replying to the government’s taxation agency that inquiries on the behalf of your company, we will clarify challenging tax situations with the various government agencies and then mediate in the best interest of your firm. But to get that job done, there is always too much work to do, that’s why Tohme Accounting is offering you to take your stress away. We don’t stop there because the job is not done until the paperwork is completed, and there are lots of paperwork involved: GST/HST/QST Returns, Corporate Taxes, Government Reporting, Bookkeeping, and Payroll. It never seems to end. Anything that touches the Corporation, we can handle. Our job is to ensure your efforts are directed towards running your business, which includes all Corporate Accounting states you face all the time. Tohme Accounting will search for every possible issue you had or might have, resolve it right away and have it done correctly for a bright road led to success.
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 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.
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.
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.
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.
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.
Filing US taxes as an American living in Canada — a situation that applies to any US citizen or green card holder regardless of where they earn income — does not mean paying taxes twice. The US-Canada tax treaty exists specifically to prevent that outcome. Under the treaty, Canadian taxes you have already paid can be applied as a foreign tax credit against any US tax owed on the same income.
For most Americans in Ottawa and Toronto, this means their US tax owing is reduced to little or nothing. If you are managing cross-border tax obligations on both sides of the border, Tohme Accounting ensures the treaty is applied correctly so you keep what you have earned. Schedule a Free Consultation to discuss your situation.
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.
2021 Federal Income Tax Rates in Canada (Taxable income in Canadian dollars)
The US requires you to report your worldwide income on your tax return. All income is generally subject to taxation
Yes. The US-Canada tax treaty is designed to prevent double taxation for Americans living in Canada who must file returns with both the IRS and the CRA. Canadian income taxes you have already paid can be claimed as a foreign tax credit on your US return, reducing or eliminating the tax you owe to the IRS on that income. For Americans in Ottawa and Toronto, filing both returns correctly with Samer Tohme, CPA, means the treaty works in your favor.
You are not alone, and there is a clear path forward. The IRS offers a voluntary compliance program designed for Americans abroad who have fallen behind on their US tax filing. Acting before the IRS contacts you is important, as the program offers a way to become fully compliant and avoid severe penalties when the failure to file was unintentional. Samer Tohme, CPA, can review your specific situation and determine the right steps — Schedule a Free Consultation to get started.
Generally, no. As a US citizen living in Canada, the Foreign Tax Credit generally prevents the same income from being taxed by both countries, crediting Canadian tax already paid against US tax owed using Form 1116. This credit is not automatic, it must be calculated and claimed correctly on the right forms in the right sequence. The exact outcome depends on your income and situation, so not every filer ends up owing nothing. Samer Tohme, CPA can review your specific situation.
The Foreign Earned Income Exclusion, on Form 2555, excludes a capped amount of foreign earned income from US tax, with the cap adjusted annually. The Foreign Tax Credit, on Form 1116, instead credits US tax dollar for dollar for Canadian tax already paid, with no fixed cap. For most US citizens in Canada, the Foreign Tax Credit tends to be the better fit, since Canadian tax rates generally run comparable to or higher than US rates. Samer Tohme, CPA can confirm what fits you.
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