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Archive for Income Tax

Calculating Multi-Jurisdictional Income Tax In Canadian Provinces

Grant Gilmour

If your company is a Canadian taxpayer, Canadian corporate tax is calculated by allocating taxable income between the provinces in which your company has a permanent establishment presence.

Discussion:

 

The company is considered to have a permanent establishment presence in any Canadian province where any of the following conditions are met:

  • A fixed place of business such as an office, branch, warehouse, workshop or factory in the province.
  • An agent or an employee present in the province.
  • The company owns land in the province.
  • There is substantial use of machinery or equipment by the company in the province.

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U.S. Citizens’ Capital Gains Taxable Under U.S.-Israel Treaty

Ron Marini

The United States Tax Court has concluded that a pro se taxpayer who was a U.S. citizen and permanent Israel resident was taxable on his capital gains. Although the taxpayer argued that such gain was excluded from U.S. tax under one provision of the U.S.-Israel income tax treaty, the court nonetheless ruled the income taxable under the treaty’s “saving clause.”

After moving to Israel in 2009, Elazar Cole, a U.S. citizen, became a permanent resident of Israel in 2010. As a result of moving to Israel, he qualified for a ten-year Israeli “tax holiday,” which exempted him from Israeli tax on non-Israeli-source capital gain income. Indeed, Article 15, paragraph 1, of the Convention between the Government of the United States of America and the Government of Israel with Respect to Taxes on Income, U.S.-Israel, Nov. 20, 1975 provides that “[a] resident of one of the Contracting States shall be exempt from tax by the other Contracting State on gains from the sale, exchange, or other disposition of capital assets.”

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Paying Too Much CGT? Pravin Gordhan’s Tax Rate Reprieve

Hugo van Zyl

During February 2016 the beleaguered South African Minister of Finance, Minister Pravin Gordhan, made a serious attempt to balance government’s books.

Gordhan was called back after Minister Nene was removed from his position, by President Zuma early December 2015. The true reason for this politically motivated musical chairs, appointing three ministers in less than 4 days, remains a mystery. Point is Nene was removed and Gordhan had to step in and rescue the cash flow and ensure the country did not face junk status.

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IRS Provides Tax Relief to Houston Area Storm Victims; Tax Deadline Extended to Sept. 1

David Green

Texas storm victims, including those in the Houston area, will have until Sept. 1, 2016 to file their returns and pay any taxes due, the Internal Revenue Service announced today. All workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization also qualify for relief. Read more

What You Need to Know about Taxable and Non-Taxable Income

David Green

All income is taxable unless a law specifically says it isn’t. Here are some basic rules you should know to help you file an accurate tax return:

Taxable income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is normally taxable…. Read more

Earned Income Credit & Other Credits

Debra Thompson

Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.

Last year, an estimated 21 million taxpayers received approximately $37.5 billion in EITC. However, the IRS estimates Read more

AVOID PENALTIES – Get Income Tax Extension Requests Filed & Estimated Income Taxes Paid

Remember your US Income Tax extension request is ONLY for additional TIME to FILE your tax forms, your income tax payments, estimated or otherwise, are still due April 18th 2016.

Most US Taxpayers forget that income tax payments are due in April, even if an extension request for more time to file the forms has been accepted.  Resist the urge to bury your head in the sand, penalties quickly add up. Read more

CRA Forms T1134 and T1135 Often Missed by Canadian U.S. Real Estate Investors

The T1134 and T1135 are a sample of Canadian foreign information returns like the U.S. 8938, 5471 or 8865.

A number of Canadians are investing in the U.S. real estate market with a U.S. limited partnership whose limited partners are solely Canadian residents and the general partner is a U.S. C corporation whose shareholders are also Canadian residents.

For those who want limited liability protection, this type of Read more

Is Your “Business” Actually A Hobby?

You may have started a home-based business and now it is tax time and you don’t know what to do. You’re operating a business, so your expenses are deductible, right? Not. So. Fast.

If you’re not making a profit, the IRS may regard your business as a hobby. If this happens, you may not be able to deduct your losses. You would still report the income from the hobby activity, but it would be Other Income on line 21 of the Read more

Tax Issues For A Marijuana Business – Legal And Illegal

In recent years, the use of medical marijuana has been on the increase. Indeed, at least 24 states plus the District of Columbia have made medical marijuana legal with more likely to follow. Can the widespread sale of recreational marijuana be far behind? It is already legal for recreational use in four states plus DC. This is not about whether or not marijuana should be legal for medical or recreational use, it is about the tax hurdles faced by businesses that sell marijuana. Read more

Limitation period for objection not running where Notice of Assessment

The Canadian Income Tax Act provides a time period in which one may appeal a notice of assessment or reassessment. It is not unusual for a taxpayer not to have received the NOA. Although the taxpayer should advise CRA of any change in addresses or to correct an incorrect address on file, this case was decided on the premise of the lack of communication to the taxpayer of CRA’s assessment of tax payable for a taxation year.

Per CCH report on recent cases: Read more

Who gets to claim the children on their taxes?

Incident to a divorce, one question that must be settled between the two spouses is “Who gets to claim the children on their taxes?” It is most commonly thought that reference to the divorce decree (Qualified Domestic Relations Order or QDRO). However, this may not be the case.

Under IRS rules children of unmarried parents are claimed as dependents on the custodial parent’s return. The custodial parent is determined strictly by a time test. The qualifying child must have the same principal place of residence as the taxpayer for more than half the year if the taxpayer is to qualify as the custodial parent. Read more

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