US person with a foreign business — what part of this actually needs a professional?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: classification comes first: whether the entity is a corporation, a partnership or disregarded for US purposes changes which forms apply and whether the profits are taxed currently.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Does the IRS treat my Canadian company as a foreign corporation?
If the company was incorporated outside the United States and a US person owns it, then yes, whatever it is called locally it is a foreign corporation with a US shareholder. That brings a reporting package with it and rules capable of taxing the company's profits in your hands before you have taken anything out. The first question is not which forms to prepare but how the entity is classified for US purposes, because classification decides everything downstream of it, including whether the profits are taxed to you currently or only when they are distributed.
Do I pay US tax on profits still sitting inside the company?
You can. The rules that apply to a US shareholder of a foreign corporation are capable of taxing profits currently, before a dividend is declared and before any money leaves the company. That is the part that surprises owners who have been told, correctly, that the local corporate tax is deferred until distribution. Whether it happens on your facts depends on how the entity is classified and what kind of income it earns. It is a computation to run before the year closes rather than a discovery to make after it.
What happens if the classification election is made late?
An election made on time can line the two countries up, so that tax paid where the company operates is available against the US tax on the same profits. The same election made late often cannot do that. The years no longer match, and credits that would have absorbed the US liability sit stranded in a period where there is nothing for them to absorb. The position is usually still worth repairing, but the repair costs more than the election would have and it does not always recover everything. That is why classification belongs at incorporation.
Should my company be a corporation or disregarded for US purposes?
There is no default answer, which is why this is modelled rather than assumed. Treating the company as a corporation keeps its profits separate until they are distributed, subject to the rules that can override that separation. Treating it as disregarded puts the income straight on to your own return, which can simplify the credit position and complicate the local one. The mix of income, the local rate, whether you draw salary or dividends, and what you expect to do with the company in a few years all move the answer.
I already pay corporate tax abroad, so is there still US reporting?
Yes, and the two are separate questions. The local corporate tax is what the company owes where it operates. The US reporting sits on you as its shareholder and exists whether or not the company owes anything to the IRS. Where the local tax helps is in the credit position on your own return, and that only works if the classification and the timing line up. Paying substantial tax abroad is a good reason the final US bill is often small. It is not a reason the filing goes away.
Is reporting still required in a year the company earned nothing?
Generally yes, because the reporting attaches to the ownership rather than to the result. A dormant company, a company that broke even, and a company in its first year before it started trading can all carry the same information return. A quiet year is also the cheapest year in which to settle a classification that was never dealt with, because there is very little in the accounts to unwind. Owners who wait for a profitable year before starting usually find the first one is the hardest to prepare.
I have not filed for several years while living abroad — what are my options?
Both countries have routes back, and using one before they contact you is what preserves the relief. On the US side there are procedures aimed at taxpayers whose failure was not wilful, including one designed for people living outside the country, and separate procedures for late account reports and information returns alone. Canada has its voluntary disclosures programme and taxpayer relief for penalties and interest. Filing quietly and hoping is the one approach with no protection attached to it. See catch-up filing.
Is double taxation legal?
Yes. Nothing prevents two countries from taxing the same income under their own domestic law — each is exercising its own jurisdiction. What treaties and credit systems do is relieve the outcome rather than prohibit the charge, and relief is generally something you must claim on a return or a form, not something applied automatically. Miss the claim and the double charge stands. Double taxation explains the mechanism.
