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Tag Archive for Larry Stolberg

TaxConnections Worldwide Tax Blogs Honors Larry Stolberg

K J 6.7

Every week, until the end of the year, we will be celebrating one of our top writers on TaxConnections.

This week we are honoring Larry Stolberg.

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PATH Act ITIN Renewal Requirements: All ITINs issued before 2013

TaxConnections Member Larry Stolberg

On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.

The PATH Act ITIN renewal requirements: individuals who were issued Individual Taxpayer Identification Numbers (ITINs) before 2013 to renew their ITINs on a staggered schedule between 2017 and 2020 either in person before an IRS employee or a certified acceptance agent or by mail under procedures to be developed. Documentation proving identity, foreign status and residency is required for renewal. The Act also provides that an ITIN will expire if an individual fails to file a tax return for three consecutive years.

Similar rules apply to individuals residing outside the United States such as Canadians who applied for ITINS and file U.S. tax returns reporting their net rental income from U.S. real estate. It’s important to keep in mind that the

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Rate Increase and Withholding of Tax on Dispositions for US Property Interests

TaxConnections Member Larry Stolberg

An important tax update was made regarding the rate increase and withholding of tax on U.S. property dispositions. On December 18th, President Obama, signed H.R. 2029, the tax (the “Protecting Americans from Tax Hikes Act of 2015”) and spending bills (Consolidated Appropriations Act, 2016) to fund the government for its 2016 fiscal year.

The December The Act increases the rate of withholding from dispositions of U.S. real property interests under §1445 from 10% to 15%, but remains at 10% for residences sold for less than $1 million.

The withholding exemption where the sale price is under $300,000US and the purchaser will acquire the property as their principal residence is still in effect.

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Good To Know… Part 3 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-27-15

Short Blog Posts In One Location…

◊ Green card holders who are holding cards close to 8 of the last 15 years need to examine their options to avoid becoming covered expatriates if they return to Canada and/or wish to give up the green card. Becoming a covered expatriate can have significant U.S. tax implications to you.

◊ CRA Form 1135 may become easier for 2015 if the aggregate cost of foreign property is not over $250K.

◊ Snowbirds need to watch their days presence in the U.S. to avoid deemed residency rules and related filing obligations! Read more

Good To Know… Part 2 – From Larry Stolberg, CPA, CA

Larry Stolberg - 11-25-15

Short Blog Posts In One Location…

◊ FBAR DUE DATES ALIGN WITH TAX RETURNS
The SURFACE TRANSPORTATION ACT OF 2015
Confirmation that the foregoing ACT in Section 2606(3)(11)  makes reference to Regulation 1.6081-5  of the IRC which confirms that the due dates will conform to the June 15th  automatic extension  if one resides outside of the U.S. on April 15th. One may file IRS Form 4868 to extend the date to October 15th. The Secretary may waive penalties for first time filers with the penalties if the 4868 is not filed.

◊ Leaving Canada requires departure planning not to be left to the day before you leave.

◊ CRA has changed the rules for the charitable gifts outlined in your WILL. Read more

Canada Is Checking Foreign Tax Credits

Larry Stolberg - 11-24-15

It is not uncommon for e-filed returns or paper filed returns that claim a credit for US tax for CRA to request verification.

US tax paid per Canadian withholding slips are not requested because the slips are issued  by a Canadian entity. They are looking to US tax claimed per US reporting slips such as W2s, 1099s, 1042s or from the US 1040/1040NR tax returns. US social security tax and medicare (ie., FICA) is creditable if it relates to US source wages or services performed in the US which is evident  on the W2.

