Important Note: If you are a U.S. citizen living and working in Canada, you remain subject to the same filing requirements that you would be in the U.S. This means, as part of your U.S. tax preparation, you must file Form 1040 every year, reporting your worldwide income. This means that if you are a U.S. citizen resident in Canada, you must file two returns each year: a Canadian return (based on residence), and a U.S. return (based on citizenship). Fortunately, this does not necessarily mean that you'll have to pay taxes to both countries. There are several mechanisms available to help avoid double taxation, and H&R Block's U.S. Tax Prep Service is here to help with expert U.S. tax advice!
To get further assistance with your U.S. tax preparation, drop in or call us. Use our online Office Locator to help you find the office nearest you for experienced U.S. tax advice.
U.S. Tax Preparation Tips
- Earned Income Exclusion: You may be able to exclude up to $85,700 from income for U.S. tax prep purposes by completing Form 2555 and attaching it to your return. This is a special form excluding foreign earned income from taxation in the U.S. To claim this exclusion you must be a bona fide Canadian resident or have been living in Canada for at least 330 days in the last year.
- Treaty Benefits: Generally, treaty benefits are not available to U.S. citizens because of a key article of the tax code. One exemption is the article governing Social Security payments. Basically, if you receive Social Security benefits from the U.S., they are only taxable in Canada. You may claim a 15% deduction on Line 256 of your Canadian tax return.
- Foreign Tax Credit or Deduction: Another way to avoid paying taxes twice is by claiming a foreign tax credit on your U.S. return for taxes you are required to pay to Canada. To claim the credit, you must complete Form 1116 and attach it to your U.S. return. As an alternative, you can claim the Canadian taxes you paid as an itemized deduction. Both the deduction and credit are limited to foreign income that is subject to U.S. tax, so neither can be claimed for income excluded on Form 2555.
- Filing Deadline: If you live in Canada, you have an automatic extension of two months to file your U.S. tax return (due on June 15 rather than April 15 each year). Keep in mind, though, that the IRS will begin assessing interest on any unpaid balances on April 15th. This provides time for you to complete your Canadian return and determine your tax liability. This is needed in case you have to claim the foreign tax credit on your U.S. return.
U.S. Tax Prep Assistance from H&R Block
To get further assistance with your U.S. tax preparation, drop in or call us. Use our online Office Locator to help you find the office nearest you for experienced U.S. tax advice.
