Offshore Income Tax

Offshore income tax got you stressed?

At taxlawyer.com, we specialize in helping U.S. and Canadian taxpayers navigate the complexities of offshore income tax. Whether you earn income from foreign investments, businesses, real estate, or bank accounts, our experienced international tax lawyers are here to make the process clear, compliant, and in your favor.

We don’t just offer legal advice, we partner with you to protect your interests and optimize your financial outcomes.

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Offshore Income Tax Lawyers

Earning income abroad can be highly rewarding, but it also comes with corresponding tax obligations.

Whether it’s foreign investments, rental properties, or overseas business profits, offshore income must be reported accurately under U.S. and Canadian tax law. The rules are strict, and even small mistakes can lead to major penalties.

Managing offshore income isn’t easy, but with the right legal team, it doesn’t have to be stressful.

At taxlawyer.com, we’re your trusted and reliable team for handling U.S. and Canadian offshore tax matters.

Whether you’re facing unreported foreign income, undisclosed offshore assets, or complex cross-border tax obligations, our experienced team of tax lawyers know how to manage your case with precision and care.

Here’s what we do best:

Simplify complex tax rules across jurisdictions.
Ensure you meet all offshore income and asset disclosure requirements.
Help you claim available credits and exclusions (like the Foreign Tax Credit and FEIE).
Represent you confidently during IRS or CRA tax audits.
Develop personalized strategies that align with your offshore income.

With regulations evolving fast, you need a knowledgeable team of US – Canada cross border tax lawyers who stay ahead.

Contact us today to protect your income, and your peace of mind.

Why Work With Our Tax Lawyers

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Tax Law Specialists

Our lawyers are not just general practitioners; they possess focused expertise in the intricate world of international and cross border tax law. This means you benefit from advice rooted in a profound understanding of global tax regulations, ensuring the highest standard of guidance for your specific situation.

Assistance Every Step of the Way

We go beyond basic service. Expect one-on-one support from a seasoned cross border tax lawyer who understands your goals and guides you through offshore tax matters, answering questions clearly and keeping you informed, confident, and in control.

Free Consultation

In Canada, we offer a free 10 – minute initial consultation with an articling student.

This allows you to discuss your specific needs and concerns with a member of our team without any obligation, helping you determine if our services are the right fit for you.

Educational Resources

We go beyond simply handling your tax filings. You’ll have access to valuable and easy-to-understand educational materials, including tax blogs, designed to demystify the complexities of offshore income tax. This helps you gain a clearer understanding of your obligations and potential opportunities.

Get Help With Offshore Income Tax in the U.S. and Canada

Managing income and assets held offshore -whether in foreign bank accounts, investments, trusts, or businesses – comes with strict reporting requirements under U.S. and Canadian tax laws. Both the IRS (U.S.) and the CRA (Canada) require full disclosure of foreign income and financial holdings.

Failing to report correctly can lead to steep penalties, interest charges, audits, and criminal prosecution under tax laws such as FATCA (U.S.) and the Canadian Income Tax Act (including implications outside voluntary disclosure).

If you’ve made errors or missed offshore income filings, you’re not alone – but resolving these requires skilled legal support. That’s where TaxLawyer.com comes in.

Our highly experienced cross-border and offshore income tax lawyers understand the complexities of offshore income reporting for both the U.S. and Canadian taxpayers.

We offer:

Strategic guidance on what offshore income you must report under IRS and CRA rules.
Expert review and correction of past foreign income filings and FBAR/FINCEN/CRA forms.
Legal support in Voluntary disclosures, tax amnesty programs, and penalty reduction efforts.
Representation during tax audits or investigations involving offshore accounts or unreported assets.
Clear communication of your obligations under FATCA, CRS, and other international tax regulations.

Our skilled international tax lawyers are in a strong position to protect your interests, and ensure your compliance with confidence.

Contact us today.

How Offshore Income Tax Works in the US

Step 1

Worldwide Income Taxation:

As a U.S. citizen, regardless of your country of residence, or resident alien, you are taxed on your worldwide income; including earnings from foreign jobs, businesses, bank accounts, or properties. Be sure to gather detailed information on all overseas income.

