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New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
Even though a U.S. LLC is a legal entity, for tax purposes it is treated as if you and the business are one and the same.
The LLC itself does not file its own tax return in this structure. Instead, the owner reports everything on their personal return. That’s why it’s called a pass-through or disregarded entity—the legal structure is ignored for tax purposes, and everything flows through to the individual.
📌 But here’s the problem:
The Canadian tax system does not treat it the same way 🇨🇦
The CRA does not recognize a U.S. LLC as a pass-through entity. Instead, it is generally treated as a corporation.
That creates an immediate mismatch between the U.S. and Canadian tax treatment, right from the start. You know what that means? Double taxation
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
Even though a U.S. LLC is a legal entity, for tax purposes it is treated as if you and the business are one and the same.
So whoever owns the LLC must report all:
Revenue
Expenses
Income
The LLC itself does not file its own tax return in this structure. Instead, the owner reports everything on their personal return. That’s why it’s called a pass-through or disregarded entity—the legal structure is ignored for tax purposes, and everything flows through to the individual.
📌 Now here’s the problem:
The Canadian tax system does not treat it the same way 🇨🇦
The CRA does not recognize a U.S. LLC as a pass-through entity. Instead, it is generally treated as a corporation.
That creates an immediate mismatch between the U.S. and Canadian tax treatment, right from the start.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
A U.S. LLC is considered a disregarded entity or a pass-through entity on the U.S. side 🇺🇸
These are just technical terms—but what you really need to understand is simple: it is taxed like a sole proprietorship.
Just like in Canada, if you have a sole proprietorship, you report everything on your personal T1 return 🇨🇦—the same concept applies in the U.S.
Even though a U.S. LLC is a legal entity on paper, for tax purposes it is not treated as separate from the owner. Instead, the owner and the business are treated as one taxpayer.
That means the owner must report:
Revenue
Expenses
Net income
All of it flows directly onto the owner’s personal tax return. The LLC itself does not file a separate corporate tax return in this structure.
📌 That’s why it’s called a pass-through or disregarded entity—the legal structure is ignored for tax purposes, and everything is reported at the individual level.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
So let’s talk about why double taxation happens and how it actually comes up in practice.
On the U.S. side, a U.S. LLC is typically treated as a disregarded entity or a pass-through entity 🇺🇸
That’s just technical language—but here’s what it really means.
A U.S. LLC is generally taxed like a sole proprietorship. Just like in Canada, if you have a sole proprietorship, you report everything on your personal T1 return 🇨🇦
It’s the same concept in the U.S.
Even though the LLC is a legal entity on paper, for tax purposes it is not treated as separate from the owner. Instead, it is treated as if you and the business are the same taxpayer.
So the person who owns the LLC must report:
Revenue
Expenses
Net income
All of it flows directly to their personal tax return. The LLC itself does not file a separate corporate tax return in this structure.
📌 That’s why it’s called:
Pass-through taxation
Or a disregarded entity
Meaning: the legal structure is ignored for tax purposes, and everything is taxed at the owner level.
Now the key question is:
👉 How does this create a double taxation problem for Canadians?
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
Why is this double taxation happening? The root cause is simple: US Immigration attorneys, local CPAs, and other advisors do not understand how cross-border taxation actually works.
They often have no clarity on how a U.S. LLC is taxed on the Canadian side, or what kind of issues it creates when reported incorrectly or incompletely.
📌 As a result, clients get exposed to avoidable problems, including double taxation scenarios.
So let’s break down the first issue—double taxation. What does it actually mean, and how does it happen in practice?
I’ll walk through a simple example so you can clearly see what I’m talking about.
Alright, let me share my screen.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
In many cases, a U.S. LLC gets reported on T1135, which misses the point entirely because T1134 is often required instead, depending on how the structure is set up.
There is frequent confusion around:
Proper cross-border reporting (T1134 vs T1135)
The U.S.–Canada tax treaty rules and benefits
The U.S. substantial presence test
And how U.S. entities are actually reported from a Canadian tax perspective
📌 As a result, Canadian taxpayers often end up with incomplete or incorrect cross-border reporting across both countries.
This is not intentional—it’s a knowledge gap in cross-border taxation, because most advisors work strictly within their domestic tax systems.
