Here are the key cross border tax preparation mistakes people make that you will want to avoid.
1. Filing your taxes in a vacuum.
It is important to realize that you should not prepare your cross border taxes in a vacuum. That is, information in one tax return will be required to finish the other.
2. Worldwide income declaration.
Depending on your situation, one or both countries will need information about worldwide income.
3. Not Reporting funds in your foreign bank accounts.
Foreign bank accounts and any combination of accounts totaling greater than ten thousand dollars ($10,000) will need to be reported in your U.S. taxes.
4. RRSP reporting.
Earnings within your RRSPs and RRIFs may need to be reported.
5. Foreign tax credits can help you save on your taxes.
There are many tax credits you can use to your advantage. Most people are not aware of all the tax credits they can leverage in their new country as well as the credits available to you as a foreigner.
6. Not Declaring non-residency when leaving Canada to save on your taxes. 7. Not taking advantage of currency fluctuations to save on your taxes.
On the departure year you may be able to declare being a non-resident and save on your taxes. Do it correctly and your future taxes can be much lower.
When the US dollar falls against most currencies, it presents an opportunity for you to save on your taxes.