We offer guidance in identifying all your taxable foreign income for IRS tax compliance.

Step 2

File with the IRS:

Report your foreign income on your IRS tax return. You may also need to file additional forms depending on your offshore assets:

FATCA (Form 8938): If your foreign financial assets exceed certain thresholds, you must report them under the Foreign Account Tax Compliance Act.
FBAR (FinCEN 114): If your combined foreign bank account balances exceed $10,000 at any time during the year, you must file an FBAR.

We expertly handle FATCA and FBAR filings, ensuring you meet all U.S. tax code requirements and avoid potential issues.

Step 3

Settle Your U.S. Tax:

After reporting your foreign income, apply any eligible tax breaks, such as the Foreign Earned Income Exclusion (FEIE), which lets you exclude up to $130,000 of foreign-earned income from U.S. taxes. You can also use foreign tax credits to reduce what you owe. Accurate filing ensures compliance and helps you avoid tax issues.

Our top U.S. tax attorneys provide expert assistance in claiming deductions like FEIE and foreign tax credits to optimize your U.S. tax obligations.

How Offshore Income Tax Works in Canada

Step 1

Identify Offshore Income:

As a Canadian resident, you are taxed on your worldwide income. This means you must report all income, regardless of where it was earned. List all income earned outside Canada, such as; foreign wages, rental income, pensions, crypto currency transactions or investments.

Our experienced tax lawyers provide clarity on what constitutes reportable offshore income under the Canadian Income Tax Act.

Step 2

Report to CRA:

To properly handle your offshore income in Canada, you must report it on your Canadian tax return (T1) and possibly Form T1135. Failure to accurately report can lead to penalties.

Our dedicated tax lawyers assist with accurate preparation and filing of your T1 and T1135 forms to ensure CRA compliance and avoid penalties.

Step 3

Claim Credits and Pay Taxes:

After reporting offshore income, pay any tax owed to the CRA. If you’ve paid taxes abroad on the same income, you may claim a foreign tax credit to reduce your Canadian tax bill and avoid double taxation. Report both foreign income and taxes accurately on your T1 return.

We can help you navigate foreign tax credits to minimize your Canadian tax liability on offshore income.

Offshore Income Tax Laws in the US

Law # 1

Global Taxation under the U.S. Tax Code: U.S. citizens and resident aliens must report all worldwide income on Form 1040, including earnings from foreign jobs, accounts, or investments, regardless of where the money is earned or held. This requirement ensures consistent taxation of global income. Failure to comply can result in IRS tax audits, penalties, or legal consequences under U.S. tax law.

Law # 2

Foreign Account Tax Compliance Act (FATCA): FATCA requires U.S. taxpayers to report foreign financial assets exceeding certain thresholds on Form 8938. It also compels foreign financial institutions to disclose U.S. account holders to the IRS. This law helps prevent tax evasion by increasing transparency of offshore accounts and ensuring global financial institutions cooperate with U.S. tax enforcement.

Law # 3

Foreign Tax Credit: U.S. taxpayers paying taxes to a foreign country or U.S. possession may claim a foreign tax credit (Form 1116) or a deduction – Schedule A (Form 1040) for qualifying income taxes. This credit helps prevent double taxation by directly reducing U.S. tax owed, while deductions reduce taxable income. Both options have limitations and are subject to specific rules. Note: electing to exclude foreign earned income can disqualify you from taking the credit on that income.

Offshore Income Tax Laws in Canada

Law # 1

Income Tax Act: The Tax act requires Canadian tax residents to report all worldwide income, including earnings from foreign jobs, properties, investments, or businesses, even if the income remains outside Canada or has already been taxed abroad. In the case of foreign accrual property income (FAPI) even passive income earned in an offshore corporation or trust and left offshore may be taxable in Canada.

This ensures that residents pay taxes on global earnings while preventing double taxation through credits for foreign taxes paid.

Law # 2

Foreign Property Reporting (Form T1135): Canadian residents must file Form T1135 if the total cost of specified foreign property exceeds CAD $100,000. This includes income-generating assets such as foreign stocks, cryptocurrencies, real estate, or bank accounts.

