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U.S & Cross Border Tax Archives - Madan CA

Do investors who receive form 1099 or form 1042 from the U.S. have to file a U.S. tax return?

No, as long as the proper withholding taxes were held on your dividends and interest income. For dividends it is 15% and for interest, it is 0%.    

As a US citizen, is there any benefits of holding a TFSA/RESP?

No. For US tax purposes, these accounts are not recognized as tax free accounts. That means that any income earned within these accounts will be taxed when you file your US tax return. Furthermore, some TFSA and all RESP accounts are considered foreign trusts for US tax purposes. This causes additional tax reporting burden on … Continue reading As a US citizen, is there any benefits of holding a TFSA/RESP?

What is the tax deadline for U.S. Personal Tax Return?

By default, the U.S. personal tax return is due by April 15 of the following year. However, if on April 15 you live and work outside the U.S., your deadline is extended to June 15. Whether your deadline is April 15 or June 15, if you require additional time to file, you can submit Form … Continue reading What is the tax deadline for U.S. Personal Tax Return?

I am a Canadian resident and I received dividends and interest income from the U.S. Do I have to file a U.S. tax return?

No, first of all, dividend from the U.S. is subject to 15% withholding tax whereas interest income from the U.S. is not subject to any withholding tax as per the Canada – U.S. tax treaty. Both sources of income will not create a U.S. tax filing liability to Canadians as long as the proper amount … Continue reading I am a Canadian resident and I received dividends and interest income from the U.S. Do I have to file a U.S. tax return?

When are U.S. Personal Tax Returns due?

US personal tax returns are due on April 15 of the following taxation year. However, if you live and work outside the US on a normal basis, the deadline is automatically extended to June 15. Furthermore, any taxpayer may request additional time to file by filing this form to the IRS by their due date. … Continue reading When are U.S. Personal Tax Returns due?

I’m a US business planning on selling products to Canadian customers. Do I need an extra-provincial license?

Americans, who are not incorporated, and who are carrying on business in a Canadian Province, must register their business in that province. To register, you must obtain an extra-provincial license. Failure to register can result in a penalty of $2,000 for individuals. Selling products to Canadian customers or providing services to Canadian customers is considered … Continue reading I’m a US business planning on selling products to Canadian customers. Do I need an extra-provincial license?

I am a Canadian resident and have some funds in a U.S. 401K. What is the most tax efficient way of bringing these monies into Canada?

The most tax efficient method is to transfer these funds to your RRSP. Unfortunately, you cannot directly transfer your 401K to your RRSP. This transfer can be completed as follows: Open a Rollover Individual Retirement Account (IRA) account with an investment firm capable of cross border investment management. Rollover the 401k to an IRA. Withdraw … Continue reading I am a Canadian resident and have some funds in a U.S. 401K. What is the most tax efficient way of bringing these monies into Canada?

Do U.S. Citizens who received a W2 slip for work done in Canada need to file a U.S. tax return?

As a Citizen of the U.S. you are required to file your worldwide income for the year. Since you earned the income in Canada, it is considered Canadian source income. As such, you will be eligible to either claim the Foreign Earned Income exclusion or Foreign Tax Credit (depending on which one lowers your tax … Continue reading Do U.S. Citizens who received a W2 slip for work done in Canada need to file a U.S. tax return?

I am filing a 1040 USA tax return, do I have to report my Canadian RRSP, TFSA account? If so, how?

You must disclose your TFSA account on your FBAR, known as Report of Foreign Bank and Financial Accounts if the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported. If your TFSA is held through a trust – you have to complete Form 3520A  and … Continue reading I am filing a 1040 USA tax return, do I have to report my Canadian RRSP, TFSA account? If so, how?

What happens when U.S. Partnership Returns are filed late?

Question: I’m a partner in a US Limited Liability Partnership, but I don’t think I will be able to file the 1065 (partnership return) by the due date. Can I file at a later date without incurring penalties? Answer: For a US LLP with a calendar year end, you can file Form 7004 to request … Continue reading What happens when U.S. Partnership Returns are filed late?

What are the tax implications for a Canadian business that earns income in the U.S.?

As a Canadian business that is deriving income from sales that occurred in the US you will be required by the IRS to report this income on one of the following tax returns, depending on your organizational structure: • 1040-NR  • Form 1120-F• Form1065 The IRS has the right to levy income tax on business income … Continue reading What are the tax implications for a Canadian business that earns income in the U.S.?

If I have a rental property in the U.S., what do I need to attach with my US tax returns to ensure the IRS accepts the figures reported?

When submitting your tax return to the IRS, you must ensure that all figures that you claim as an expense have the proper documentation submitted with them. Additionally the receipts and invoices you submit along with your tax return must prove: The expense is reasonably considered to be an ordinary expense given the nature of … Continue reading If I have a rental property in the U.S., what do I need to attach with my US tax returns to ensure the IRS accepts the figures reported?

How are RRSPs taxed in the U.S.?

For U.S. Citizens or U.S. residents who hold a Canadian RRSP, it should be noted that the IRS treats the RRSP just like any other investment account and therefore, imposes tax annually on the growth of the investments inside the RRSP. However, an election can be made by completing the Form 8891 annually with your … Continue reading How are RRSPs taxed in the U.S.?

How are IRAs and Roth IRAs taxed in Canada?

This is a significant concern for U.S. citizens or green card holders who are also residents of Canada and therefore, must file tax returns in both countries. IRA An IRA has very similar characteristics to that of a Canadian RRSP – contributions are tax deductible, growth is tax free, and the withdrawals are taxed. However, … Continue reading How are IRAs and Roth IRAs taxed in Canada?

Who is required to complete the “Report of Foreign Bank and Financial Accounts (FBAR)” with the IRS?

Every U.S. Citizen, regardless of whether they live in the U.S. or not are required to file a FBAR Form to the IRS on an annual basis if the total value of the following foreign financial accounts exceed $10,000 at any time during the year: Bank Accounts RRSP/RESP/TFSA Brokerage account held for trading stocks and … Continue reading Who is required to complete the “Report of Foreign Bank and Financial Accounts (FBAR)” with the IRS?

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