Live in Canada and earn from the US? All you need to learn about the taxes
If you are a Canadian resident but earning from the US and unclear about the tax rules then this article will surely help you out. It covers everything that you must know about tax liability on your foreign income.
The taxation rules in Canada for foreign income look complex but are simple if taken care of. The foreign income tax works like the income tax that you pay within the country. You can choose the Canadian Tax consultancy service for your income tax (inside and foreign income).
Taxes: Residents and Non-Residents
There are two categories under which you may understand the rules on the foreign income tax, residents and non-residents. The tax return that you will file to reveal your foreign income will be based on the fact if you are a Canadian resident or non-resident.
If you are a resident, you will have to file a Canadian tax return where you will reveal the income that you have earned outside the country i.e. from the US. Now there’s a concept of the foreign tax credit, let’s understand that. The foreign tax credit can be claimed if you have paid tax on the foreign income outside the country.
The benefit of this foreign tax credit is that your tax inside the country will be reduced. If you have already paid tax outside the country then there will be a reduction in the tax inside the country.
Make sure the foreign income proof that you provide is genuine. Also, ensure that you go for US tax consultants in Toronto to file your tax returns otherwise the tax laws will leave you confused. You can also choose The Accounting and Tax company for your hassle-free tax-returns.
On the other side, non-refundable tax credits are offered to non-residents on their tax-return filing on the foreign income. Since you are a non-resident citizen, you will not be liable to pay tax in Canada for the income earned in the US but your tax-credits will be impacted through this. What is this tax-credit then?
It is also known as the tax-free threshold, you can earn up to a certain extent in Canada without paying any tax. This limit in 2019 was $12,069; if your 90% income or more till $12,069 was from Canada then you are liable to pay no tax.
The non-resident citizens have to fill the TD1 or a federal tax form to file the income tax returns on their foreign income. It is recommended that you go for Personal tax consultancy service in Toronto to file your tax returns on the foreign income.
