The United States of America and Canada share the world’s biggest bi-national land border and they have a lot of things in common in terms of culture, traditions, and most importantly the language “English”. It is easy for people to cross borders and move from America to Canada for tourism but a high number of migrations from America to Canada have been observed over the past two decades.
The reason for these migrations are numerous but most importantly people move to Canada for better jobs. Canada has secured a high place globally when it comes to a high quality of life, education, government transparency, and civil liberties. These are also some of the reasons why people prefer moving to Canada from America.
Why Do Expats Need Tax Consultants?
Some American citizens that have moved from America to Canada are often caught up in the struggle of taxation. With the complex taxation laws of both countries and the lack of knowledge of taxation of the common man, the question of how much and when to pay the taxes is quite a difficult one.
This is why there are laws made and consultants trained who help expats with their taxation procedure. The best way to pay your taxes without getting into the trouble of double taxation and to avoid tax fraud is to hire an expat tax consultant in Canada.
What Are The Taxation Laws in Canada For Expats?
U.S Tax Obligations On U.S Expats In Canada
According to the law in the U.S, all U.S citizens whether living in America or outside are required to pay tax. So if you are a U.S citizen living and working in the U.S or living and working abroad, you must pay your U.S federal income taxes.
U.S Income Tax Return Requirements
The requirement for a citizen of the U.S whether working and living in the U.S or outside of it is to file their taxes annually. The taxes are indexed with the Internal Revenue Service according to the age of an individual and their current status.
Meeting The Filing Deadlines
If you are living in the U.S and you have to file a tax then the last date to file a tax is the 15th of April. Though if you are living in Canada, you can get an automatic extension till June 15th.
How Can You Avoid Double Taxation?
According to the law in the U.S, you are supposed to file your taxes no matter which part of the world you live in. But, if you are filing your taxes in Canada on the income you’ve earned, the U.S IRC has provisions that help you avoid double taxation.
- You can either use a Foreign Earned Income Exclusion (FEIE) which helps you exclude earned income from the income you earned in Canada when determining the U.S income taxes. This will include any source of money you’ve earned from the U.S while living in Canada.
- Obtain a Foreign Tax Credit (FTC)
Nevertheless, there are many other formalities that you have to meet and for this purpose, you should hire a tax consultant who will guide you along the way.