If you are a US citizen living in Toronto or elsewhere in Ontario, you are required to file US taxes just like you would if you were living in the United States. Filing US taxes while living abroad can be complicated, but it’s important to stay compliant with the Internal Revenue Service (IRS) to avoid penalties and fines.

Here’s everything you need to know about filing US taxes in Toronto or elsewhere in Ontario.

Who Needs to File US Taxes?

All US citizens are required to file US taxes, regardless of where they live or where they earn their income. This includes US citizens living in Toronto or elsewhere in Ontario.

In addition, if you are a green card holder, you are considered a US tax resident and must file US taxes.

When Do You Need to File?

The deadline for filing US taxes is April 15th of each year, just like it is for US citizens living in the United States. However, if you are living abroad on April 15th, you are given an automatic extension until June 15th.

It’s important to note that even if you are given an extension to file your US taxes, you are still required to pay any taxes owed by April 15th to avoid interest and penalties.

What Forms Do You Need to File?

As a US citizen living in Toronto or elsewhere in Ontario, you will need to file a US tax return, which includes reporting your worldwide income. You may also need to file additional forms, depending on your specific situation.

Some of the most common forms that US citizens living abroad need to file include:

  • Form 1040: This is the main form used to report your US tax return.
  • Form 2555: This form is used to claim the foreign earned income exclusion, which allows you to exclude a certain amount of your foreign earned income from US taxation.
  • Form 1116: This form is used to claim the foreign tax credit, which allows you to reduce your US tax liability based on the taxes you paid to foreign governments.
  • FBAR: This form is used to report foreign bank and financial accounts.

It’s important to work with a qualified tax professional to ensure that you are filing all of the necessary forms correctly.

What Are the Penalties for Not Filing?

If you are a US citizen living in Toronto or elsewhere in Ontario and you fail to file your US taxes, you may face penalties and fines. The penalties for not filing can be significant, and they can add up quickly if you don’t take action to get compliant.

Some of the penalties you may face for not filing your US taxes include:

  • Failure to file penalty: This penalty is assessed when you don’t file your tax return by the deadline. The penalty is 5% of the tax owed for each month that the return is late, up to a maximum of 25%.
  • Failure to pay penalty: This penalty is assessed when you don’t pay your tax liability by the deadline. The penalty is 0.5% of the tax owed for each month that the payment is late, up to a maximum of 25%.
  • Accuracy-related penalty: This penalty is assessed when you make an error on your tax return that results in an underpayment of tax. The penalty is 20% of the underpayment.
  • Criminal penalties: In extreme cases, you may face criminal penalties, such as fines or imprisonment, for failing to file your US taxes.

It’s important to work with a qualified tax professional to ensure that you are compliant with all US tax laws to avoid these penalties and fines.

Final Thoughts

Filing US taxes in Toronto or elsewhere in Ontario can be complicated, but it’s important to stay compliant to avoid penalties and fines.