Taxes for Americans in Canada: Some Relief

Taxes for Americans in Canada

Late on US taxes in Canada? The IRS is throwing you a bone!

If you follow our US taxes explained series, you are may have seen our guide to US taxes for Americans living in Canada. We are pleased to have great news to those who have relocated to Canada; the IRS has recently announced that it will be lenient regarding the penalties for filing delinquent expat tax returns for Americans living in Canada. The Daily Gleaner described what the IRS is trying to accomplish with their recent article, “Dual Citizens Relieved Over Tax Reprieve.”

US – Canada Tax Relief

The IRS is making it easier for dual citizens or Americans living in Canada to get caught up with their US taxes by waiving the potentially high penalties they would normally face for missing the filing deadline.

“David Jacobson, the U.S. ambassador to Canada, told the Globe and Mail on Friday the Internal Revenue Service is poised to waive potentially massive penalties for Americans who file outstanding returns and don’t owe any taxes.”

The Failure to File penalty on US taxes is assessed at 5% for every month the return is filed late, and is capped at 25% per year. The IRS is offering to waive this fee for Americans who are filing delinquent returns.

IRS Relief for Canada – Why?

It may seem too good to be true, but the IRS made this announcement after many discussions with David Jacobson, the US Ambassador to Canada, and Jim Flaherty, the Federal Finance Minister of Canada.

 “We told the U.S. that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals, and they listened. We’re happy with today’s development. It is a victory for Canadians and a testament to our positive working relationship with our American neighbours.”


Another issue addressed was dual citizens being afraid of crossing the border in the event that they were behind on their US taxes. Flaherty also commented that this would be a non-issue moving forward; being behind on your US taxes doesn’t mean you’re going to be arrested when crossing the border to visit family or friends.

This is seen as a sensible move by the IRS — it removes the fear of getting caught up with US taxes while relieving part of the burden of US taxes to honest, hardworking dual citizens.

Additional Information about US Taxes in Canada

We also have a video post about paying US taxes in Canada here. If you have any other questions about paying US taxes north of the border, or if you would like to learn about our expat tax services, please contact us.