Cross Border Income Tax Services
Maroof HS CPA Professional Corporation provides a one-stop solution to both Canadian and U.S. individuals to achieve compliance with both CRA and IRS.
Tax Returns for U.S. Expats living in Canada, Canadians with U.S. filing requirements, are different than for those living in the United States. The addition of multiple forms for each source of income or asset keeps on adding complexity. It does not end there, skipping the filing of those forms results in steep penalties imposed on U.S. taxpayers.
We help U.S. citizens, residents or nonresident aliens; and businesses navigate through the maze of Tax Laws and confusing IRS forms to fulfill compliance requirements.
Range of Cross Border tax Services
We provide cross-border income tax services in below areas:
- U.S. Individual Income Tax
- U.S. Tax Services for Businesses
- IRS Certifying acceptance agent services for ITIN applications
- Specialized U.S. personal tax returns for U.S. persons with foreign corporations
- Specialized tax services for U.S. LLCs doing business in Canada
- Specialized IRS international information returns – Canada Focused
- Streamlined Foreign Offshore Procedures and Alternatives
- Tax Strategies for Non-Compliance and related penalties
Electronic Filing of U.S. Tax Returns from Canada
We can electronically file eligible U.S. federal income tax returns and state income tax returns.
Benefits of E-Filing
- Instant transmission to IRS and States
- Quick refund processing
- No risk of CRA reassessment related to Foreign Tax Credits Reviews
Personal Tax Services
U.S. Individual Income Tax Services
You must file a U.S. individual income tax return if you are a US Citizen living outside, a Resident alien in the U.S., or a non-resident making investments (or generating income) in the United States. Depending on the individual tax situation, there may be substantial additional reporting requirements than normal tax returns.
A wide range of US ex-pat tax services provided by us include:
- Preparation of Federal & State Tax Returns for US Citizens living in Canada
- Tax Preparation for Non-Residents
- Tax Preparation for Resident Aliens
- Tax Preparation for dual-status residents in the US
- Getting Refunds from IRS for withheld taxes
- Claiming Tax Treaty Benefits
- Advice for Back Tax Filings
- International information returns
- Self-Employment Taxes for Foreign sourced Income
Business Tax Services
U.S. Tax Services for Businesses
Whether you are a US business operating within the United States only or a Canadian business or individual having U.S. income tax filing requirements, we are here to help with your U.S. business taxes.
We prepare tax returns for:
- Corporation income tax return for foreign Corporations (1120F)
- Corporation income tax return for C-Corporations (1120)
- Corporation income tax return for S-Corporations (1120S)
- Partnership income tax return (1065)
- Income tax returns for Limited Liability Companies (LLC)
- Protective tax returns for Canadian Corporations
- Treaty-based positions for E-commerce and online businesses operating from Canada
- International information returns
Certifying Acceptance Agent in Canada
Maroof HS CPA Professional Corporation provides Certifying Acceptance Agent services in agreement with Internal Revenue Service.
U.S. ITIN Applications
ITIN (Individual Taxpayer Identification Number) is issued by Internal Revenue Services for those who do not have or are not eligible for, Social Security Number. We prepare your ITIN application W-7 or review the one prepared by you, review all the original or certified documents provided by you, submit your application to IRS, and get you the ITIN.
If you are a resident of Canada with a US reporting requirement, we can help you with both the ITIN application and US income tax returns at the same time.
If you are a Canadian business that needs an Employer Identification Number (EIN) from IRS, we prepare and file your application, and obtain EIN for you.
EIN is required for businesses having U.S. income tax filing requirements. Due to the Canada-U.S. Tax Treaty, Canadian businesses are often exempt from U.S. taxes on effectively connected business income unless there is a permanent establishment in the U.S.
Having an exemption from income taxes in the U.S. does not exempt such businesses from filing requirements of U.S. income tax returns.
Tax Services for U.s. LLCs doing business in Canada
Navigating the complex relationship between Canada and U.S. LLCs
There is a complex relationship between U.S. LLCs and the Canadian tax system!
If you are using a US Limited Liability Company (LLC) to conduct business in Canada, your LLC will be subject to special income tax treatment in Canada. A US LLC is either a fiscally transparent entity disregarded as an entity separate from its owner/member(s) or it might have checked the box and treated as a corporation in the United States.
We provide both Canadian and US Income tax services for U.S. LLCs engaged in business in Canada.
Read: How a U.S. LLC is taxed in Canada? and Hybrid Entities in Canada.
U.S. Persons with CFCs in Canada
GILTI, Section 962 Elections and Form 5471 Preparation
The final and proposed regulations released in 2020 now allow U.S. individual taxpayers to elect under section 962 to treat their CFC income as received by a domestic corporation. Section 962 election sometimes causes a painful return preparation process for individual taxpayers who are good at D-I-Y tax returns. We prepare the tax returns involving Controlled foreign corporations (CFC) with GILTI inclusions and Sec 962 elections (or 954 elections) for individuals.
U.S. tax returns involving Sec 962 are complex and expensive ones, so it’s always recommended to plan ahead. U.S. taxpayers with Canadian corporations are recommended to take advantage of our one-stop solution for both Canadian corporate tax services and U.S. income tax services.
U.S. International tax - Canada Focused
From FBAR to Complex PFIC & Other Information Returns
If you are a U.S. citizen or green card holder living in Canada; moving to Canada from the U.S. or the other way around; a Canadian living in the United States; or have a U.S. reporting requirement for any other reason, we can assist you.
Some of the specialized forms we help with are:
- Form 5471 (for both individuals and corporations) – Information Return of U.S. Persons With Respect
to Certain Foreign Corporations
- Foreign assets reporting such as FinCen 114 (FBAR) and form 8833
- Form 8621, for PFIC Filings
- Form 8833, Treaty-based positions
- Form 1120-F for Canadian corporations, whether a branch or filing a treaty-based position
- Other commonly used forms 926, 8865, 3520, etc
Managing Non-Compliance & Hefty Penalties
Non-Compliance with U.S. tax laws and regulations can be extremely punitive and expensive!
Non-compliance, oftentimes, is due to simple ignorance of the law, negligence, or even voluntary. Depending on the nature of non-compliance, unsuspecting taxpayers may end up owing tens of thousands of dollars in penalties. Internal Revenue Service has long maintained that the purpose of penalties is not to generate revenue but to use this as a deterrence tool to ensure compliance with laws.
There are a couple of options to manage these penalties before they are issued. The key is not to make silent disclosures as it limits the taxpayer’s options once the notice of penalties are issued.
Streamlined Foreign Offshore Procedures
Many U.S. citizens or residents after moving to Canada fall behind in their income tax filings in the U.S.
These taxpayers may quickly start racking up penalties due to the non-filing of FBARs. If crossed the threshold for form 8938, this is another common missed form. Then we have slightly complex situations where U.S. citizens or residents own the shares of Canadian corporations, and miss either form 5471 or 8621! Investing in Canadian TFSA, Canadian domiciled Mutual funds or ETFs, generate other filing requirements.
If a taxpayer submits these forms at a later date, a notice of penalties is generated. Notice of penalties can be managed sometimes using First-time penalty abatement or reasonable cause defence. The chances are reasonable cause may not succeed. Therefore, it is extremely important that taxpayers consult a cross-border tax professional to determine the full extent of non-compliance.
Proper planning and careful tax strategy can help avoid these penalties. Luckily Streamlined foreign offshore procedures can help fix the non-compliance.
How does it work?
Under the program, a taxpayer is required to submit three most recent completed (or amended) tax returns along with all missed information returns, and six years of FBARs. The requirement for the three most recent returns changes if there is a section 965 transition tax involved, in that case, tax returns are required since 2017.
Attach the payment of tax and interest, and sign the statement of certification.
A proper and complete submission provides a clean slate without any penalties.
Note: For Streamlined domestic procedures there is still a 5% penalty. For U.S. persons residing in the United States domestic procedures are applicable, hence, a minimum penalty. For example, a Canadian taxpayer moving to the United States and did not file required information returns such as 5471.
How can we help?
- A preliminary discussion with the taxpayer to gather all the facts and information on foreign assets.
- We determine the reporting requirements based on the discovered facts and the extent of penalties involved.
- If needed, we involve our trusted U.S. tax attorney to finalize the strategy.
- Prepare all the tax returns, information returns, a statement of certification, file FBARs
- Review with the taxpayer, and submit to IRS. If needed, we engage the tax attorney for final submission.
Other Tools to Manage Non-Compliance
Sometimes taxpayer is not eligible for Streamlined Offshore Procedures, for example, when non-compliance is willful. In such cases, we recommend Offshore Voluntary Disclosure Program (OVDP). At other times, the taxpayer may be eligible to submit delinquent returns and information returns.
- Streamlined Offshore Procedures – Domestic procedures
- IRS Offshore Voluntary Disclosure Program (OVDP)
- Submitting information returns such as 5471 or 5472 using Delinquent International Information Return Submission (DIIRS).
- Submitting FBARs using Delinquent FBAR Submission Procedures