The people who can benefit from our cross-border financial, tax and estate planning and investment management consulting expertise include:

  • Executives and professionals working and living across the border

  • Canadians retiring in the United States and Americans retiring in Canada

  • Small business owners with companies on both sides of the border

  • Canadians returning to Canada and Americans returning to the United States

  • Canadian and U.S. expats living abroad

  • US citizens with divorce or separation asset allocation or alimony payment issues.

  • US citizens considering citizenship renunciation.

 

Below is a selection of frequently asked questions from our clients. We welcome you to explore and if you don't find what you're looking to address, contact our office today.

 

Certain inquiries may require a consultation. particularly when the answer must be tailored to suit your specific tax situation. Our office will advise if a consultation is required. If we cannot help you, we can direct you to the right place.

Frequently Asked Questions

I'm a US citizen living in Canada, why do I have to file taxes? Will I owe any taxes when I file my US return?


US tax law require all US citizens to file tax returns with the IRS, and pay any taxes resulting from the filing. However, the Canada-US tax treaty and other related domestic exemptions are in place to prevent double taxation in both countries. Therefore, US citizen living in Canada may or may not pay any US taxes as a result of filing. Some examples where US citizens living in Canada may need to pay the US tax are: if you earned US source income; you have not paid enough Canadian tax to fully reduce your US tax liabilities via foreign tax credit; your US source income is significantly higher than your Canadian income. These are a few – there are more situations you may be required to file. In addition to the US income tax filing, there are additional foreign disclosures that US citizens will need to comply or they may be subject to late filing penalty. Call us and we can assist you in understanding where you stand.




How can I check on the processing status of my refund for my US return?


Taxpayers can directly check the refund status by using the following link and providing their information that's reported on the return for the tax year they're checking: https://www.irs.gov/refunds In order to check your refund status, you must be able to input the following information:

  • Social Security Number or ITIN
  • Filing Status of the return (located on first page of your 1040)
  • Exact refund amount




Why did I receive a refund check with an amount far less than expected in 2020?


The IRS is required by law to pay interest on tax refunds due to individual taxpayers affected by the federally declared disaster (COVID-19) who filed their Federal tax returns for 2019 on or before the postponed due date of July 15, 2020.

Most tax refund payments will be issued separately from the refund interest payment. The refund interest, if issued by paper check, will include a notation on the check (INT Amount) that identifies it as a refund interest payment.
This payment is separate from your refund so you should expect the refund reported on your 1040 return to be delivered to you as well.




How do I request my IRS transcript?


Individuals can use the link below to order the transcript via mail or online. Be sure to use the exact address and filing status from your latest tax return. Transcripts arrive in 5 to 10 calendar days at the address IRS have on file for you.

https://www.irs.gov/individuals/get-transcript#:~:text=You%20can%20get%20various%20Form,can%20view%20your%20tax%20account.




How will the US Economic Impact Stimulus payments affect my filing?


For US citizens who are a resident in Canada and have received the US Economic Impact Stimulus Payments, the amounts are not taxable in Canada. Up to $2,400 is available to individuals who are married and filing jointly, or $1,200 for other filing status taxpayers. The payment is a tax credit provided to US citizens and US resident aliens, and the amount is reduced as gross income reaches certain thresholds as outlined by the IRS.




What are FBAR forms?


If you have a foreign financial account (bank account, brokerage account, mutual fund, trust, or other type of foreign financial account) where you hold financial interest or signature authority exceeding US$10,000 in aggregate, the Bank Secrecy Act require you to report the account yearly to the Department of Treasury by electronically filing a Financial Crimes Enforcement Network (FinCEN) 114, Report of Foreign Bank and Financial Accounts (FBAR).




I'm a US citizen living in Canada, who's never filed a US return before - What do I do?


If you are delinquent in filing your US tax returns, you may be qualified to file under the streamlined tax filing procedures administered by the IRS. The streamlined tax filing procedures only require you to file three most recently years of tax returns and six years of FBAR forms. If you do not qualify to file under the streamlined program, other options are also available.




As a US citizen living in Canada, do I have to pay gift tax on cash gifts to family?


Yes, all US citizens are subject to US gift tax rules, however, exemptions apply to certain gifts throughout the year. The current exclusion is US$15,000 per recipient, US$155,000 to non-resident spouse, and unlimited for US spouses.




Should US citizens open TFSA accounts or hold Canadian mutual funds?


