News

More Tax Reform South of the Border???

Last December, Congressman George Holding (R-North Carolina), introduced a bill that would change the way the United States taxes ex-patriots. This new bill could potentially eliminate citizenship-based taxation for Americans residing outside the U.S.

This bill is a work in progress. It is making it’s way through congress and still must pass through senate. After which, it may finally see a presidential signature.

For more on this follow this link to the article from Advisor.ca

Tax Relief Could Be Coming For Americans in Canada

 

CRA spills the beans to the IRS!!!

Did you know that the Canada Revenu Agency is sharing information with the IRS? As part of the U.S. Treasury Department’s FATCA regulation, the government of Canada agreed to allow the sharing of bank account data with the IRS.

U.S. persons who have accounts at some Canadian financial institutions are likely to have their information shared with the IRS.

This raises a few questions:

What is a U.S. person?

A U.S. person is either a U.S. citizens, a Green Card holders, and/or an accidental Americans.
And, what the heck is an Accidental American? A person born in the nearest U.S. border town hospital. Or someone who was born to an American parent (with some conditions).

What types of accounts are being disclosed?

Revenue Canada discloses most financial account types to the IRS. These include savings, chequing, and business accounts. Thankfully RRSP, RRIF, RESP and TFSA accounts are exempt from this reporting. This does however include joint accounts, where information is shared about accounts held between a U.S. person and a non-U.S. person.

What kind of data is being shared?

Names & addresses of account holders (including non-U.S. persons), account numbers, account balances or values, and data about payments such as interest, dividends, other income and proceeds of disposition.

Are you a U.S. person?
Still think you can hide form the IRS?
Unsure how to proceed?

As a U.S. person you must file a U.S. tax return, regardless of U.S. source income, where you live or whether you have tax due. You must also file an Financial Bank Account Return (FBAR) if you exceed the filing threshold. The FBAR itemizes your financial assets which should match what Revenue Canada is sharing with the IRS.

The IRS continues the Streamlined Foreign Compliance program designed to help non-compliant individuals become compliant with their citizenship-based tax obligations. This program may wave the onerous penalties as they relate to non-compliance on the FBAR returns.

The CBC has a brief article on this.

Contact us to discuss your situation and how we can help clear up your back taxes.

What new for the 2018 Canadian Tax season!

The 2018 tax season is right around the corner!!!

Revenue Canada will start processing 2018 tax returns on February 26.

What’s new for 2018’s tax returns!

  1. You may be able to claim fertility treatments through the Medical Expenses Tax Credit
    • This is a new retro-active credit. You may be able to adjust prior year returns as far back as 10 years.
  2. Canada Caregiver Credit – Are you helping take care of someone who is physically or mentally impaired?
    • the Canada Caregiver Credit is now a consolidation of the infirm dependant, caregiver, and family caregiver credits.
  3. The Disability Tax Credit – Nurse practitioners are approved health professionals who can certify a person’s disability. This deduction is often overlooked. It has substantial tax saving potential. Talk to your tax professional about this credit.
  4. Educator School Supply tax credit (a carryover from the 2017 tax year)As a school teacher (primary or secondary), or an early childhood educator you are able to claim educational supplies. The credit allows  up to $1000 of supplies for a 15% refundable credit. The type of unreimbursed expenses you can claim include, but not limited to: books, games, puzzles, containers, consumable supplies and educational software.

What’s gone for the 2018 taxation period?!?

  1. Revenue Canada has eliminated the “education and textbook amounts” for 2018 and future years. Although, you can still claim a credit for the tuition you paid.
  2. Manitoba has eliminated the Tuition Fee Tax Rebate (and advance) for tax years ending after December 31, 2017.
  3. Additionally, the Fitness and arts credits for your children’s activities also got the axe!
  4. The Public Transit tax credit is now in the scrap yard!

The filing deadlines remain the same:

  • May 1st for most taxpayers, that is to file and pay your taxes (due to April 31st falling on a Sunday)
  • If you are self-employed, you (and your spouse) get an automatic extension to FILE your return which is June 15th. Interest starts accumulating on May 2nd. Consequently, you could consider making installment payments prior to April 30th if you expect to pay this year.