This form discloses details to the CRA and ensures compliance with foreign income reporting rules under the Income Tax Act, helping avoid penalties for non-disclosure.

Law # 3

Foreign Tax Credit Law: Canadian residents can claim a foreign tax credit for income taxes already paid to another country on the same income. This credit reduces the amount of Canadian tax owed, though limits may apply. Canada also maintains tax treaties with many countries, including the U.S., to coordinate tax rules and ensure fair treatment for cross-border income.

Frequently Asked Questions About Offshore Income & Tax

What is offshore income tax?

Offshore income tax refers to the taxation of income earned outside your home country, such as foreign wages, dividends, rental income, or capital gains. Both the U.S. and Canada require tax residents to report and pay tax on their worldwide income, including income held in foreign accounts or assets.

Failing to report offshore income can result in severe penalties. You may also need to file additional forms like FBAR/Form 8938 (U.S.) or Form T1135 (Canada) in order to report offshore assets including crypto currency. While tax treaties and foreign tax credits may reduce double taxation, the rules are complex and unforgiving.

When it comes to offshore tax, expert legal guidance is essential. Work with experienced offshore income tax attorneys – like those at TaxLawyer.com – to stay protected and compliant.

Does the U.S. tax offshore income?

Yes, the U.S. taxes offshore income – if you are a U.S. citizen or resident alien, you must report and pay tax on your worldwide income, regardless of where it’s earned.

This includes foreign wages, rental income, dividends, interest, and capital gains. Offshore income must be reported on your IRS Form 1040, and additional disclosures like the FBAR (FinCEN Form 114) and FATCA (Form 8938) may be required if your foreign financial accounts exceed certain thresholds.

Failure to report offshore income can lead to steep penalties, tax audits, or even criminal charges.

Given the complexity, it’s highly recommended to consult an experienced offshore income tax attorney.

Reach out to us today at TaxLawyer.com for help staying compliant and protecting your international assets.

Does Canada tax offshore income?

Yes, Canada taxes offshore income but only if you are a Canadian tax resident.

Canadian residents must report and pay tax on their worldwide income, including earnings from foreign employment, investments, rental properties, pension income even if not taxable in the jurisdiction of origin and business activities abroad. This income must be declared on your T1 Personal Tax Return, and if the total cost of foreign property exceeds CAD $100,000, you must also file Form T1135 (Foreign Income Verification Statement).

Failing to report offshore income, or offshore assets, can result in severe penalties, interest charges, and tax audits.

If you’re earning income outside Canada, it’s strongly advised to consult with an experienced offshore tax lawyer to ensure full compliance and take advantage of tax treaty benefits and foreign tax credits where available.

Send us a message today at TaxLawyer.com to get started.

How do the IRS and CRA track offshore income?

Both the IRS (U.S.) and CRA (Canada) use a range of tools and international partnerships to track offshore income and detect tax non-compliance. Here’s how:

1. International Reporting Agreements

The IRS enforces the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report U.S. account holders.
The CRA relies on the Common Reporting Standard (CRS) to collect data from global financial institutions about Canadian taxpayers.

2. Mandatory Offshore Disclosure

U.S. taxpayers must file FBAR (FinCEN Form 114) and FATCA Form 8938 for foreign accounts and assets.
Canadian taxpayers must file Form T1135 if they own specified foreign property valued over CAD $100,000.

3. Tax Treaties & Information Exchange

Both countries have tax treaties and Tax Information Exchange Agreements (TIEAs) with over 100 jurisdictions, enabling the automatic and on-request sharing of income, account balances, and ownership records.

4. Whistleblower Programs

The IRS Whistleblower Office pays for credible leads on offshore tax evasion.
The CRA’s Offshore Tax Informant Program (OTIP) rewards tips about undisclosed international assets.

5. Joint International Task Forces & Intelligence Networks

The IRS and CRA actively collaborate with international partners to investigate offshore tax evasion and share intelligence across borders.

The Joint Chiefs of Global Tax Enforcement (J5) unites tax authorities from the U.S., Canada, U.K., Australia, and the Netherlands to combat transnational tax crime, crypto-related fraud, and offshore evasion.
Canada also participates in the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), a network of over 40 tax administrations under the OECD. JITSIC facilitates real-time cooperation and data sharing to identify offshore risks and aggressive tax planning schemes.

