Canadian Citizens who earn rental income from the U.S
There are thousands of expats from different countries who earn money from the United States. Canadians are probably top on the list of these expats who earn in dollars from various sources in the U.S. Rental income is one such source given the fact that many Canadian citizens own real estate properties in the country but do not reside there or maybe own more than one property. Most of these people who give their property on lease are of the opinion that they would earn extra money as they might not have to pay taxes. But this is absolutely not true. Rental income is taxable by the US government and the owners are liable to pay taxes to the IRS. The following facts would provide a clear picture of taxation rules for the resident and non-resident Canadians in the USA.
A Canadian citizen who resides in the US and earns rental income is supposed to file tax returns for the same by declaring the total income to the IRS. The IRS Publication 527 comprises five chapters that have a detailed description of the tax rules related to rental income. For a better understanding, one can look up to the Canadian Tax Consulting Services who can help in paying the taxes.
Sometimes, there are tenants who pay an amount of income as a penalty to break the lease before the defined time. In such a case, the amount paid by the tenant has to be added and declared as rental income for the financial year in which it is received.
The non-residents on the other hand, are liable to pay 30% withholding of their total rental income. This is the case for those who are not registered with the IRS and are not accountable as a regular taxpayer. This payment is made by the tenant himself or by the owner’s property manager if any.
This 30% payment can be avoided if the owner registers himself as a taxpayer and obtains the Individual Taxpayer ID Number(ITIN) which is required for every individual to be eligible for filing a tax return. You can take the help of International Tax Consultants in Toronto who provide their services globally.
After obtaining the ITIN, you can file your tax return for the financial year in which you receive it. You can also look for tax deductions which include mortgage interest, advertisement costs, etc
In case you want to avail an all-in-one service, you should take the help of The Accounting & Tax Company who have one of the best accountants and consultants to guide you in paying your taxes. You can experience a hassle-free process and get your job done easily
