US Individual Taxes
The United States levies tax on its citizens and residents on their worldwide income. Non-resident aliens are taxed on their US-source income and income effectively connected with a US trade or business (with certain exceptions). U.S. income taxes are owed on any income that you receive during your stay in the United States. Even if you do not receive income from a U.S. source, it may be possible that you could still be taxed on your worldwide income. Income taxes are assessed at both a state and a federal level. Each year, you must report your earnings on annual tax reports, known as "Income Tax Returns”, to both state and federal tax offices.
What’s included in our U.S. tax services?
- Preparation of U.S. federal and state
income tax returns.
- U.S. tax calculations.
- U.S. and Canada treaty benefits.
- Coordination of U.S. and Canadian
deductions and credits.
- Assistance with IRS correspondence.
US Corporate Taxes
US taxation of income earned by non-US persons depends on whether the income has a nexus with the United States and the level and extent of the non-US person's presence in the United States.
The US tax reform legislation enacted on 22 December 2017 (Public Law (P.L.) 115-97) changed the law of 'worldwide' to 'territorial' taxation in the US. The changed law includes the imposing of tax only on income derived within its borders, irrespective of the residence of the taxpayer. this system aimed at eliminating the need for complicated rules such as the controlled foreign corporation (CFC or Subpart F) rules and the passive foreign investment company (PFIC) rules that subject foreign earnings to current U.S. taxation in certain situations. Hence, P.L. (115-97) permanently reduced the 35% CIT rate on resident corporations to a flat 21% rate for tax years beginning after 31 December 2017. Corporate income tax is based on net taxable income as defined under federal or state law. Generally, taxable income for a corporation is gross income (business and possibly non-business receipts less cost of goods sold) less allowable tax deductions. Certain income, and some corporations, are subject to a tax exemption. Also, tax deductions for interest and certain other expenses paid to related parties are subject to limitations.
For complete details, contact our office for a review of your situation.
Payroll & Business Services
As a business grows, it must hire more employees, which can result in increased payroll administration. We can assist you in implementing the controls necessary to ensure a reliable, efficient, and effective payroll system. Our firm can also help you develop a payroll system and prepare all necessary payroll tax returns in a timely manner.
When it comes to paying employees, laws and the CRA have made the payroll function a time-consuming process for the small business owner.
Small business owners spend an average of eight hours a month performing payroll functions. That's 12 full days a year that could be spent generating sales, prospecting new business opportunities, improving products or services, or servicing customers.
Our Payroll Services enable you to spend time doing what you do best - running your company.
Why Outsource Your Payroll...
- It's Cost-Effective
- Use your staff more efficiently by letting us handle payroll and the associated legal details. Reduce overhead by removing the need to hire specialized employees.
- It's a Time Saver
- Our payroll service eliminates the burden of customizing, updating and maintaining your own payroll system--no more data entry, no more researching updates or new laws, no more worries.
- Worry-Free Payroll Tax Filing
- Eliminate the risks of calculating and filing your own payroll taxes by having professionals do it for you. Federal, Provincial tax laws are frequently changing and becoming more complex. How much time do you want to spend learning all the rules and keeping your information up to date?
- Allows You To Focus On Core Competencies
- Our professional staff allows you to focus on the core competencies of your business. We are accounting professionals--you get the experts working for you and with you.
- Comprehensive Reports
- You get a wide variety of user-friendly and accurate payroll reports.
GET THE PAYROLL SOLUTION THAT BEST FITS YOUR NEEDS
We know that when it comes to payroll service - no one size fits all. That's why we offer custom payroll processing options.
In order to give you an accurate price for our payroll services, we need to know a little more about your business and what services you're interested in. Our prices are very affordable. Please call us or contact us to find out about the pricing of our Payroll Processing Services.
Cross Border Trust and Estate Planning
It's possible that your estate plan has a U.S. connection? Cross-border estate planning requires the knowledge of a qualified professional with experience in these issues. If you or your family have relationships across the border, you should obtain advice from an experienced professional to help in identifying issues and preparing a coordinated estate plan.
We work with families and individuals from a broad range of backgrounds, customizing plans for their needs.
Foreign Trust Reporting Requirements and Tax Consequences
Under IRS Revenue Procedure 2020-17, eligible U.S. citizens and residents are exempt from the reporting requirements for transferring money to tax-favored foreign retirement trusts or for owning such assets.
