Living in a foreign country can be tricky at times, especially when it is that time of the year when you have to file your taxes. International taxation is a complicated area. But that doesn’t mean that there is no solution to this. Hundreds of Americans move to Canada every year for many reasons. It may be work or just some peace of mind that you can have in a less crowded suburb. Around one million Americans are already living in Canada. Considering at least 50% of these Americans are good Samaritans and pay their taxes in time, we can say that international taxation has been going on for quite a while. Now the million-dollar question is, “do US citizens living in Canada have to file a US tax return?” and the answer is “Yes.” America is the only country after Eritrea that taxes its citizens’ income based on their citizenship and not their place of living. This means if you are American, no place on earth is tax-free for you. IRS has got you under the radar, no matter where you work, live or earn from. Now there are some fundamentals that can help you better understand your tax responsibilities as a US citizen living in Canada. Read on to discover those basics.
Due Dates for US Tax Returns
These dates are very important to note down. US citizens living in Canada have to file a US tax return on April 15 of the year they arrive. Then the same date will be their on-going due date unless they miss it. But what happens if you are unable to file it at the said date. There is an automatic extension for months for American citizens by IRS. Moreover, if a US citizen needs more time to figure out their tax situation, they can have further extensions up to December 15.
US Tax filing requirements
There are some tax filing requirements that are there for US citizens only. In simple words, Americans have to deal with some additional paperwork when they file their tax returns—especially living in a foreign country such as Canada. These requirements may include foreign assets and regular foreign income. Some of the foreign assets may include dividends, stock shares, property, and bank accounts. To fulfill these tax requirements, there is this form that comes into practice, called the Foreign Bank Account Reporting (FBAR). There is another form commonly known to Americans – Form 1040 by IRS. This form will be required to file your tax returns whether you live in America or not.
The Take-Away
The important thing to understand here is, at some point, you will need a professional tax accountant to assist you through the entire process. Ignoring professional help may not be your best bet in international tax return filing. You may find yourself stuck with some complications in the longer run. And even if it all goes smoothly, a professional tax accounting firm can do much more than assisting you. They will also tell you ways to minimize the amount you pay in taxes. You can get on top of your work routine if you are not worried about the tax filing process. for further information, you can contact the experts at GTA Accounting.