These alliances give both the IRS and CRA global reach in detecting undisclosed offshore income, digital assets, and complex tax structures.

6. Tax Audits and Criminal Investigations

Both the IRS and CRA use data analytics, whistleblower reports, and third-party disclosures to flag taxpayers for tax audits or initiate criminal investigations for offshore non-compliance.

Offshore income isn’t hidden anymore.
To stay compliant and avoid penalties, consult experienced offshore tax attorneys at TaxLawyer.com.

How do the IRS & CRA know about my offshore income?

Both the IRS (U.S.) and CRA (Canada) have powerful tools and international agreements that help them uncover offshore income:

Automatic Information Sharing (CRS & FATCA):
- Under FATCA, over 100 countries report account details of U.S. persons to the IRS.
- Under the Common Reporting Standard (CRS), Canada receives similar information from foreign banks on Canadian residents.
Foreign Bank Account Reporting (FBAR):
U.S. taxpayers must report foreign accounts over $10,000 via FBAR (FinCEN Form 114). Failure to file can trigger audits and penalties.
International Tax Treaties & TIEAs:
The IRS and CRA exchange taxpayer information through Tax Treaties and Tax Information Exchange Agreements (TIEAs) with dozens of countries.
Whistleblower Programs:
Both agencies offer financial incentives for insiders who report offshore tax evasion.
Tax Audits, Triggers & Data Matching:
Foreign asset disclosures (e.g. Forms 8938, T1135) are matched against bank data and third-party reports. Inconsistencies often lead to tax audits.
Joint International Enforcement:
Both countries participate in JITSIC (Joint International Taskforce on Shared Intelligence and Collaboration), a network of 40+ tax authorities working together to expose offshore non-compliance.
Your Tax Return: You are legally obligated to report your worldwide income on your tax return. Not doing so can lead to serious consequences

Offshore income isn’t invisible.
To avoid penalties and protect your financial future, consult with an offshore tax lawyer at TaxLawyer.com.

What happens if I don’t report foreign income?

United States

Failing to report foreign income in the U.S. can trigger severe civil and criminal penalties, especially if you neglect to file required forms like:

FBAR (FinCEN 114) – penalties up to $10,000 per violation, or up to 50% of the account balance for willful non-compliance.
Form 8938 (FATCA) – penalties start at $10,000, with additional fines for continued failure.

You may also face back taxes, interest, tax audits, asset forfeiture, and in extreme cases, criminal prosecution for tax evasion or fraud.

Canada

Canadian residents must report worldwide income, including offshore earnings. Failure to do so may lead to:

Gross negligence penalties (up to 50% of understated tax),
Late filing penalties,
Interest charges,
Mandatory filing of Form T1135 (Foreign Income Verification Statement) if foreign property exceeds CAD $100,000, non-compliance can result in daily penalties up to $2,500+.

In serious cases, the CRA may launch an audit or refer the matter to its Criminal Investigations Division.

Unreported foreign income is a major red flag.
To avoid penalties or prosecution, consult with an experienced offshore tax lawyer.
Start today at TaxLawyer.com.

Am I eligible for a foreign tax credit?

Yes, both the U.S. and Canada have rules to prevent you from being taxed twice on the same income earned in another country.

United States

If you’re a U.S. citizen or resident alien, you may be eligible for the Foreign Tax Credit (FTC) if:

You paid or accrued income tax to a foreign country, and
That income is also subject to U.S. tax.

You must file Form 1116 to claim the credit (unless you qualify for the simplified exemption). The credit helps avoid double taxation by reducing your U.S. tax liability dollar-for-dollar, based on eligible foreign taxes paid.

Canada

Canadian residents can also claim a foreign tax credit for non-Canadian income that’s taxed abroad. This credit is claimed on your T2209 (federal) and potentially a provincial/territorial form. The goal is to prevent double taxation on foreign-source income such as employment earnings, dividends, or capital gains.

Offshore Income Tax Tip: Each country has its own rules, limitations, and filing requirements.
To maximize your credit and stay compliant, consult a cross-border tax expert at TaxLawyer.com.

