People move to other countries for several reasons. Whether you move abroad for a better job opportunity or live closer to your loved ones, crossing the border isn’t easy. The international move comes with many challenges and one such issue is taxation. An expatriate is a person who lives outside their home country. When a person moves across the border, like Americans moving to Canada, they need to consider several things. As an expat, do I retain tax residence status in the home State? Is my foreign income taxable in the home State? How to find any special deductions or exemptions? Finding answers to all such complex questions can be intimidating. Moreover, there could be serious consequences if you fail to comply with the tax laws in both your home country and country of residence.
International Tax Planning
Taxes, both corporate and personal taxes can become a huge financial burden for expatriates. Besides the native country, the source country also charges taxes from non-residents on the earnings they receive within their country. And this is where international tax planning comes in! Expats have different tax situations which makes it necessary to have international tax planning. International tax planning involves implementing the guidelines of concerned tax authorities to minimize the tax burden. Local tax laws and rules applicable through Tax Treaties and multilateral agreements can help significantly reduce the tax burden of businesses and individuals. Comprehensive international tax planning helps in lowering taxes, resulting in increased cash flow.
Why Hire Cross-Border Tax Advisor?
When moving across the border, like Canadians moving to Florida, proper tax planning is crucial. However, formulating a tax strategy and finding a solution to prevent double taxation requires specialized skills and experience. So, if you don’t want to miss out on tax savings opportunities, it’s best to hire a cross-border tax advisor. Here are some reasons to hire a professional for cross-border taxation.
1. Knowledge of International Tax Laws
Every country has a tax law that can be complicated to understand. You may have knowledge of the tax regulations of your native country but when you move abroad, it can be challenging to learn the tax laws of the new country. Whether you get a job in Canada or a Canadian business expands operations to the United States, it becomes necessary to seek US tax advice from a US tax accountant or Canadian tax advisor. Only cross-border tax advisors understand the implications from a US domestic standpoint. A tax strategy created for Canada may not work best in the United States. You need to hire US-Canada Cross-border tax professionals who have the qualifications and license to create a tax strategy considering the laws of both countries.
2. Avoid Errors & Risks
A tax specialist understands the tax laws that ensure correct tax filing. Without proper knowledge of the tax laws of a different country, there’s a risk of making errors that could lead to costly penalties. Non-compliance can lead to audits by the Internal Revenue Service (IRS) and potential fines and even imprisonment. The penalties can be costly and could potentially hurt the cash flow of your business. Hiring a cross-border tax accountant eliminates this risk and ensures tax compliance both in the US and Canada.
3. Lower Taxes & Improve Cash Flow
When a professional creates your tax strategy, it helps in reducing the tax burden. Tax advisors assess your financial situation and consider all possible credits or deductions that you may qualify for. They make the best use of opportunities that can prevent double taxation and improve your business’s profitability.
