US Expat Taxes for Americans Living in Canada – What You Need to Know
There are an estimated 700,000 Americans living in Canada.
There are lots of good reasons for living north of the border, but there’s no need to list them here. More importantly, if you’re an American expatriate living in Canada, what exactly do you need to know regarding filing US expat (and Canadian) taxes?
The good news is if you are already paying income tax in Canada, there are various exclusions and exemptions available to prevent you paying tax on the same income to the IRS too.
US taxes – what you need to know
If your annual income is more than US$10,000 (or $400 self-employed), you must file a form 1040. While any tax due is still due on April 15th, expats get an automatic filing extension until June 15th. This can be extended still further until October 15th.
If you live abroad and have assets worth over US$200,000, you also need to file a form 8938 declaring them.
“A 2013 survey commissioned by Thomson Reuters asked 1,009 Canadians if they liked filing their taxes. 41 per cent said yes.”
– CBC News
If you have more than US$10,000 in total in one or more foreign bank accounts at any time during the tax year, you also need to file FinCEN form 114, sometimes known as an FBAR (Foreign Bank Account Report).
The US and Canadian governments share taxpayer info, while Canadian banks pass on their US account holders’ account info to the IRS, so it’s not worth being economical with the truth or burying your head in the sand. The penalties for tax evasion for expats are stringent to say the least.
If you’re a US citizen or green card holder (including dual citizens) and you have been living in Canada for some time but didn’t know you had to file a US tax return, don’t worry: there’s a program called the IRS Streamlined Procedure that allows you to catch up on your filing without paying any fines. It’s better to do this soon though, before the IRS comes to you.
Tax Day in Canada is April 30th, and this is also the date you have to file by, other than if you are self-employed, in which case you must file by June 15th. The Canadian equivalent of the IRS is called the CRS (Canada Revenue Agency), and the personal income tax declaration form is called T1 General, or just T1.
You can find information on Canadian income tax rates here.
We strongly recommend that if you have any doubts or questions about your tax filing situation as an American living in Canada, that you contact an expat tax specialist.