SERVICES

US Corporate and Individual federal and state tax consulting and compliance – cross-border specialization


US Tax Services competently addresses the following common requests of corporations and individuals seeking planning or tax preparation:

 

  • Desire local US tax expert

  • Looking for best price from an experienced expert

    • large firms in the Canadian market area understandably charge more for US tax work as their fees must cover overhead  including overhead unrelated to your US tax return; we quote fixed fees (not hourly) for tax compliance

    • not merely a local Canadian accountant who picks up bits and pieces of US tax knowledge in a hobby-like unstructured fashion?

  • We consider your US tax needs to be important, will pay attention to you and will timely address communication between us.

  • You don't want to be lost or ignored as a small client at a huge firm.

  • We use US-trained CPA with extensive US tax experience in the cross border environment. We coordinate with a specific Canadian firm to offer Canadian tax prep, Canadian tax consult and Canadian legal advice from that firm’s lawyers. We coordinate with specific cross-border legal firms for US and cross-border legal advice, immigration tax planning and strategy.

  • US tax provider with existing clients earning primarily on Amazon, Apple and Google who can walk us through the tax, forms, withholding, traps for the unwary, structuring and income-sourcing issues specific to these industries

  • Balance overall cross-border tax strategy with US tax needs in a cross-border setting and context

 

 

1040 and FBAR Amnesty – Offshore Streamlined

If you haven’t filed your past 1040s as required of a USC even while abroad (streamlined program is closed for US residents) and/or are also amiss with FBAR (i.e., because you owned Canadian or other non-USA accounts in TAX-YEAR in excess of USD$10,000 in aggregate of all accounts), we prepare your returns under the ‘offshore streamlined’ program to as to procure amnesty on the missing filings - do so ASAP before IRS closes this program offering. You must have your SSN to proceed.

 

USD$1,400 refund per child under 17

Taxpayers with one or more dependent children who lived with them during the tax year receive a USD refund far in excess of the1040 prep fee.

Note the USD $1,400 per child refund requirements (for parents with Canadian source ‘earned income’ such as T4 wages, T4A or self-employment):

  • Child is under 17 years of age at Dec 31 of the tax year of the return filing

  • A taxpayer identification number, aka TIN, such as SSN can be used to claim said credit only if the TIN was issued on or before the before the due date for filing the tax return, including extensions.

  • Child must be a US citizen

  • Even for USC child (where citizenship is obtained via USC grandparent) credit not allowed from birth but only from time citizenship documentation created

See http://www.ustaxservices.ca/single-post/2017/12/26/New-US-Tax-Bill-affect-on-child-tax-credit-and-USC-abroad-claims-of-refundable-additional-child-tax-credit & https://www.linkedin.com/feed/update/urn:li:activity:6516838909849149440

US federal and state estimated taxes and return extensions
US companies and individuals are generally required to calculate and make federal and state estimated tax payments. Also, Canadian companies often are unable to produce financial statements in time for the US tax filing due dates of their US operations and need to request extensions for the filing dates. The extensions extend the time provided to file the return, but not to pay taxes due and in addition to the tax filing paperwork, calculations are needed then to determine taxable income, and tax due, under US tax law. 

US State sales tax
Canadian companies selling goods, services or products in the US are generally liable for state sales and use tax. There is significant tax form compliance that must be adhered to as well as ample opportunity for effective tax planning to reduce or eliminate the overall tax burden. More and more, Canadian companies are being audited and assessed by various states and often this scenario could have been entirely avoided had the proper planning and compliance been implemented from the start.

 

US condo/property Sales OR Rental

Canadians often invest in US real estate, especially the condo market. There are IRS compliance requirements and tax savings opportunities that are associated with such ownership. With SALES, certain filings must be made with the IRS by the buyer within 20 days of the sale thus putting the IRS on direct notice that you were the seller and providing the IRS with your personal and contact information. The IRS expects certain filings to be made by you, the seller, and there is now no chance of your being overlooked by virtue of your residence in Canada because you have already been placed on the IRS radar screen by the buyer. Both the seller and buyer filings require a US taxpayer ID for the Canadian seller. The filing procedure changes for BOTH the seller and buyer whether the Canadian seller is obtaining a US taxpayer ID number at the same time that the sale related filings are made or later. Not complying properly can result in problems including excessive or unnecessary US tax being withheld from your sale proceeds. Let us help you successfully complete this process.

