US expats in Canada, you need to know this for April

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Tax season is already in full swing and April is just around the corner. Tax season can be a challenge for most, however US expats living in Canada have even more challenges given the fact that they need to navigate two tax regimes and deadline dates.

As we move into April here are 5 things to be aware of as a US taxpayer in Canada:

The April 15th deadline likely won’t matter

April 15th is a very important date for Americans given this is the final date to pay and file your US 1040 without an extension. However, the rules for US expat living outside of the US is quite different.

Americans in Canada receive an automatic extension to June 15th (or later if June 15th falls on a holiday or weekend) to file their 1040 and pay any taxes due. Technically this also extends the time to pay, however I always advise clients to make a payment before April 15th to be safe.

You might need to file and extension

Before April 15th, if you feel like you won’t be able to file by June 15th, you can certainly file an extension via form 4868 to ensure you don’t miss the June 15th deadline. This will help to ensure your returns are properly extended to October 15th. Note however that this will only extend your US return and not your Canadian tax returns (more on this below).

And yes, I do know that your FBAR is not due until October 15th. However given how relatively easy this form is to complete I always suggest to get this filed early in the season.

You can’t extend you Canadian tax returns

You can’t technically “extend” you Canadian returns, which will be due on April 30th or June 15th if you or your spouse have self-employed income. For those that have an April 30th filing deadline date make sure to file all Canadian returns and forms required. Just because you’re getting a refund doesn’t mean that you avoid all potential penalties. Late filed forms like T1135 carry high penalties regardless of whether or not you own tax.

Don’t procrastinate on delivering final items for your accountant

I can’t stress this point enough

Tax accountants (especially in Canada) have very little time to complete all client tax returns given the tight deadline, and the fact that many final tax slips are not issued until late March or early April. And although accountants do their best to gather information and ask the right questions early in the season, more questions are almost always bound to come up once they review your current tax documents.

When your accountant asks clarifying questions or requests additional information it’s always a great idea to respond ASAP. Most people are natural procrastinators, so if you can get ahead of the herd you should be able to get completely filed well before the deadline.

Make sure to understand your future tax instalment payments

Once you tax returns are filed you’ll be given a list of potential instalments to make for 2024 for both Canadian and US purposes. Make sure to properly mark these instalment payments on your calendar to ensure all payments are made on time. I see clients miss these payments all the time and penalties can be quite high for missed instalment payments.

I hope these tips and information above have been helpful and I also wish you a productive and short tax season. If you have any question on cross-border tax or investment planning please feel free to reach out via email to phil@philhogan.com.

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