Exempt assets are those that are only or almost exclusively for the purposes of the following:
- Retirement benefits
- Disability benefits
- Medical benefits
- Educational benefits
Assets that are for income-generating purposes are still subject to reporting requirements.
A U.S. person includes a citizen of the United States, a domestic partnership, a domestic corporation, any estate other than a foreign estate, any trust if a U.S. person exercises primary supervision over the administration of the trust or if one or more U.S. persons have the authority to control all substantial decisions of the trust, and any person that is not a foreign person.
Tax consequences can apply to U.S. persons who are treated as owners of a foreign trust and U.S. persons treated as beneficiaries of a foreign trust, and to the foreign trust itself. There can be income tax as well as transfer tax consequences that should be considered.
In addition to tax consequences, there a number of information reporting rules that can apply to a U.S. person who enters into transactions with a foreign trust or is treated as an owner of a foreign trust under the grantor trust rules of Internal Revenue Code (IRC) sections 671-679, including information reporting on Forms 3520 and 3520-A; on Form 8938, Statement of Specified Foreign Financial Assets; and on FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
This page focuses on information reporting requirements on Forms 3520 and 3520-A (under IRC section 6048), as well basic income tax considerations.
Income Tax Consequences
- U.S. owner of a foreign trust - In general, a U.S. person who is treated as the owner of a foreign trust under the grantor trust rules (IRC sections 671-679) is taxed on the income of that trust. IRC section 679 applies specifically in the context of foreign trusts and will treat as an owner of a foreign trust a U.S. person who transfers assets to a foreign trust which has or is presumed to have a U.S. beneficiary. Each U.S. owner of a foreign trust should receive a Foreign Grantor Trust Owner Statement (Form 3520-A, page 3) from the foreign trust, which includes information about the foreign trust income they must report.
- U.S. beneficiary of a foreign trust – In general, a U.S. beneficiary of a foreign non grantor trust will report its share of foreign trust income. Depending on whether the U.S. beneficiary is a beneficiary of a grantor or non grantor trust, the beneficiary should receive a Foreign Grantor Trust Beneficiary Statement or a Foreign Non Grantor Trust Beneficiary Statement, which includes information about the taxability of distributions the beneficiary has received.
- U.S. transferor of assets to a foreign non grantor trust - IRC section 684 requires the recognition of gain on certain transfers of appreciated assets to a foreign trust by a U.S. person.
In general, a Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts is required to be filed when a U.S. person:
- creates or transfers money or property to a foreign trust or makes a loan to a foreign trust;
- receives distributions from a foreign trust, receives the uncompensated use of property of a foreign trust, or receives a loan from a foreign trust;
- is treated as the U.S. owner of a foreign trust under the grantor trust rules; and
- receives certain large gifts or bequests from foreign persons.
The instructions for Form 3520 include more information about:
- who must file a Form 3520;
- when and where the Form 3520 must be filed; and
- possible penalties for filing the Form 3520 late or filing incomplete or inaccurate information.
See Form 3520 filing tips below. See also Gifts from Foreign Persons for information about reporting receipts of certain large gifts or bequests from certain foreign persons.
In addition to Form 3520, U.S. persons who are treated as owners of a foreign trust under the grantor trust rules must ensure that the foreign trust timely files a complete and accurate Form 3520-A, Annual Information Return of Foreign Trust with a U.S. Owner , and furnishes the required annual statements to its U.S. owners and U.S. beneficiaries. If a foreign trust fails to file Form 3520-A, the U.S. owner must:
- complete and attach a substitute Form 3520-A to a timely filed Form 3520, and
- furnish the required annual statements in order for the U.S. owner to avoid penalties for the foreign trust’s failure to file a Form 3520-A.
The instructions for Form 3520-A include more information about:
- who must file a Form 3520-A or ensure that a Form 3520-A is filed;
- when and where the Form 3520-A must be filed; and
- possible penalties for filing Form 3520-A late or filing incomplete or inaccurate information. The instructions for Form 3520-A and Form 3520 also provide information about filing a substitute Form 3520-A.
