There are more than one million US citizens living in Canada. These individuals remain subject to tax by the IRS on their worldwide income and have annual filing obligations with significant penalties for non-compliance. As Canadian residents, they are also subject to Canadian taxation on worldwide income. This potential for double taxation is largely resolved through generous rules set out in the Canada-US Tax Treaty.
US citizens living in Canada must comply with the complex interactions between the Canadian and American tax regimes as modified by the rules under the Canada-US Tax Treaty. Many US citizens in Canada are only recently learning about their US filing and reporting requirements. With the enactment of the US Foreign Account Tax Compliance Act (FATCA), those who are not currently compliant must consider the options available in order to become compliant.
The increased exchange of information between the Internal Revenue Service (IRS) and Canada Revenue Agency (CRA) due to FATCA’s implementation means that dual citizens and residents of Canada with US account holdings need to be aware of their obligation to report this US revenue in Canada. If they are not tax-compliant, the CRA and consequently the IRS will soon find out.
Our professionals have specialized expertise in assisting all clients become tax-compliant, particularly US citizens who live in Canada and must maintain compliance with US tax rules in order to avoid the costly problems that can occur without forthright disclosure. We regularly advise US citizen clients in the areas of routine filing and reporting requirements as well as how to take advantage of catch-up compliance pathways for delinquent US taxpayers.
Although the cost of compliance as well as the time involved in gathering the information necessary to become compliant can be burdensome, the consequences of non-compliance are far more burdensome. The team at Tax Partners is here to make the process of becoming tax-compliant as smooth as possible.