We all recognize considerable differences exist betweenCanadian and U.S. tax laws however the variations don’t just quit within the law books. The variations also extend to the specialists preparing tax returns for individuals coping with both countries tax systems.
Within this planet of on the web content saturation and info overload, how does one determine who is a competent cross-border tax preparer? Does a sign around the door or maybe a fancy webpage indicate the requisite knowledge? Are you able to assume your existing Canadian tax preparer has theknowledge and competence in relation to U.S. taxes? Does anyone with a U.S. CPA or EA license indicate they are competent to prepare U.S. tax returns? The answers to these questions may possibly surprise you.
Unbeknownst to many clientele, they wind up trusting their U.S. and Canadian tax returns to a preparer who thinks cross-border taxes is merely an exercise in transposing a Canadian return to a U.S. return and vice versa. Sadly, cross-border tax filings are a lot more complicated than merely mirroring a single return into the other and also the charges and penalties of producing mistakes is often higher.
A cross-border tax catastrophe is usually avoided by doing due diligence on the subject of engaging a competent tax experienced. To assist in your due diligence, we’ve assembled a list of qualifications and topics that you must bear in mind when deciding upon a firm to handle your cross border taxes.
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What will be the pitfalls of working with a separate U.S. and Canadian tax advisor?
Lots of clients believe it is finest to retain a separate tax preparer for every single country. Our experience has shown you can find pitfalls to hiring a single nation tax advisor. Preparing cross-border returns isn’t accomplished in a silo.
Under are some prevalent pitfalls when engaging non-affiliated, single country tax advisors:
• Miscommunication – You’ve heard the old saying the left hand doesn’t know what the correct hand is carrying out. Certain enough, our encounter has shown this can be a common occurrence when multiple firms are engaged to prepare returns for the identical client.
• Higher Expenses – Tax preparation charges are greater when separate firms are engaged for the reason that you end up paying the overhead of two firms as opposed to one particular and you will discover often extra costs from getting two firms communicating with 1 a different.
• Higher Threat of Errors – With out a complete analysis of your tax circumstance, there is certainly a higher likelihood of deductions being missed, earnings being sourced incorrectly and significant inconsistencies inside the tax filings.
• Missed Deadlines – Canada and also the US have diverse filing deadlines. You face a greater threat of deadlines getting missed when filings are not effectively co-ordinated. Therefore, it is crucial that these deadlines be co-ordinated in the procedure of preparing your tax returns. With a number of parties involved in the filing course of action, it is significantly harder to make sure one particular firms filing schedule is in sync with all the deadlines of your other firm.
• Inconsistent Tax Strategies – Having two separate prepares generally final results in neither tax preparer completely coordinating a tax tactic that optimizes your all round cross-border tax filings. The tax tactic employed by 1 tax advisor could be fatal towards the tax strategy employed by the other advisor. This leads to a disjointed and incomplete tax strategy which will outcome in larger taxes and costs.
• Burdensome Communication – No one likes repeating themselves. Once you engage two separate firms, it’s not uncommon to spend considerable time communicating with each firms to make sure they are around the very same page, major to far more strain and greater charges. Applying one firm that does every thing in property eliminates the costly and burdensome cross-communication.
• Inefficiencies – We’ve all know the inefficiencies that arise when you will discover too a lot of cooks in the kitchen. The saying couldn’t be far more relevant for the approach of engaging multiple tax specialists. Between bankers, investment advisors, lawyers and tax pros, your tax filing engagement can become a crowded kitchen.
What to Look for in a Qualified Cross-Border Tax Firm
With 20 years’ knowledge coping with US and Canadian taxes, we understand the qualifications a cross-border tax client should look for within a cross border tax preparer.
A actually qualified cross border tax expert need to be able to competently supply each Canadian and U.S. tax services. Additionally, giving tax solutions in each nations must be their principal line of business enterprise; not just an add on service or possibly a
of service that they not too long ago introduced.
In addition, as aspect of the due diligence in retaining a cross-border tax qualified, the following qualifications ought to be viewed as:
Canadian and U.S. Credentials – Our staff consists of dually U.S. and Canadian trained and licensed CPA/CPA, CA and U.S. tax attorneys. This guarantees all client U.S. and Canadian tax returns are reviewed and signed by a dually licensed U.S. CPA and Canadian CPA, CA with knowledge in cross-border tax returns. While there are actually incredibly few U.S. based tax pros that are licensed to prepare Canadian tax returns, it is not uncommon to find a Canadian based tax preparer also licensed within the U.S. Do not be fooled into thinking a person with a U.S. CPA or EA license is necessarily knowledgeable in cross-border taxes. However, the overwhelming majority of Canadian tax professionals holding a U.S. CPA license are licensed in either Delaware or Illinois for the reason that these states permit granting a CPA license for basically passing a basic exam and do not require any actual U.S. tax expertise.