Opening a TFSA or holding Canadian mutual funds may result in additional tax and costs to file your US tax return. The IRS may view the TFSA as a foreign trust and form 3520/3520-A would need to be filed along with your US tax return. In addition, Canadian mutual funds may be considered Passive Foreign Investment Companies (PFIC) for US tax purposes, and form 8621 are required to file for each PFIC you owe.




If I am legally separated in Canada, what is my filing status in the US?


An individual who is legally separated from his/her spouse under a decree of divorce or of separate maintenance shall not be considered married for US tax purposes. US Internal Revenue Code defines divorce or separation instrument as:

  • A decree of divorce or separate maintenance or a written instrument incident to such a decree,
  • A written separation agreement, or
  • A decree requiring a spouse to make payments for the support or maintenance of the other spouse.




What are the tax consequences in Canada if my principal residence changed to a rental property?


In Canada, if a property is changed-in-use from principal residence to a rental property, deemed disposition occurs and the fair market value at the time of change-in-use would be the new cost base of the rental property, which will be used to calculate capital gain in the future. However, taxpayers can file election 45(2) to deem the change-in-use not happened. Furthermore, the property can still be qualified as the taxpayer’s principal residence for four more years if certain conditions met.
Prerequisite of the designation are as below:
i. The property cannot be only a partial change in use
ii. The taxpayer has to be resident or deemed resident of Canada during those years
iii. No CCA claimed while rented out




When are you required to register for a GST/HST account?


Small business owners and entrepreneurs with gross sales or revenues in excess of $30,000 or more in a single quarter or cumulatively over four quarters (a calendar year) must register for a GST/HST account. If your gross revenues are less than that, you are considered a small supplier and do not need register for a GST/HST number.
Please note, there are different GST/HST registration requirements for charities and public institutions, public service bodies, non-residents, and taxi operators and commercial ride-sharing drivers. You can read about these on the CRA website




What documents do I need to prepare or keep for reporting the capital gain from sale of a rental property (US or Canada)?


List of documents include but are not limited to:

  • Sale and Purchase closing statements
  • Summary of any purchase and selling cost which are not reflected on the statements
  • Summary of rennovation expenses (if any) prior to sale
  • Tax payment proof for any federal and state tax withheld




What is the key difference between ROTH IRA and traditional IRA?


Key difference between Roth and traditional IRA is with how they’re taxed. Roth IRAs are funded with after-tax dollars; the contributions are not tax-deductible and once you start withdrawing funds, the money is tax-free. Traditional IRAs are funded with pre-tax dollars; you usually get a tax deduction on your contribution and pay income tax when you withdraw the money from the account during retirement. Holding on to these accounts can be taxable if you are moving to Canada.




Is the ROTH IRA taxable in Canada?


Yes, Roth IRA is taxable in Canada unless you make a deferral election in your first year of residency. Foreign reporting in form T1135 is also required




Are TFSA or RESP accounts taxable in the US?


Yes. Although the income earned in a TFSA is tax-free for Canadian tax purposes, the income earned is taxable for US income tax purposes. Similar to the TFSA, the income earned in a RESP is taxable for US income tax purposes.




What documents do I need to support my medical expenses claim on a Canadian T1 return?


According to CRA copies or original documents of medical related expenses should include receipts, prescriptions and certificate in writing (if any) for the full taxable year or any 12-month period ending in the taxable year. The acceptable receipt should include the following details:

  • Name if the patient
  • Date and amount of the payment
  • Name of the medical practitioner, if applicable;
  • The service(s) provided by the medical practitioner;
  • The name of the person who made the payment




Do I need to report foreign personal-use property on Form T1135?


No. Personal-use property such as vacation property that you use primarily as a personal residence and listed personal property such as works of art, jewelry, rate folios, and coins are not required to report on T1135.




Can I claim the medical expenses paid for my spouse and dependent children on my Canadian T1 return?


Yes. You can claim eligible medical expenses that you or your spouse/common-law partner paid for any of the following persons: • Yourself
• Your spouse / common-law partner
• Your or your spouse’s / common-law partner’s children who were under 18 years of at the end of the tax year.




I'm leaving Canada, which date should be regarded as the departure date on my filing?


CRA has indicated that the date you become a non-resident of Canada is the latest of:

  • The date you physically leave Canada
  • The date your spouse and dependants leave Canada
  • The date you become a resident of the new country you are immigrating to.