Does Uncle Same Want You

Many Canadian residents have been surprised to learn that their personal or investment circumstances have in fact created an obligation for them to make certain tax filings in the U.S. These tax filings are typically federal filings with the Internal Revenue Service however, in many cases there is also an obligation to make filings in various U.S. states.

Listed below are a variety of circumstances that could potentially trigger an obligation to make a tax filing in the U.S. or one of its jurisdictions.
Please note that the following is not an exhaustive list and we have only attempted to identify the criteria in general terms. In most situations the criteria is much more specific than that listed below. If any of these situations are "similar" to your circumstances, please contact us to review this matter further.

  • On average, do you spend 4 months or more per year in the United States?
  • Have you spent greater than 182 days in the United States in any given calendar year?
  • Do you earn rental income from U.S. real estate?
  • Have you ever disposed of U.S. real estate?
  • Have you ever earned employment income while in the United States?
  • Have you ever earned revenue from your business while operating or selling into the United States?
  • Are you a U.S. citizen or Green Card holder?
  • If you are a U.S. citizen, have you gifted significant amounts of your "world wide" assets?
  • If you are not a U.S. citizen, have you gifted any assets located in the U.S.?

U.S. Estate Tax Exposure
In addition to having a filing requirement under one of the above scenarios, you may be exposed to U.S. Estate Tax if you own assets such as shares of a U.S. corporation or U.S. real estate. Professional advice should be sought where exposure may exist.

If U.S. reporting is required, you must obtain an Individual Taxpayer Identification Number (ITIN). This number can be obtained in person at the nearest U.S. Consolate in Toronto.

If you are a U.S. citizen living in Canada or a Canadian citizen living in the United States and are the beneficiary of a trust, including a Canadian RRSP, you have additional annual filing requirements.

"Information contained herein is of a general nature. No action should be taken without seeking professional advice that takes into account current developments and the specific facts of a particular situation."

[Updated - February 20, 2010]

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