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Taxation for expatriates: Advice from H&R Block.

Important Note: If you are a US citizen living and working in Canada for any period of time, you must remember to file two returns each year: a Canadian return (based on residence), and a US return (based on citizenship) under the Voluntary Disclosure Initiative (VDI). To learn more about the mechanisms available to help avoid double expatriate taxes, contact H&R Block!

US expatriate income taxes: Preparation tips.


Earned income exclusion & treaty benefits.

You may be able to exclude up to $85,700 from income for US tax purposes by completing Form 2555 and attaching it to your return. To claim this exclusion on taxation for expatriates, you must be a bona fide Canadian resident or have been living in Canada for at least 330 days in the last year. Also, if you receive Social Security benefits from the US, they are only taxable in Canada. You may claim a 15% deduction for your expatriate taxes on Line 256 of your Canadian tax return.

Foreign tax credit or expatriate income taxes deduction.

Avoid paying double taxation for expatriates is by claiming a foreign tax credit on your US return for taxes you are required to pay to Canada. To claim the expatriate taxes credit, you must complete Form 1116 and attach it to your US return. Alternatively, 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 US tax, so neither can be claimed for income excluded on Form 2555.


Important dates for US expatriate income taxes.

Though you have until June 15th to file, 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 expatriate taxes liability in case you have to claim the foreign tax credit on your US return. Remember that refunds on expatriate income taxes can only be received for three open tax years. Foreign tax credits can be created 10 years back and brought forward to offset balances for open years under certain conditions.

US expatriate income taxes assistance from H&R Block.

If you're seeking help on taxation for expatriates, use our online office locator to find the office nearest you for experienced assistance. We also provide expatriate taxes consulting to Canadians living in the USA. H&R Block has been serving Canadians for more than 50 years. As the country's leading tax services provider, we strive to help our clients build a better financial future. From providing fast, reliable taxation for expatriates services, to offering dependable bookkeeping and accounting support, our tax experts are committed to delivering assistance and solutions that are second to none. Contact us today to find out how our tax consulting services can make your life easier.

Visit H&R Block's Tax Talk for articles on expatriate tax advice, as well as other related business and finance topics.

With 50 years experience as Canada's leading tax specialist.