I just received my Certified Acceptance Agent from the IRS. This has been a long journey. Years actually.
I had applied several years ago, but they changed the rules and didn't allow for Certified Acceptance Agents from outside of the US. So, that stopped me dead in my tracks.
They opened it up again and I applied again. I received my Acceptance Agent credential but was disappointed to find out that these credentials really didn't offer much to my clients. A certified copy of the passport still needed to be sent in.
Well here I am now a Certified Acceptance Agent. Met my very first client yesterday to provide these services. A very pleasant Calgarian with gambling withholdings. Her ITIN had expired. She had filed her tax return but never got her refund. She never got a notice from the IRS but surmised that it was due to the ITIN expiration. She was a very lovely client. I guess clients collecting taxes withheld from gambling winnings maybe happier than clients who discover that just because they left the US doesn't mean they don't have to keep filing taxes.
Well another service added to the menu. I am now in the IRS directory, I am getting phone calls asking to speak to Loretta which is my formal name. So a new venue.
All of the best to everyone and their US tax ordeals. It's not simple.
CPA Verify https://cpaverify.org/ is a great resource for making sure your CPA is actually a CPA.
Just enter the last name and see if you can find them. You can then go to the state that they are licensed in and make sure it's them. Check the address. Make sure that the person you are dealing with sounds like the licensed professional.
If you can't find them then contact the state or province they are practising in.
If you know anyone who had a Green Card and left the US make sure they abandoned it correctly - Filed Form I-407 and are compliant up until they file Form I-407. For tax purposes they may still be a US resident. Under the US tax rules, once resident status (Green Card) is acquired, it is deemed to continue unless it is rescinded or administratively or judicially determined to have been abandoned.
I had a lovely client who had to file a US tax return and after much going back and forth finding numbers from eons ago when she lived in the US, we filed her US tax return and I also filled out Form 2848 - Power of Attorney as a safety measure. The IRS responded and said that the client's Social Security Number was not valid.
Canada and the US differ on Capital Gains on personal residences, but it may be possible that you get hit with Capital Gains taxes on the US side or on a vacation property. Something you can do to address this Capital Gain would be to increase your basis by any improvements you made on the property.
If you have an RRSP or RRIF, the income isn't actually automatically deferred for US purposes. The income earned in an RRSP or RRIF is, in general, taxable for US purposes. In order to defer the income until you make distributions then Form 8833 Treaty-Based Retrun Position Disclousre Under Section 6114 should be included in your US tax return.
Canada imposes a 25% withholding tax on certain types of Canadian source income paid to nonresidents of Canada. Residents of countries with which Canada has a treaty may be eligible for reduced rates.
The withholding rate on Canadian source dividends paid to US residents eligible for treaty benefits is 15%.
Do you have to file a US tax return if you sold Real Property even if you had a loss or you had sufficient withholdings?
Page 13 of the 1040NR instructions
"Dispositions of U.S. Real Property Interests Gain or loss on the disposition of a U.S. real property interest (see Pub. 519 for definition) is taxed as if the gain or loss were effectively connected with the conduct of a U.S. trade or business."
Just want to go over a US shareholder of a Canadian Corporation who has more than at 10% interest in the Corp and is not an Officer or Director of the Corp (does not have control other than the shares). This is a Category 3 Filer
There is no requirement that the Foreign/Canadian Corporation be a Controlled Foreign Corporation.
Category 3 does not necessarily have to file annually only when circumstances require.
If you are US person and are a significant shareholder in a Controlled Foreign Corporation, then the US wants to tax you on your accumulated earnings and profits at the end of 2017. The timing of this tax was so swift that
Inbound Investment Reporting:
Form W-7 – Application for IRS Individual Taxpayer Identification Number. Number is used to identify foreign persons for income reporting and tax withholding purposes;
Form SS-4 — Application for a Tax Identification Number—in order to obtain tax identification number for the foreign trust or U.S. business;
Special rules apply for sourcing capital gains from sales of stock or securities. A gain will be considered foreign source, provided the individual's tax home is in the foreign country and a foreign income tax of at least 10% of the gain is paid to a foreign country. Otherwise, the gain will be entirely US source. Under these source rules, the location of the property or place of sale has no bearing on the source of income from the sale.
Excess credits may be used to reduce US tax liability if carried over to a year with foreign source income that has not been taxed by a foreign country or the taxed at a lower rate in the foreign country. Generating foreign source income within the carryforward period may be useful after returning to live in the US. Some possible for utilizing Foreign tax credits are:
In some cases, passive income and taxes must be treated as general category income and taxes. Generally, passive income and taxes must be treated as a general category income if the foreign taxes you paid on the income (after allocation of expenses) exceed the highest US tax that can be imposed on the income. However, passive income that is financial services income is treated as general category income regardless.
The Court of Claims has allowed the 10-year statute of limitations provided for the FTC in IRC Section 6511(d)(3)(A).
Make installment payments of the withholding tax under section 1446 with Form 8813 by the applicable due dates during the tax year of the partnership in which the income is earned. The partnership must generally make the installment payments for each foreign partner on or before the 15th day of the 4th, 6th, 9th, and 12th months of the partnership's tax year. Generally, pay any additional amounts due when filing Form 8804. However, if the partnership files Form 7004 to request an extension of time to file Form 8804, pay the balance of section 1446 withholding tax estimated to be due with Form 7004 in order to avoid the late payment penalty.
Withholding Tax on Foreign Partners' Share of Effectively Connected Income – IRC Section 1446A partnership (foreign or domestic) that has income effectively connected with a U.S. trade or business (or income treated as effectively connected) must pay a withholding tax on the effectively connected taxable income that is allocable to its foreign partners. Note: The withholding tax rate for effectively connected income allocable to non-corporate foreign partners is 39.6%, and remains at 35% for corporate foreign partners.
Foreign Earned Income Exclusion under Section 911
A US taxpayer whose tax home is abroad and who qualifies under the bona fide residence test or Physical Presence test may elect a $101,300 exclusion of foreign earned income (2016).
Individuals should consider the effect of treaty benefits on state income tax returns. Most states follow the Federal Treaties, but not all. At present, the following 13 states do not honor federal tax treaties: Alabama, California, Connecticut, Hawaii, Kansas, Kentucky, Maryland, Mississippi, Montana, NJ, ND & Pennsylvania.
Have you hired an independent contractor to perform services for your company or business? Then you likely need to report their pay to the IRS and to them via form 1099-MISC. The form 1099 is an information return used to help businesses/individuals accurately report their income on their tax returns and provides a mechanism for the IRS to ensure that the income was properly reported.
If you legally change your name because of marriage, divorce, court order or any other reason, you need to tell Social Security so that you can get a corrected Social Security card.
Canada-U.S. Tax Treaty Article XXIX B Taxes Imposed by Reason of Death
A U.S. federal estate tax return must be filed if a deceased Canadian resident who is not an American citizen owned U.S.-situated assets exceeding $60,000 US in fair market value at the time of death. A US estate tax return may also be required if the deceased made substantial lifetime gifts of U.S. property, even if the U.S. assets do not exceed $60,000 at the time of death. If your total worldwide estate in 2017 is less than $5.49 million US at the time of death, you will probably not have to pay any US estate tax. If the estate is passing to a spouse, a marital credit may also be available to reduce the tax payable.
What is inheritance tax?
In Canada, there is No inheritance tax. Instead the CRA treats the estate as a sale, unless the estate is inherited by the surviving spouse or common-law partner, where certain exceptions are possible. This means that the estate pays the taxes owed to the government, rather than the beneficiaries paying. By the time the estate is settled, the beneficiary should not have to worry about taxes.