Canadian and U.S. Office Places – A genuinely qualified crossborder tax advisor ideal serves consumers when they arephysically situated on both sides on the border. With offices in both Los Angeles and Toronto, our firm is capable to simultaneously service customers all through the U.S. and Canada. Our Canadian and U.S. office locations give us the benefit of having the ability to foster an interactive partnership with our customers on both sides from the border while also staying abreast from the tax laws in each nations.
Canadian and U.S. E-filing Capabilities – We’re certainly one of a few firms that present free e-filing of U.S. and Canadian tax returns. In today’s day and age, filing a return by mail is the equivalent of writing a check at the grocery shop checkout. Paper filing a return is cumbersome and time consuming while e-filing supplies quickly and accurate processing of your return. Sadly, the vast majority of Canadian tax preparers aren’t allowed by the IRS to e-file U.S. tax returns.
Secure & Secure Cross Border Platform – We make it easy to deal with clientele across borders. Our secure on-line client portal lets clients access their tax records from any computer or mobile device. We created a secure environment for consumers to interact with our firm, to present their tax records and to view and e-sign their tax documents. We also make it easy for clients to remit payment electronically in each nations.
Experience, Practical experience, Experience – Lots of Canadian tax pros who claim to be skilled in canada us tax planning have simply taken a one day course to learn about the basics of US taxes. Our practice focuses exclusively on serving U.S. citizens living in Canada and Canadians dealing with U.S. tax matters. With decades of actual tax encounter in each countries, we fully grasp the challenges and issues facing cross border taxpayers, such as changes in residency, Canadian holding companies and U.S. taxpayers who own non-registered Canadian mutual funds and ETFs.
Practical experience with U.S. State Tax Filings -Most Canadian primarily based tax preparers have minimal practical experience filing state tax returns because their customers living in Canada do not call for a state tax filing. We’re the only cross border tax firm licensed in the State of California. From California taxation of RRSPs to California domicile laws to California community property laws, we are uniquely certified to help customers with all the complex California tax laws that apply to Canadians. We also regularly represent clients primarily based in New York, D.C. and Arizona.
Do not Be Fooled by Low Prices – A low quoted fee for cross border tax preparation is really a certain sign that the tax preparer doesn’t realize the true complexities involved with filing cross border returns and lacks the necessary expertise to handle you’re returns. Most cross border tax filings are complex, especially if your work, investments or corporate holdings span across the border. We offer consumers with a comprehensive intake program to ascertain the necessary scope of services that will be provided. This allows us to ensure that clientele receive a fair and clear quote for the services we’re to provide in advance of commencing any work. All costs are communicated to you in advance in order to maintain complete transparency and avoid last minute surprises and add-ons. In addition, our charges are competitive compared to large international cross border tax firms.
Returns Prepared In Home – We usually do not outsource our tax preparation. Unlike most cross border tax firms, all of our work is carried out in-house by our dedicated staff. We usually do not sell youthe “service” and then outsource it to a third party in a further country. To make sure returns are prepared correctly and to be as efficient as possible, exactly the same tax professional prepares each your U.S. and Canadian tax returns.
Dedicated Connection Manager for a Hassle-free Course of action – Every client at our firm is assigned their own dedicated partnership manager. Throughout the tax return preparation method, your dedicated relationship manager is there to guide you and make the procedure as simple and straightforward as possible.
What It is best to Discuss With Your Cross-Border Tax Advisor
Now that you simply know what to appear for inside a cross-border tax qualified, what are some with the topics aqualified cross-border tax specialist should discuss with you?
Talk about PFIC? Did they discuss the U.S. tax consequences of holding non-registered Canadian mutual funds or ETFs or non-controlling investments in Canadian corporations that qualify as Passive Foreign Investment Corporations (PFIC)?
Foreign Personal Holding Company Revenue Did they discuss the U.S. tax consequences of getting an owner of a Canadian Controlled Private Corporation (CCPC) with only you as its employee?
U.S. Foreign Tax Credit AdjustmentDid they bring to your attention the foreign tax credit adjustment on your US return if your foreign capital gains or dividends are over USD$20,000? Did they consider the need to apply the High Tax Kick Out rules?
Earnings ResourcingDid they discuss your earnings in the context with the key US-Canada sourcing rules under the treaty?
Foreign Grantor Trusts Did they evaluate your investment holdings to identify if any qualify as a foreign grantor trust, such as a RESP or segregated fund?
Election to File Jointly If you are a dual status alien within the U.S., did they discuss the option to make a 6013 election?
Benefits of Working with US
Partnering with us brings several direct and immediate benefits, the vast majority of which is discussed above. A partnership with us will streamline your cross-border tax filings and enable you to focus around the bigger issues affecting your life such as your family, your profession and your life goals.
Have inquiries? We have answers. Contact us today for a complimentary assessment. Learn more here on cross border estate planning