 

We can also assist with obtaining a refund, if applicable, of US taxes already withheld upon sale.  These taxes are NOT sunk costs that are gone forever. Often, these withheld taxes can be partially or fully reclaimed for refund IF proactive timely action is taken to file a refund claim. Allow us to analyze your situation for you and to help you get back your money. If no action is taken, your withheld money is not returned and eventually it may become legally too late, due to statutes of limitation, to seek a refund of your sales proceeds money that was submitted to the IRS by your buyer.

 

With RENTALS, absent specific US tax planning and related filings that are not expensive to complete, your rental income will be subject to US tax and will be paid on your behalf, as required by law,  by the renting party or property management company withholding 30% of your rental proceeds and forwarding this money to the IRS as a tax payment. Let us help you successfully transform this process in a way that eliminates or drastically reduces your US tax burden. Taking action to properly tax plan and report with regards to this particular point is one of the biggest no-brainers in the cross-border arena. The tax laws here are specifically designed to help your situation and alleviate your tax burden but you must initiate action or else you will be defaulted to the system that overtaxes you in comparison. The tax planning and compliance costs are low and are essentially self-funding since the annual savings  you will reap should far outweigh the tax compliance costs.

 
"Treaty-based returns" for Canadian corporations 

It is commonly prudent for Canadian companies who own one or more US subsidiaries to file a “treaty-based protective filing” to protect themselves from potentially severe punitive measures the IRS is entitled to impose upon Canadian companies who didn’t file US returns because they thought they were exempt from US tax. Making this filing protects their ability in the future to avail themselves of allowable deductions, should the IRS determine that they have indeed been subject to U.S. tax. 

Delaware filings and alternate franchise tax calculations to reduce tax 

Although well known for its numerous income tax exemptions for corporations, Delaware does indeed impose a corporate income tax under certain fact patterns. Also, it may be somewhat typical that a Canadian company has expanded into the US through a Delaware holding company. Although often exempt from corporate income tax in that situation, Delaware still imposes a corporate franchise tax, which generally can be computed under two alternate methods. The two methods often result in drastically different amounts of tax due, typically with one method producing a nominal amount of tax liability and the other a high amount. Often the state assessment sent to the taxpayer has been computed under the default method that produces the higher tax result and this higher assessment will stand until proactively changed by the taxpayer via certain filings.

  

Other US tax services

  • Withholding tax issues and compliance

  • Obtaining corporate employer identification numbers (EIN) 

  • Obtaining individual taxpayer ID numbers (ITIN) 

  • Entity classification filing, e.g., "check-the-box" corporations

  • Assistance with responding to US Federal & state tax notices and achieving penalty abatement

  • Preparation of forms/vouchers for tax payments

  • Preparing and advising on reporting compliance for cross-border US withholding tax

  • Resolving federal tax issues and records with the IRS and/or states

  • Setting up in the US –  tax concerns/requirements, structuring, how your customers pay you, withholding, state business registrations &  opening a US bank account

 

Repatriating profits from the United States 

Often, one of the issues at the forefront for Canadian companies conducting business in the US is how to bring back to Canada profits earned through US operations in a manner that is most tax efficient and that considers the complexities involved in cross-border movement of payments. 

State sales tax and income tax (nexus) implications 

Canadian companies are sometimes unaware of the myriad of state taxes imposed and even when aware that such tax is imposed, the implications and tax exposure is many times overlooked or unknown. Canadian companies seeking to comply with US state tax obligations often need assistance in determining the precise requirements and exposure that exist for their particular company as well are interested in learning what tax and legal planning steps may be implemented to safely curb or even eliminate such exposure.

 

Streamlined Sales Tax Project & Amnesty

There are numerous state sales and use tax issues and concerns that confront Canadian businesses that have expanded operations into the US market. These items can quickly escalate into serious issues for a company and even threaten economic volatility.

It is therefore imperative for companies to understand and ensure compliance with state sales tax laws, collections, filings, remittance, exemption qualifications and requirements. Even companies who for years presumed and understood that they were exempt have been alarmingly awakened by tax assessments asserting otherwise.

