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Income Tax Guide for US Expats Working in Canada

  To many Americans, Canada might appear to be a parallel universe: a land of courteous people who generally speak English yet do not hold American citizenship—a country that is both close and far away. Others remember Canada as the country that invaded the United States in 1812 and burned down the White House (despite the fact that Canada did not exist at the time, and the British bear sole responsibility for the attack on Washington, DC). However, approximately 800,000 US citizens call Canada home. Cities such as Toronto, Calgary, Vancouver, and Edmonton, as well as other parts of the country near the US border, have large numbers of US expats. Taxpayers in Canada must pay both federal and provincial (or territorial) taxes, much as citizens of the United States do to the IRS and state governments. The primary distinction is that most Canadian provinces (with the exception of Quebec) do not need the filing of a separate return; the federal government collects provincial. Because o...
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Tax Filing Requirements for US Citizens in Canada

 If you are a US citizen or resident alien, the rules for filing income, estate, and gift tax returns, as well as paying estimated taxes, are essentially the same whether you are in the US or abroad. You are taxed on all international income, and you must declare and pay taxes in accordance with the Internal Revenue Code.Many Americans residing overseas are eligible for specific tax breaks, such as the foreign earned income exclusion and the foreign tax credit, but they can only obtain them by submitting a US tax return. For more information, read Publication 54, Tax Guide for US Citizens and Resident Aliens Abroad. U.S. taxpayers who own foreign financial accounts must report them to the Treasury Department, even if they earn no taxable income. Taxpayers must electronically file a Report of Foreign Bank and Financial Accounts (FBAR) by April 18, 2022, through the BSA e-filing system. For more information, read the Foreign Bank and Financial Account Report (FBAR). 

Taxpayers must also disclose virtual currency transactions to the IRS on their tax forms

as they are taxable under the law just like any other property transaction. For additional information, visit virtual currencies. If you are a U.S. citizen or resident alien living abroad or serving in the military outside the United States on the regular due date of your return, you are entitled to an automatic 2-month extension to file your return without asking one. If you use a calendar year, the standard due date for your return is April 15, with an automatic extended due date of June 15. If the due date falls on a Saturday, Sunday, or legal holiday, it is postponed until the next business day. If you are eligible for the 2-month extension but are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by submitting Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2-month extension date. Even if you are granted an extension, you will be required to pay interest on any taxes not paid by the regular due date of your return. Electronic filing (e-file). Taxpayers having an AGI (Adjusted Gross Income) below a certain threshold can electronically file their tax return for free utilizing Free File. 

Taxpayers having an AGI greater than the given criteria may use the free file fillable forms

e-file by purchasing commercial software, or the authorized IRS e-file provider locator service. A small number of organizations offer software that can handle foreign addresses. Taxpayer Identification Number A social security number (SSN) or individual taxpayer identification number (ITIN) is required for every taxpayer who files a tax return in the United States or is claimed as a dependent on one. To receive an SSN, complete Form SS-5, Application for a Social Security Card. To obtain Form SS-5 or to determine whether you are eligible for a Social Security card, contact a Social Security office or visit Social Security international operations. If you or your spouse are ineligible for an SSN, you can obtain an ITIN by submitting form W-7 along with the required documentation. If you have an Identity Protection PIN (IP PIN), enter it correctly on both electronic and paper. tax returns to avoid rejection and delays. An erroneous or missing IP PIN will result in the rejection of your e-filed return or a delay in processing your paper return until it is verified. Do not divulge your IP PIN to anyone. It should only be shared with your tax expert when you are ready to sign and submit your return. The IRS will never request your IP PIN. 

Phone calls, emails, and texts requesting your IP PIN are scams

If you don't have an IP PIN, see Get an Identity Protection PIN (IP PIN) for information. Get tax guidance for US citizens and green card holders living in or migrating to Canada. H&R Block covers all you need to know about filing US expat taxes in Canada. U.S. citizens living in Canada who pay US taxes ski in Totonto. With H&R Block, you may be confident that you've chosen the proper professional for your US expat taxes in Canada. We've detailed a few things that US people working in Canada should be aware of regarding US and Canadian taxes, such as what factors influence the tax you pay and which papers you may be required to complete. Of course, expat tax requirements are complex and extend much beyond what we've described below, which is why we've made it easy to do your expat taxes correctly. Get started on your taxes in the United States and Canada right now!What Americans living in Canada should know about United States taxes For starters, Americans and US green card holders residing in Canada should continue to file a US tax return annually. As a citizen of the United States, you owe taxes to the country, no matter where you live. That means you are taxed on everything of your income, including earnings, dividends, interest, and rental properties. Even if you only remain in Canada for a short time, working as a US citizen can have an impact on your tax situation. For example, if you earn money while on a short-term assignment, you must record it on your US tax returns. As your financial roots deepen in Canada, you will have more to consider while submitting your American taxes.

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Income Tax Guide for US Expats Working in Canada

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