Do you have questions or concerns relating to your 2018 tax return?

Come on down to our office at 581-B Des Meurons or contact us here.

Sweeping Tax Reform south of the 49th parallel lead to new forms

IRS reworking the 1040 for the 2019 Tax Season

The New 1040

In late December 2017, the president signed into law the Tax Cuts and Jobs Act. This legislation represents the largest U.S. tax reform in 30 years. The Internal Revenue Service is streamlining the Form 1040 (individual tax return) into a smaller and simpler document. This effort to help taxpayers with simpler forms comes in time for the upcoming tax season.

The new postcard-sized 1040 replaces the current 2-page Form. This August, IRS circulated a draft-copy of the new form. The IRS continues to works with the tax community to finalize the streamlined document. You will see the new streamlined version of the Form 1040 when your 2018 individual income tax return is prepared during the 2019 tax filing season.

Need help with your US returns, give us a call at 204.292.1051

The IRS designed the form in hopes that 30% of U.S. filers, roughly 150 million taxpayers, could use the same form. The new form consolidates the three versions the Form (1040, 1040A and 1040EZ) into one simple form. While the form is much shorter and simpler it still allows the IRS to obtain the necessary information from each taxpayer needed to determine their tax liability or refund.

The new Form 1040 uses a “building-block” tactic. Meaning, the tax return is reduced to a simple form which is accompanied with additional schedules if needed. Taxpayers with straightforward tax situations would only need to file the new postcard-sized 1040 with no supplementary schedules.

New Schedules

This new shorter and simpler Form 1040 birthed a few other new schedules. These forms are intended to supplement this new Form 1040. These new schedules take in the lines for other income, adjustments, and credits. As well as other items normally included on the previous longer version of the Form 1040. The IRS chose to designate these new forms by numbers as opposed to the traditional lettering system.

Below is a quick overview of what the information captured by these new schedules:

  • firstly, Schedule 1 is used to report additional sources of income (not from a W-2) or adjustments to income.
  • the new Schedule 2 is a form for people with some additional forms of taxes, such as alternative minimum tax.
  • Schedule 3 is for nonrefundable tax credits such as the foreign tax credit, education credits or residential energy credit.
  • Taxpayers will add up certain taxes, such as self-employment tax, uncollected Social Security and Medicare taxes, and household employment taxes. They will then report them on Schedule 4
  • Schedule 5 is to add up tax payments, such as estimated tax payments or amounts paid with an extension.
  • lastly, Schedule 6 is where you can report a foreign address or appoint a third-party designee to discuss your tax return with the IRS on your

 

Contact us if you have any questions about the new tax forms or any other changes to the tax laws.

 

Did you know!?!

Did you know?

The United States is one of 2 countries worldwide that taxes based on Citizenship?!? The African country of Eritrea is the other citizenship-based taxation system, which imposes a flat 2% rate on its citizens’ foreign income.

Who might need to file a U.S. tax return?

  • U.S. citizens and green card holders (regardless of where you live in the world)
  • Canadian and snowbirds living in the U.S., you may have to file a tax return or a Closer Connection Exemption Statement (form 8840) depending on your particular circumstance
  • Those who have rental real estate in the U.S.
  • People who are disposing of their U.S. real property may need to file a tax return.
  • Individuals who have had withholding on their U.S. gambling winning may also want to file.

What’s your filing deadline?

Like Canada, the United States have their individual filing deadline set in April.

The U.S. deadline is the 15th of April versus the Canadian deadline of April 30th (both countries allow additional days should the deadline occur on a holiday or on a weekend).

If you are a resident of a foreign (to the U.S.) country you are entitled to an automatic 2-month extension of time to file, and pay, your US taxes.

If you expect not to be able to meet your June 15th filing deadline, then you should file form 4868 “Application for Automatic Extension …” prior to this date. This will allow you to file your return as late as October 15th (an additional four-month extension). Interestingly, the FBAR also has an automatic 6-month filing extension. But the FBAR filing extension does not require filing the request.

Foreign Bank Account Reporting (FBAR).

Are you are a U.S. citizen who has foreign, to the U.S., bank accounts and other financial interests. Moreover is their combined total value exceeding $10,000 USD at any point in the year??? Then you are required to report all of your accounts to the U.S. Department of the Treasury. FBAR is an acronym for Foreign Bank Account Report.  And this document is just that, a report, it is not a return that triggers tax!

What accounts are we talking about?

The reported accounts would include, but not necessarily limited to;

  • TFSA’s,
  • RRSP’s,
  • RRIF’s,
  • Bank accounts (Chequing, Savings, etc.) &
  • Trading accounts.
  • Don’t forget to include your joint accounts and
  • Accounts over which you have signing authority but no financial interest!

Form FinCEN114 is electronically filed annually (if you meet the previously stated threshold). Be warned that failure to report these accounts may result in a penalty of up to $10,000 per account.

Furthermore, be aware that Canada Revenue Agency and the Internal Revenue Service communicate, at minimum, annually about accounts held by U.S. citizens in Canada.

What U.S. services to we offer?

  • U.S. form 1040 individual tax returns
  • Cross Border Financial Planning
  • U.S. corporate tax returns
  • 1040-NR non-resident tax returns; including gambling winning withholdings, real property dispositions, rental property returns.
  • W-7 “Individual Taxpayer Identification Number” Applications and Certifying Acceptance Agent services (certifying your passport for ITIN purposes, you keep your passport).

What we include in our Tax Preparation Service?

  1. Preparation of federal, state and county level tax returns required depending on your circumstance.
  2. Analysis of the Canada/U.S. Tax Treaty as it may relate to your situation
  3. Disclosure Statements prepared relating to your treaty-based position
  4. Accounting and claiming of tax credits and deductions on your Canadian and US tax returns
  5. Representation should you need to correspond with the IRS or CRA

We are here to help meet your U.S. filing obligations. If you would like to discuss your situations and your options please do not hesitate to call us at: 204.292.1051 or send us and email.

CRA blocks calls, often gives taxpayers wrong information, auditor says

A Globe and Mail article dated November 21st states that Canada’s Auditor-General, Michael Ferguson,  found that Revenue Canada blocked over half their outgoing calls. That’s 29 million calls from taxpayers that get a busy signal, a “call back later, or a “please visit our website”.

Furthermore, Micheal states that Revenue Canada provided wrong answers to taxpayers at a rate of nearly 30%.

see the article here.

IRS Simplifies RRSP Treaty Benefit Election For U.S. Citizens

The IRS recently released a new Revenue Procedure regarding U.S. citizens and residents holding Canadian Registered Retirement Savings Plans (RRSP) and Registered Retirement Income Fund (RRIF). The IRS has simplified some of the reporting requirements for these taxpayers.

In the past, filing a 1040 tax return for a taxpayer who held RRSPs required the filing of form 8891 for each and every RRSP and RRIF account owned by the taxpayer.

READ MORE HERE….

Important filing deadline for U.S. citizens’ reporting requirements

For U.S. Citizens living and working in Canada.

The Bank Secrecy Act requires U.S. taxpayers to file special reports if they hold a financial interest in, or signature authority over, a foreign financial account, including:

  • Bank accounts
  • Brokerage accounts
  • Mutual Funds (not held in US based brokerages)
  • Foreign Trusts
  • Other financial accounts; such as RRSPs, RRIFs, TFSAs, etc..

This report is due by June 30th each year.

Who Must File?

  1. U.S. Taxpayers must file an FBAR (Financial Bank Account report) if: The taxpayer had a financial interest or signature authority over at least one financial account (see above) located outside of the United States; and
  2. The aggregate value of ALL foreign financial accounts exceeded $10,000 at ANY time during the calendar year. Affected taxpayers include US citizens; US residents (green card holders); entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the US or under the laws of the US, and trusts or estates formed under laws of the US. Exceptions

Certain exceptions do exists.

To review if you qualify, please contact our office.