Exceptions to filing Forms 3520 and 3520-A
Forms 3520 and 3520-A are not required to be filed for Canadian registered retirement savings plans (RRSPs) and Canadian registered retirement income funds (RRIFs). See Rev. Proc. 2014-55 PDF. In addition, Forms 3520 and 3520-A are not required to be filed for certain tax-favored foreign retirement trusts or tax-favored foreign non-retirement savings trusts, provided that the U.S. owner is an “eligible individual” and the tax-favored foreign trust meets certain requirements. See Rev. Proc. 2020-17 PDF. Caution: These exceptions do not affect any reporting obligations that a U.S. person may have to report specified foreign financial assets on Form 8938 or any other reporting requirement, including the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
Form 3520 and Form 3520-A filing tips to avoid penalties
- Form 3520
- File Form 3520 by the 15th day of the fourth month following the end of the U.S. person’s tax year, or April 15th for calendar year taxpayers, subject to any extension of time to file that may apply. If you are a U.S. citizen or resident who lives outside the Unites States and Puerto Rico or if you are in the military or naval service on duty outside the United States and Puerto Rico, then the due date to file a Form 3520 is the 15th day of the 6th month following the end of the U.S. person’s tax year.
- If an extension was filed with respect to your income tax return, be sure to check Form 3520, Box 1k, and enter the form number of the income tax return to avoid your Form 3520 being treated as filed late.
- Form 3520-A
- File Form 3520-A using an Employer Identification Number (EIN) for the foreign trust on Line 1b of the form rather than the U.S. owner’s SSN or ITIN. If the foreign trust does not have an EIN, refer to How to Apply for an EIN.
- File Form 3520-A by the 15th day of the 3rd month after the end of the trust’s tax year. An automatic 6-month extension may be granted by filing Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information and Other Returns. Form 7004 must be filed under the foreign trust’s EIN.
- If the foreign trust will not file a Form 3520-A, the U.S. owner of the foreign trust must file a substitute Form 3520-A by completing a Form 3520-A to the best of their ability and attaching it to a timely filed Form 3520, including extensions (see Form 3520 and Form 3520-A instructions for more information on filing a substitute Form 3520-A). Do not separately file a duplicate Form 3520-A if you are filing a substitute 3520-A.
Other Possible Filing Requirements
Form 1040, Schedule B, Part III, Foreign Accounts and Trusts, must be completed if you receive a distribution from, or were grantor of, or a transferor to a foreign trust.
If you transfer money or property to a foreign trust, you may be required to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return.
A foreign trust, which is not taxed as a grantor trust, may be required to file a Form 1040-NR, U.S. Nonresident Alien Income Tax Return to pay U.S. tax on certain U.S. sourced income. See Publication 519, U.S. Tax Guide for Aliens and the instructions for Form 1040-NR for additional information.
You may be required to file Form 8938, Statement of Specified Foreign Financial Assets, to report your specified foreign financial assets if the total value of all the specified foreign financial assets in which you have an interest is more than certain reporting thresholds.
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account each year to the Internal Revenue Service by filing FinCEN Form 114 (formerly TD F 90-22.1), Report of Foreign Bank and Financial Accounts (FBAR).
US Tax Resolution Services
IRS Audit Representation
Our experienced professionals know the ins and outs of working with government tax agencies. We understand what your rights are, and are thoroughly schooled on tax ruling and regulation. We will act on your behalf from the moment you ask us to represent you. You possibly will never have to meet with the IRS!
The process of obtaining audit representation begins with an evaluation of the state or IRS notification you received
Back Taxes Owed
Have you filed your tax returns every year, but not paid all the tax you owe? Maybe you just didn’t have enough money at the time and planned to pay more later. Unfortunately, the penalties and interest that are added to back taxes greatly increase how much you will ultimately owe the government. If you are delinquent on your taxes and haven’t yet heard from the IRS, you soon will. The IRS may place a lien on your property or a levy on your bank accounts or wages. The potential damage from unpaid back taxes can be financially ruinous, but it is often avoidable. We can help you assess your tax debt options and negotiate a workable payment plan with the IRS. Unpaid back taxes is a problem that rarely goes away on its own. Contact us today and resolve your tax liability issues.
One of the worst things about IRS tax controversies are the penalties and interest tacked on to your original bill. There are penalties for late filing, late payment, and negligence, to name but a few–and the interest on unpaid taxes can rapidly increase your total tax liability. If you are struggling with unpaid taxes plus additional penalties and interest, we can help. The IRS may abate certain penalties if there is reasonable cause and the failure was not due to willful neglect. Many taxpayers who have not previously had major issues with the IRS can qualify for a first time penalty waiver. Generally, the IRS does not revoke interest charges, but some established interest suspension provisions do apply–especially where the IRS has made an error. We understand if you are overwhelmed by penalties and interest. They often appear arbitrary and unfair. We will carefully scrutinize your tax situation to see where penalties and/or interest may be waived.
Other services include filing your US Federal corporation tax returns and meeting the State requirements.