📌 That’s why cross-border context is so important in these situations—you can’t treat it as a purely domestic U.S. file.
Alright, let me share my screen.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
Many local Canadian accountants face limitations when dealing with cross-border structures 🇨🇦
In some cases, they may incorrectly report a U.S. LLC on T1135, missing the fact that T1134 reporting is often required instead, depending on the structure.
There is often confusion around:
Proper cross-border reporting forms (T1134 vs T1135)
The U.S.–Canada tax treaty benefits
The U.S. substantial presence test
And how U.S. entities should be reported from a Canadian tax perspective
📌 As a result, Canadian clients can end up in situations where reporting is incomplete or inconsistent across both countries.
It’s important to understand that this is not usually intentional—it’s simply a knowledge gap on cross-border rules, because most advisors operate primarily within their own domestic tax systems.
📌 That’s why cross-border context is so important in these situations—you can’t treat it as a purely domestic U.S. file.
Alright, let me share my screen.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
⏲️ Tax Return Deadline Countdown!
📄 Extended Partnership Tax Returns
⌚️ Time Left to File: 3 MONTHS
‼️IF YOU FILED FOR AN EXTENSION
You only have 3 MONTHS left to file your EXTENDED Partnership Tax Return! Remember, this deadline is real. You cannot miss it or you will pay significant penalties
Form 1065
Partnership Tax Return
Due on March 16, 2026
File for an Extension:
Form 7004
Extends Deadline to September 15, 2026
‼️ Important: Filing for an extension only moves the filing date! Your taxes were still due on the original due date
If you need help on your Extended Partnership Tax Return, shoot us an email at [email protected] with the subject line "Extended Partnership Taxes: Let's Get This Done!"
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
⏲️ Tax Return Deadline Countdown!
📄 Extended S-Corp Tax Returns
⌚️ Time Left to File: 3 MONTHS
‼️IF YOU FILED FOR AN EXTENSION
You only have 3 MONTHS left to file your EXTENDED S-Corp Tax Return! Remember, this deadline is real. You cannot miss it or you will pay significant penalties
Form 1065
Partnership Tax Return
Due on March 16, 2026
File for an Extension:
Form 7004
Extends Deadline to September 15, 2026
‼️ Important: Filing for an extension only moves the filing date! Your taxes were still due on the original due date
If you need help on your Extended S-Corp Tax Return, shoot us an email at [email protected] with the subject line "Extended S-Corp Taxes: Let's Get This Done!"
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
New Video: U.S. LLC is a Double Taxation Tax Trap for Canadians in the United States on E-2 and L-1 Visas 🇨🇦➡️🇺🇸.
Here's how a horrendous idea comes about.
When you speak to a local U.S. accountant, most of the time they are working with domestic U.S. clients 🇺🇸
They usually have very limited exposure to:
The U.S.–Canada tax treaty
Canadian accounts like RRSPs and TFSAs
Canadian ETFs and mutual funds
How these investments are taxed at the federal vs state level in the U.S.
Because of that, they may not fully understand how to properly report or structure these accounts for a Canadian client.
In some cases, they may even default to making elections like an S-Corp election or similar structures that may not be appropriate in a cross-border situation—and in many cases, that can create unnecessary complexity or adverse tax outcomes.
📌 That’s why cross-border context is so important in these situations—you can’t treat it as a purely domestic U.S. file.
Alright, let me share my screen.
Full Video on the Akif CPA YouTube Channel: https://www.youtube.com/watch?v=pK7GsEbHmvA
Link to the blogpost I am showing: https://akifcpa.com/heres-why-your-u-s-llc-is-a-double-taxation-tax-trap-as-a-canadian-on-an-e-2-or-l-1-visa-with-examples/
🇺🇸 (713) 451-9700
🇨🇦 (416) 800-2709
⭐ [email protected]
🌐 www.akifcpa.com
https://www.youtube.com/
https://www.facebook.com/akifcpa/
https://www.instagram.com/akifcpa/
https://www.linkedin.com/company/akif-cpa-pllc
https://www.tiktok.com/.cpa
A bit about us at Akif CPA:
We’ve got a crew of talented tax pros who really know their stuff when it comes to taxes, accounting, business advice, payroll, reviews, sales tax audits, and financial planning.
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