If a taxpayer is a resident of Canada, and they receive United States Social Security benefits, they must report these benefits on their personal tax return in Canada. As a result of the tax treaty between Canada and the United States, a taxpayer only has to pay tax on 85% of the benefits they receive. If they started collecting those benefits prior to 1996, they only have to pay tax on 50% of the benefits.
The rules for those people who are required to report to the Internal Revenue Service (IRS) of the US are complex. Moreover, even the experts can’t seem to agree on what is required. There seems to be little clarity and the “little guys” are at the losing end of this requirement. This article News Analysis: The Personal Impact of Offshore Enforcement by Marie Sapirie talks about four different actual scenarios of people living outside the US who found out that they were required to report to the IRS &/or the Department of Treasury and the horror they went through. It is really important that you not only understand the basics of what is required, but also understand that none of this is clear cut. Even when IRS agents are asked direct questions about those FBARs, nobody seems to have a clear and consistent answer.
It is a requirement that any tax preparer who prepares a US tax return for money is registered with the IRS. You are also able to file your own 1040 if you are so inclined. Make sure you do your research as to what has to be filed and when. Make sure you file any required extensions if you need extra time.
If you do decide to hire someone to do this for you, remember they must have a PTIN number.
The provincial government is encouraging seniors to make their home more accessible and safe, by offering a new home renovation tax credit. Clients should speak with their accountants in order to utilize this opportunity for cash-back on home-related expenditures.
Also, seniors who travel south each year may want to tell their local CGA the number of days they are vacationing in the United States, as this could trigger the need to file a form with the IRS.
Self-employed individuals may want to check into Employment Insurance and WorkSafeBC, to make sure they are receiving the coverage they need.
Read our latest newsletter in order to review these and more topics of interest by clicking on this link to view: Kemp Harvey Group Autumn 2012 Newsletter .
Interesting article in the Financial Post.
Are you in that category? If so, give us a call.
For further information straight from the IRS: