How Can US and Cross-border Taxes Affect You?

US Dollar bills rolled up

How Can US and Cross-border Taxes Affect You?

Monica Martinez brings extensive knowledge and experience in US and cross-border taxes to GGFL as both a Canadian Chartered Professional Accountant and a US Certified Public Accountant, and with this knowledge and experience, adds significant value to the services we can offer our clients.

We use the word “taxes” in plural, because aside from the overall US federal tax system, each of the 50 states has their own set of tax rules – making it akin to dealing with 50 separate countries.

If that isn’t challenging enough, on December 22, 2017, President Trump’s administration passed the “Tax Cuts and Jobs Act,” which represents the biggest tax overhaul the US has seen in 30 years!

Monica became interested in US tax as a young auditor when she helped prepare US and Canadian tax returns during the busy season.

“I found that learning and dealing with both the Canadian and US tax systems made my job more interesting, challenging, and rewarding,” she says. “US and cross-border tax is a unique specialization that is in high demand today, because many clients have US and cross-border tax issues to consider.”

“Among those considerations,” she says, “are that:

  • More and more companies are doing business across the border. They are selling into the US, sending their key executives or employees on business trips or longer-term assignments. This can create US corporate and cross-border payroll implications for the companies, but also US personal tax obligations for their employees;
  • US citizens living in Canada have annual US income tax filing requirements and can face unfavourable tax consequences if they don’t plan their investments properly; and
  • US estate tax can apply not only to US citizens, but also to Canadians who hold US assets – owning a Florida condo or even US shares within an RRSP can create US estate tax exposure.”

“The US tax system is definitely more complicated and involves more cumbersome tax filings,” says Monica. “For example, the Canadian tax system is based on residency. If you are a Canadian citizen who moves to another country and who no longer has Canadian income, you are not required to continue filing Canadian tax returns.”

“On the other hand, if you are a US citizen or hold a US Green Card, it doesn’t matter where you live or how long you have been away from the US. The IRS still requires you to file US tax returns on an annual basis, reporting your worldwide income. You likely also have to file other detailed information returns to report financial accounts and other investments that you hold outside of the US – and there are hefty penalties for failure to file these forms.”

The addition of Monica to GGFL’s tax team means the firm can help Canadian and US taxpayers with a variety of complex tax matters, including:

  • Assisting companies and their employees with tax planning and compliance obligations as they expand their operations south of the border;
  • Assisting US citizens and US residents to comply with their detailed annual tax filings, and structure their investments in the most tax efficient manner, while relieving double taxation;
  • Providing tax planning and compliance services to Canadians working in the US or moving there on a permanent basis, or Americans coming into Canada;
  • Implementing cross-border estate plans for US citizens or Canadians to eliminate or reduce exposure to US estate tax;
  • Assisting US citizens or US Green Card holders, who were unaware that they had US filing obligations, to become compliant on their delinquent filings, with minimal or no penalty exposure;
  • Providing tax planning and compliance services for those wanting to renounce their US citizenship or revoke their Green Card;
  • Assisting Canadian companies or individuals with the tax implications of purchasing, renting or selling US real property; and
  • Assisting companies and individuals navigate through the extensive US tax changes brought on by President Trump’s Tax Reform.

“Every client situation is different,” says Monica, “and I love helping individuals and companies to identify not only their cross-border compliance obligations, but also how to best structure their affairs and assets to save the most tax and simplify their lives.”

“US tax issues arise on a daily basis in our client base,” she adds. “In just my first month working at GGFL, I have seen such a broad range of interesting US and cross-border tax issues, and I look forward to working on these with our clients.”