Is a gift from a foreign person taxable?

Generally, a gift received from a foreign person is not taxable income in either Canada or the U.S. However, in the U.S. if you receive:

More than $100,000 from a nonresident alien individual or foreign estate, or
More than $17,339 (2025 threshold) from a foreign corporation or partnership,

You must file Form 3520 with the IRS. Failure to report can result in penalties of up to 25% of the gift’s value, even if no tax is owed.

Pro Tax Tip: While the donor may be subject to gift taxes in their own country, the U.S. recipient usually is not.

Canadians do not need to report gifts as income. However, if the gift involves foreign property (e.g., real estate or shares), you may be required to file Form T1135 if the total foreign property exceeds CAD $100,000.

Pro Tax Tip: If the gift produces income or capital gains later, that income is taxable in Canada.

Not sure if your foreign gift triggers reporting requirements?
Avoid costly penalties — speak to a cross-border tax lawyer at TaxLawyer.com.

What forms do I have to fill out to file offshore income & taxes?

United States

If you’re a U.S. taxpayer with offshore income or assets, you may need to file:

Form 1040 – report worldwide income (including offshore income).
Schedule B – disclose interest/dividends and foreign accounts.
Form 8938 (FATCA) – report specified foreign financial assets (thresholds vary).
FBAR (FinCEN Form 114) – report foreign bank accounts if combined value exceeds $10,000 at any time during the year.
Form 1116 – claim the Foreign Tax Credit.
Form 3520 – report foreign gifts or inheritances.
Form 5471 / 8865 / 8621 – for foreign corporations, partnerships, or passive foreign investment companies (PFICs).

Canada

Canadian residents must report foreign income on:

T1 General Return – include all worldwide income.
Form T1135 – for foreign property over CAD $100,000 (e.g., stocks, real estate, crypto currency, funds).
Form T2209 – claim foreign tax credit.
Form T1141 / T1142 – if you receive funds or transfers from a foreign trust or inherit from a non-resident.

Filing the wrong forms — or missing them entirely — can lead to major penalties.
Work with a qualified offshore tax attorney to stay compliant.
Start now at TaxLawyer.com.

Do emigrants from Canada have to declare foreign income on a Canadian tax return?

It depends on your residence status.

If you emigrated during the tax year (i.e., you’re now no longer considered a Canadian tax resident), you must report worldwide income earned up to the date of departure.
After your emigration date, you’re generally treated as a non-resident and are taxed only on Canadian-source income (e.g., rental income, pensions, or business income in Canada).

You’ll also need to file a departure tax return and may be subject to deemed disposition rules, meaning Canada may tax you on unrealized gains as if you sold certain assets when you left.

Tax residence can be nuanced.
To avoid costly mistakes or double taxation, consult a top tax lawyer at TaxLawyer.com.

Do emigrants from the U.S. have to declare foreign income on a U.S. tax return?

Yes, U.S. citizens and green card holders are taxed on their worldwide income, no matter where they live.

Even after you move abroad, if you haven’t formally renounced your U.S. citizenship or green card, you must continue to file a U.S. tax return and report all foreign income.

This includes:

Employment income abroad
Foreign investment income
Rental income from overseas properties
Income from foreign businesses

You may be eligible for relief through the Foreign Earned Income Exclusion (Form 2555) or the Foreign Tax Credit (Form 1116) — but reporting is still mandatory.

To end U.S. tax obligations, you must:

Renounce U.S. citizenship or
Officially relinquish your green card (if held for 8+ years, you may face exit tax under IRC §877A)

Avoid double taxation and steep penalties.
For strategic cross-border tax planning, consult with a U.S. expat tax attorney at TaxLawyer.com.

Where can I find offshore income & tax services near me?

At TaxLawyer.com, you’ll find a team of experienced offshore tax attorneys serving clients across the United States and Canada. Whether you’re dealing with unreported foreign income, offshore trusts, overseas investments, or crypto held abroad, we offer comprehensive offshore tax services tailored to your specific situation.

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Wherever you are, TaxLawyer.com connects you with top-tier offshore income tax attorneys who understand the complexities of cross-border compliance. Schedule a confidential consultation today and protect your global assets with confidence.