Many companies assign international projects to their employees. While sometimes people leave their home country in search of a better job, others may plan to set up their business overseas. Regardless of the reason you have chosen to move, you will need to familiarize yourself with the tax laws of your new country, while not forgetting about the old. U.S. citizens living in Canada or expatriates in America often find it challenging to navigate the tax system. This is because besides complying with the tax policies of the home country, they also have to deal with U.S. tax laws. For expatriates, navigating international taxation can become overwhelming. For this reason, most people prefer hiring a tax advisor to stay tax compliant while minimizing tax burden.
Why Hire a Professional Tax Preparer?
When it comes to taxation, citizen or non-residents avoid getting in trouble with the IRS. Even if you’re an American citizen permanently living in Canada, you still need to file U.S. income taxes on an annual basis with the Internal Revenue Service (IRS). This is because the USA taxes individuals on the basis of their citizenship, not residency. The tax rules and regulations are complex in both U.S. and Canada. They have specific guidelines for cross-border transactions that make it complicated to file taxes. Professionals specializing in cross-border taxation provide invaluable services for preparing and filing U.S. income tax. Here are some reasons why hiring a cross-border tax advisor is highly recommended.
1. Ensure Tax Compliance
An engineering graduate doesn’t know how to perform surgery. Likewise, medical professionals are not trained to build houses. People get education and training in different fields. From electricians to plumbers, every professional is trained to do their job. Similar to tax professionals that are trained in tax laws and their job is to provide tax-related services. A non-professional will find it challenging to learn all of the rules and regulations of national or international tax laws. Failure to understand tax laws could lead to mistakes in filing taxes which leads to non-compliance. These errors result in IRS audits, large monetary penalties, and even imprisonment. To avoid these issues, it’s best to hire an expert in international tax law and tax treaties. A cross-border tax advisor provides a range of services to navigate cross-border tax regulations.
2. Efficient Tax Planning
Tax planning becomes even more important for individuals moving abroad or businesses having overseas operations. For instance, Canadians moving to Florida require a comprehensive cross-border tax plan. Unless you have in-depth knowledge of U.S. tax laws, creating an efficient tax plan can be overwhelming. Only experienced tax advisors have the knowledge and experience to find the best solutions to minimize tax liabilities while avoiding errors in tax filing. These professionals know how to take advantage of the US-Canada Income Tax Convention. With years of experience, cross-border tax professionals gain an understanding of multiple tax systems. This helps in devising a cross-border taxation strategy that is in line with your financial objectives. They make sure their clients abide by their home country’s tax laws, as well as their country of residence.
3. Financial Gains
Tax professionals use their knowledge of the tax system to claim all possible deductions. When you work with a tax advisor specializing in Canadian and US taxation, you get the benefit of tax exemptions available in both countries. By claiming all deductions and tax credits, the tax professional can help you save money and improve cash flow.