Tailored Plans to Meet Your Unique Needs
We would welcome the opportunity to discuss your unique situation and to develop a tailored plan to meet your needs. When our clients approach us, we talk them through a vast array of U.S. tax situations including:
A. Becoming Tax Compliant
You haven’t kept up with your U.S. tax filing requirements but want to become compliant. Is there any way to clean up your U.S. tax situation without incurring a mountain of penalties? Fortunately, the answer is “Yes”.
i. Avoid Tax Penalties
U.S. citizens and green card holders are required to file an annual tax return and in many cases provide details on their investments and companies around the world. You haven’t kept up on your filing requirements but want to become compliant. Is there any way to clean up your U.S. tax situation without incurring a mountain of penalties? Fortunately, the answer is “Yes”.
While the original offshore voluntary disclosure program (OVDP) was discontinued by the IRS in September 2018, they have introduced new Taxpayer amnesty for those Taxpayer who are exposed to potential criminal penalties.
Additionally, for those Taxpayers who don’t have any significant taxes outstanding but want to get caught up without incurring late filing and failure to file penalties, the IRS has maintained the streamlined tax filing program which waives penalties for those Taxpayers that qualify.
Our cross-border tax services team has years of experience in navigating these programs and can advise you on whether you will qualify for each program along with helping you to make the necessary submissions.
B. Tax Planning for Immigration and Emigration
You’ve spent some time living in the U.S. and are ready to pack it in and move back to your home country. Once you’ve set foot in your former nation your U.S. tax obligations end, right? Not so fast! It’s not that simple.
i. Tax Planning for Immigration
Moving to the U.S. requires careful planning to achieve a tax efficient result. In many cases, assets can have substantially different tax treatments from one jurisdiction to the next. Additionally, due to differences in tax rates, deemed gains on departure from your former country and the timing of the change in residency careful planning is required to achieve a successful change in residency.
Our Cross-Border Tax Services team is skilled at reviewing your income, assets and personal circumstances to provide a detailed plan for moving to the U.S. that will ensure the utmost tax efficiency is achieved.
ii. Tax Planning for Emigration and Renunciation
You’ve spent some time living in the U.S. and are ready to pack it in and move back to your home country. Once you’ve set foot in your former nation your U.S. tax obligations end, right? Not so fast! Nothing with the U.S. is that simple.
If you are a U.S. green card holder, you must formally surrender your permanent resident card. If you are a U.S. citizen, you must formally renounce your citizenship. In either case, your net worth, past taxes and annual income will all determine whether you can simply cease filing in the U.S. or if some residual tax and obligations will follow you for years to come.
At Davis Martindale, we can build a plan for you to prepare your affairs for leaving the U.S. or renouncing your citizenship so that when you leave, you don’t need to worry about the IRS following you home.
C. Tax Services for Snowbirds
In Canada, the geese aren’t the only ones who fly south for the winter. If you are one of the many Canadians who happily trade in their snowshoes for sandals each winter, there are several U.S. matters that are likely to eventually require your attention.
i. How to Hold your U.S. Real Estate
Whether your home away from home is modest or more substantial, you should consider the best way to hold your property before you make the purchase. There are many options available depending on your objectives for the property and choosing the right one can alleviate income tax issues when you sell the property or estate tax issues when you pass it on to the next generation.
Our Cross-Border Tax team can help you be confident that the structure you choose is the best option for your situation
ii. U.S. Reporting for Rental Income
When you receive U.S. rental income, failure to property file a U.S. tax return to report the rental income can result in you paying tax on the gross rent received instead of the net rental income.
At Davis Martindale, we know all of the ins and outs of reporting rental income for non-residents and help you report the income from your “little piece of heaven”.
iii. U.S. Tax on the Sale of your U.S. Real Estate
When the time comes to sell your U.S. property, it can potentially be subject to an upfront tax of 15% of the gross sales price. With the filing of appropriate waivers or claiming the right exemptions, the upfront tax can be reduced significantly.
Our Cross-Border Tax team and guide you through the potential exemptions available to you and file the necessary waiver and returns to help you minimize the tax your eventually pay.
iv. Protecting Against Deemed U.S. Residency
Many Canadian are familiar with the “183 day rule”. They confidently proclaim, “as long as I spend less than 183 days in the U.S., I won’t have an issue.” What is less commonly known is that the 183 day rule is actually measured on an average basis over the 3 prior years. This means that spending more than 120 days in a year can create U.S. issues.
Our Cross-Border Tax team can help you review your days to see if you have any tax filings required for the U.S. and, if you do, we are also happy to complete them for you.
D. Doing Business in the U.S.
You have finally decided to leave the comforts of Canada to pursue the potential of the U.S market. While you are eager to the get started, you are greeted with options like LLCs, LPs, LLPs, LLLPs, S-Corps, and C-Corps, how do you know the right one to pick?
i. Choosing the Right Structure for your U.S. Operations
When operating in Canada your business structure choices are generally to incorporate or operate as a sole proprietor. Suddenly, when you move into the U.S. you are greeted with options like LLCs, LPs, LLPs, LLLPs, S-Corps, and C-Corps. With so many choices, how do you know the right one to pick?
At Davis Martindale, our cross-border team understands that picking the rights structures isn’t just about what works in the U.S. but also in how the structure will work with the Canadian tax system when the time comes to bring your profits home. Our team can analyze your business model to find the right combination of Canadian and U.S. business structures for your situation.
ii. Assessing Exposure to State Tax
In Canada, doing business in different provinces generally requires little planning in advance with the exemption of maybe adjusting the HST you charge on your invoice. In the U.S., each State might as well be its own country with completely different tax systems in play in each jurisdiction. Determining what States to file in and what taxes you are exposed to can be a daunting task.
Fortunately, our Cross-Border Tax team is well versed in analysing the “nexus” requirements for each State and determining where your State tax exposure lies. We are also able to leverage are comprehensive network of DFK tax professionals throughout the U.S. to get you the specialized local knowledge to make your State venture a success.
iii. Coordinating Filings and Tax Equalization for Cross-Border Employees
With an expansion into the U.S., it is inevitable that you will start to have employees crossing the border to assist in growing your business. With cross-border employment comes new and complicated payroll and filing requirements for your employees.
To assist you in retaining your staff and helping them navigate their Cross-Border tax obligations, our Cross-Border team has cost effective options for the preparation of U.S. non-resident tax returns and handling the required reporting on their Canadian returns for the income earned abroad.
iv. Filing your U.S. Tax Returns
While U.S. tax can be complicated for domestic companies, for international companies, the filing requirements can become truly bewildering.
Our Cross-Border Tax team understands the many unique aspects of operating an international business and how that affects your U.S. tax and filing requirements. This allows us to handle the complex filings associated with U.S. businesses with foreign subsidiaries as well as the reporting required for Canadian companies operating in the U.S.
v. Creating a Strategy for Repatriating Profits
When it comes to operating internationally, earning the income is only half the battle. The other half is how to get it home.
At Davis Martindale, our team can help you assess what combination of business structures and the types of transactions that will allow you to keep the most cash in your pocket when you bring your profits back to Canada.
Work With Us
Our Tax Specialists are ready to have a personalized discussion with you.