You work hard for your money. Naturally, you want to keep as much of it as possible when you file your taxes.
If you’re an individual filing a simple U.S. tax return, you can likely file your own taxes without much of a hassle. However, some tax returns are more complicated than others. For instance, if you are a U.S. citizen or green card holder living in Canada, keeping up with U.S. cross-border compliance requirements can be a challenge. There are certain unique financial, tax and estate planning laws that you may not be aware of.
U.S. tax preparation for individuals living in Canada with U.S. tax obligations is best handled by a qualified U.S. tax advisor. U.S. citizens and green card holders residing in Canada may experience significant benefits from the services offered by them.
These professionals optimize their clients’ returns and ensure compliance in both countries. They are trained to handle the most sophisticated tax situations and use their knowledge to protect their clients against penalties. A good tax advisor offers consultation, planning and preparation services; all firmly rooted in cross-border tax realities.
Do You Really Need a Tax Advisor?
Just as a doctor is trained to recognize subtle symptoms and catch them before they lead to a bigger medical issue, a qualified tax advisor is trained to scrutinize your returns and filing positions and address any discrepancies before the IRS catches them.
A qualified U.S. tax advisor is one who specializes in the complexities of the U.S. tax code. They leverage that expertise to assist taxpayers in ensuring proper compliance in the United States.
A regular accountant may not have the proper qualifications to assist you in your U.S. cross-border tax filings, nor will they be able to offer or understand the necessary planning opportunities that may save you time and money. This is where a qualified U.S. tax advisor does what a regular accountant cannot.
Credentialed and experienced advisors can save you a lot of money in the long run. How so? Well, for one, they utilize their proficiency and experience to apply complicated and confusing tax law requirements on your behalf.
Tax laws often have a lot of nuances that the average taxpayer would not be able to recognize, take advantage of or avoid, if necessary. Qualified U.S. tax advisors can spot these complications and oftentimes use them to your advantage.
Below, we’ve compiled a list of the biggest advantages that you can enjoy when you engage a qualified U.S. tax advisor;
#1: Eases Your Tax Burden
As discussed earlier, U.S. tax filing obligations for certain individuals can be complicated. For instance, a small business owner may have certain deductions and credits available to them on the U.S. income tax return. This may require additional filings in addition to the typical Form 1040, U.S. Individual Income Tax Return.
Any additional forms or schedules that may apply to a taxpayer’s case, should be identified by the tax advisor. These additional forms are oftentimes required, especially in the cross-border tax context. When you’re attempting to navigate your way through these returns, the risk of error rises with each additional form you are required to submit. A knowledgeable tax advisor mitigates these risks and identifies relevant tax positions or applicable credits to lessen your tax burden as much as possible.
#2: No More Costly Errors
At the core of their job, a tax advisor attempts to offset any and all errors that may arise on your tax returns. These errors can prove costly in terms of the associated penalties and your need to hire a professional to fix them. Furthermore, the errors oftentimes result in frustrating processing delays and multiple instances of correspondence from the Internal Revenue Service (IRS).
For those individuals choosing to file on their own, the IRS maintains a list of the most frequent tax filing errors that involve computing mistakes when determining taxable income, inputting expenses on the incorrect line and basic math errors.
Errors lead to tax liabilities, penalties and interest. Most of these will be imposed from the date you file the return, or the date in which the return was due. The interest and penalties assessed accumulate quickly.
As a caveat, we are not claiming that a qualified U.S. tax advisor does not make errors. Rather, in consideration of the fact that these advisors are specifically trained in the area of U.S. tax, the chances of errors in filing is significantly reduced, compared to that of a lay person filing the return without assistance. Furthermore, qualified U.S. tax advisors can provide specific protection if the U.S. tax filing is done incorrectly.
#3: Identifies All Credits and Deductions That You Qualify For
Tax advisors study your professional and personal profile and piece together any deductions and credits that you may qualify for. You may think that you are entitled to a variety of credits but, the complexities of the U.S. tax law may limit your ability to utilize multiple or significant credits. A qualified U.S. tax advisor will identify the tax position best suited for your situation to help maximize any refunds you may be entitled to.
#4: Year-Round Advice and Assistance
Apart from providing a professional touch on your tax returns during the tax season, you also have the benefit of approaching your tax advisor at any other time of the year.
They can answer any important questions regarding your financial health, as it relates to your taxes, to help properly position you. This ensures that you are not a run-of-the-mill tax filer that only speaks to their accountant once a year to provide them with your reporting slips. Your advisor will strive to develop a relationship with you to best position you in the future.
This is especially useful when you are the owner of a business and may encounter tricky tax situations outside of the end of the tax year (situations that call for quick action!) that will likely affect your tax position in the future.
#5: Sets Your Personal and Professional Affairs in Order
U.S. tax filing obligations aside, a tax advisor also steers individuals and businesses to make proper financial decisions in key areas. This could include retirement planning, estate planning, investment management, and small business planning. Canadians with U.S. real estate, especially, will find this particularly useful to avoid to pitfalls associated with U.S. taxes upon the sale of that property.
Your tax advisor even comes to the rescue for important life events such as marriage, the birth of a child or purchasing real estate. Oftentimes, individuals forfeit or diminish future earnings because they neglected to make smart moves at the right time with the help of a qualified U.S. tax advisor.