U.S.-Canadian Dual Taxation Pitfalls: Reporting Issues and Planning Opportunities for U.S. Taxpayers

The Canada-U.S. border is the longest contiguous international border on earth. The geographical and demographic similarities between the two countries contribute to the world's most significant trade relationship between the two countries. Given these harmonious and long-standing relations, Canadian resident taxpayers frequently get caught up in the U.S. income tax system and vice versa.

A critical component of this cross-border business activity is avoiding dual taxation on income and gains. The U.S. and Canada have a comprehensive tax treaty system that addresses most dual taxation concerns. As in all international planning, tax advisers must understand the particular provisions to avoid an unpleasant tax bill--or maybe two.

Among the planning challenges for cross-border activities is navigating the tax treatment of LLCs and other U.S. disregarded entities. Canadian owners of U.S. LLC shares could face dual tax layers. Tax advisers for clients using LLCs will need to carefully plan on both sides of the border.

Other areas of concern in U.S.-Canadian tax planning include the treatment of passive income and tax considerations of cross-border pension ownership, contributions, and withdrawals. The extensive U.S. tax reporting requirements imposed on taxpayers with U.S. filing obligations are hovering over all these concerns.

Listen as our experienced panel provides comprehensive and practical guidance on navigating U.S.-Canada cross-border tax planning and reporting issues.

1. U.S.-Canada tax treaty overview and dual tax mitigation provisions
2. Treatment of U.S.-based LLCs and pass-through entities in cross-border situations
3. Passive and unearned income treatment
4. U.S. tax reporting requirements of Canadian-sourced investments
5. Limitation of benefit provisions

The panel will discuss these and other relevant topics:

• Tax treaty provisions for mitigating dual taxation on ownership of cross-border LLCs and other pass-through entities
• Limitation of benefits clauses and provisions in the U.S.-Canada income tax treaty
• Key risks and challenges of passive/unearned income in cross-border situations, including an update on current Canadian legislative proposals with respect to Canadians earning passive income and new limitations on the deduction of interest in Canada
• U.S. reporting requirements of Canadian-sourced investment

Learning Objectives

After completing this course, you will be able to:

• Identify key provisions of the U.S.-Canadian income tax treaty
• Recognize the tax treatment of Canadian citizens owning an interest in a U.S. entity
• Establish the U.S. reporting requirements of Canadian-sourced investment
• Determine the limitations of benefits clauses and provisions in the U.S.-Canada income tax treaty
• Discern the tax implications of U.S. taxpayers owning shares in ULCs in Canada
• Identify tax planning opportunities to avoid double taxation and minimize the overall effective tax rate across the two countries

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of foreign information reporting requirements, including FATCA and FinCEN Form 114; familiarity with foreign income sourcing rules and tax treaty provisions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).