American citizens who live in Canada face special tax challenges. A new IRS announcement has detailed the specific ways that this group can get at least some tax relief. These Americans must file a tax return each year with the Internal Revenue Service. For more than a decade, the situation has been a mess, with poor communication between the tax agency and the state department. At last, the U.S. government has decided to get serious about enforcing its own tax policy abroad. Tax relief for U.S. citizens who live in Canada has arrived, in the form of a new IRS policy which purports to forgive any late-filing penalties if you owe no tax. Oddly, the U.S. is one of the very few nations in the free world that requires its citizens who live abroad to pay income tax on money they earn outside of the country.
At the IRS website, www.irs.gov, there is an announcement detailing the new policy. If you live in Canada and have not filed a tax return for several years, then you are all right as long as you own no tax. The unmentioned part is that the IRS will indeed charge a late penalty if you owe any amount of tax. It appears the agency will go back for at least six years\’ time in enforcing this new, convoluted policy.
Sadly, most of the one million Americans who live in Canada have no clue about the U.S. tax policy, and it is not their fault. Many pay tax to the Canadian government and have been living there for a long time, and simply don\’t know that they are supposed to be filing with the IRS and U.S. government.
The first thing to do in order to get tax relief is show reasonable cause for not filing. The IRS takes a much more lenient view if you can do so. Secondly, keep every receipt for income and expenses. These items may seem mundane right now, but will come in handy when, or if, you have to sit down with an IRS agent. Third, try to file six years\’ worth of tax returns, because this is what the agency suggests in its announcements. Finally, do not delay. If you take action now, you will likely get some tax relief from the IRS. It is to your advantage to be able to show that you took action as soon as you learned about the law.
For Americans who live abroad, the tax situation is pretty baffling, and getting any amount of tax relief can be difficult. Follow the tips above, and you will be on your way to getting at least some tax relief.
Seeking tax relief from the IRS? Contact Guardian Tax Resolutions. The Guardian will help you resolve your tax issues and get you the piece of mind that you deserve.