American Tax Services
A variety of U.S. tax services are available to clients, including computerized completion of the personal tax return form. The services also include electronic research facilities and interpretation of a number of complex issues affecting U.S. taxation, including treaties, regulations, and legislation specific to jurisdictions in each of the 50 states and the District of Columbia.
The Canada-United States Tax Convention
A number of recent changes have gone into effect. For instance, although Canadians present in the U.S. for longer than 182 days in the year are generally considered to be U.S. residents for tax purposes, some concessions are now available.
Canadian residents who possess a green card, for instance, and are in the U.S. for at least 183 days, enjoy some advantages under the convention if they remain Canadian residents and can establish a "closer connection" to Canada.
U.S. social security payments to Canadian residents are subject to 25.5% withholding tax, with no further Canadian tax liability.
A Canadian foreign tax credit provision may be available to offset U.S. estate taxes on death, particularly those resulting from U.S. capital gains. Non-residents in the U.S. can also apply for a limited credit against federal estate taxes. In some instances, trusts may also act as a shelter for some assets, when an individual dies and U.S. based property is held in trust by another family member.
However, estate taxes in the U.S. are both a complicated legal and accounting process, and estates of Canadians with U.S. based property are subject to detailed scrutiny.
Tax Planning Strategies for the U.S.
Canadian tax strategy and financial planning must be closely coordinated with any investment or long-term travel plans to the U.S. Canadian residents traveling to the U.S. should carefully plan their itinerary to ensure they don't exceed the requisite number of days to be declared a U.S. resident for tax purposes.
Both spouses should also ensure they have taken all available Canadian tax credits, such as their non-refundable tax credits, prior to traveling.
Medical expenses deductions, based on a 12 month period ending during the taxation year, and including any health insurance purchased for the U.S. sojourn, should also be maximized.
Canadian residents must exercise caution when purchasing shares in U.S. corporations, real estate or other investments, such as stocks and bonds, then closely monitor their holdings, because estate taxes can be onerous. Moreover, in the U. S., income from all sources must be reported to the IRS.
Canadians must also ensure all the paperwork of U.S. disclosure returns have been completed in order to ensure that various protections available under the Canada-U.S. tax protocol will be honoured.
Note to users: All information provided is of a general nature. Although we endeavour to ensure its accuracy and timeliness, no one should act upon it without appropriate professional advice after a thorough examination of the facts of the particular situation.