For companies seeking to become compliant, not only on a go-forward basis, but in a manner that addresses ignored historical requirements and minimizes liability exposure & penalization for voluntary disclosure, the Streamlined Sales Tax Project may be the perfect route to take. 

While the program’s objective is to simplify and modernize sales and use tax collection and administration in the US, certain participating states under certain circumstances also offer amnesty "from assessment for uncollected or unpaid sales or use taxes together with interest or penalty for sales made during the period the seller was not registered in that state" – i.e., a clean slate of audit.
 

Canadians or US citizens resident in Canada filing a US individual return

Some reasons you may be filing a US tax return:

  • You are a US citizen but resident abroad and are filing to comply as required

  • Your US immigration needs require that your US return filing be in good standing

  • You wish to renounce your US citizenship

  • You wish to reduce or eliminate your alternative minimum tax (AMT)

  • You wish to file a joint return with your non-resident alien spouse

  • US estate tax related

  • You wish to claim social security benefits and receiving such benefits require your US return filings

  • You are a Canadian who earned rental income or gain on sale of US real estate property

  • You are a Canadian who seeks a refund of US withholding tax including from gambling or prize winnings (Vegas or other)
     

By opening the below link one can view our Form 1040 Organizer, which lists what information we require of taxpayers in order to prepare their individual US tax returns. 1040 Organizer

 

Self Employment Tax Exemption Form CPT56 (07)

It’s interesting to note that a self-employed American resident of Canada may be able to report "earned income" yet still not be subject to US self-employment tax (best of both worlds) due to treaty agreements.
 

Canada - US Bilateral Social Security Agreement Exempting Self Employment Tax

This agreement can help with not being subject to US self-employment tax on self-employment income and at same time should allow the refundable additional child tax credit to operate.

 

One should request Form CPT56 (07) http://www.cra-arc.gc.ca/E/pbg/tf/cpt56/README.html from CRA as described below. Note that one will likely wait weeks or months to receive this. Be sure to keep a paper trail demonstrating proof that you’ve requested this form from CRA so that in the event CRA doesn’t provide it, you may demonstrate to IRS that you requested it.

 

Article V of the Agreement on Social Security between Canada and the United States reads: where, but for this Article, a person would be covered under the laws of both Contracting States in respect of earnings from self-employment, that person shall, in respect thereof, be subject only to the laws of Canada if that person is considered to be resident in Canada for the purposes of the relevant provisions of those laws, and only to United States laws in any other case. This exemption requires that you obtain Form CPT56 (07) from CRA and attach it to your U.S. return, for the correlating “detachment” period covered by the form.

 

In filling out CPT56, one should consult with one’s Canadian tax advisor who might advise instructions such as:

  • Put a check in the box for Self-Employed Person.

  • Put "Self" in box for "Name of employer in Canada.

  • In "Initial Detachment" box, put the date in which you started self-employment in the "from" box; put "indefinite" in the "to" box.

  • Sign the taxpayer's name in the box for "Authorized signing officer."

 

Send CPT56 to CRA at the following address (CRA doesn't provide the below filing address anywhere on their website and because it may change, you might want to first verify via a phone call with CRA that it remains current):

 

ATTN: CPPEI Rulings Section – Social Security
Canada Revenue Agency - Ottawa Taxes Service Office
11th Floor, 333 Laurier Avenue West
Ottawa, ON
K1A 0L9

 

For questions about this form or the countries’ agreement, one may call or write the CRA as described in the following.

From Canada or the United States, you can contact, free of charge, at:
1 800 277-9914
1 800 255-4786 (TTY)
Fax: 1 613 952-8901

One may also write to:
Income Security Programs
Human Resources Development Canada
Ottawa, ON K1A 0L4
CANADA

Need more details? Contact us

We are here to assist. Contact us by phone or email.

ANY AND ALL OF THE INFORMATION ON THIS WEBSITE DOES NOT CONSTITUTE ADVICE IN GENERAL AND/OR TAX ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. FOR ASSISTANCE WITH YOUR PARTICULAR FACT PATTERN AND HOW TAX LAW PERTAINS TO THAT PATTERN, PLEASE CONTACT OUR OFFICE TO ARRANGE AN ENGAGEMENT WHEREUPON OUR OFFICE CAN OFFER ADVICE IN THE COURSE OF THE ENGAGEMENT.

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