Foreign tax credits claimed in respect of US computed from  the US tax return based on determination of what portion of the tax payable of the return relates to US source income that is creditable is usually supportable by submitting to CRA your schedules and copy of the federal (and state where applicable) return. Recently CRA has Read more

Section 55 Proposed Amendments Affecting Inter-corporate Dividends

Larry Stolberg - 11-7-15

The 2015 Federal Budget proposals to section 55 may cause otherwise tax free inter-corporate dividends to be subject to taxation as proceeds of disposition (ie., capital gains) that previously were  exempt from the ambeit of section 55. Computation of safe income or post-1971 tax retained earnings may now be required in every instance to ensure one is not caught. Timely section 55(5)(f) designations filed by the recipient corporation may also have to be made. The proposal was to be effective for dividends paid after April 20, 2015. Hopefully there will be further consultation on the matter and the final legislation will only affect those circumstances to which the proposal was  intended.

Caution should be made to  companies currently paying dividends  or wishing to implement various purification techniques, capital gains crystallization and other restructuring that may involve section 55 of the Income Tax Act Read more

FBAR Due Dates Align With Tax Returns

Larry Stolberg - 11-6-15

The SURFACE TRANSPORTATION ACT OF 2015 became law in late July, 2015. The tax provisions changed a number of due dates effective for tax years beginning after December 31, 2015 for partnerships, C corporations and S corporations. Surprisingly, was a change for FBARS or FINCEN114 that will now align commencing for the 2016 taxation year the FBAR (Report of Foreign Bank and Financial Accounts) due date with the due date for individual returns, moving it from June 30 to April 15. The bill instructs the IRS to modify existing regulations to reflect the changes to tax return filing deadlines.

This will mean that for 2016 tax return filers the FBAR will be due April 15, 2017 which is the normal due date for U.S. persons residing in the U.S. on April 15th. It appears that alignment will also mean that the automatic extension to June 15 for those residing outside of the U.S. will be accepted as not late, but more importantly, it Read more

What Offshore Delinquent U.S. Individual Filers Need To Know! – Part 4

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Is acceptance of a streamlined application automatic for those residing in Canada?

Answer

The primary criteria for acceptance into the Streamlined Foreign Offshore Procedure (“SFOP”) is that the reason for the non-compliance was due to non-willful conduct and that you meet a non-residency test.

Non-willful conduct requires you to certify on IRS Form 14653. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.

The non-residency requirement is generally met if in any one of the 3 past due years, you Read more

What Offshore Delinquent U.S. Individual Filers Need To Know! – Part 1

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I am a U.S. citizen and have resided in Canada for years and have not filed U.S. Returns. What can I do or what could happen if I do nothing?

Answer

U.S. persons including U.S. citizens or green card holders residing in Canada who are not up to date with their U.S. filing obligations should consider the available programs in an effort to become tax-compliant.

The updated streamlined procedures announced on June 18, 2014 modified changes to the 2012 streamlined program, now known as the Streamlined Foreign Offshore Program (“SFOP”) requiring the filing of 3 years of past-due returns (with required disclosures and Read more

Investing In The United States

TaxConnections Blogger Larry Stolberg posts about investing in the USAEven with some economic recovery, the landscape in the U.S. has made it very attractive for Canadians to purchase vacation or rental properties in the warmer climates. Interest has increased as result of lower pricing as well as the stronger Canadian currency with anticipation of realizing significant capital gains when the market fully recovers.

Canadian businesses wishing to expand into the U.S. marketplace should be aware of the income tax implications with respect to deriving income in the U.S. and repatriating profits back to Canada.

The U.S. like Canada, have specific tax rules with respect to inbound investing by non-U.S. persons. Often the simple things to be in compliance are not provided to the investor as part of the marketing process causing unnecessary grief for the unwary.

Rental and Sale of United States Real Estate

Withholding tax on rental and sale

Canadians who intend to rent their U.S. property are subject to a 30% U.S. withholding tax on the gross rent. Read more

Professional Corporations

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For a number of years, provincial governing bodies of regulated health professionals (1) and other professional organizations (2) have allowed the incorporation of the professional practice. The major tax advantage of incorporation, is the ability to defer tax by retaining income in the corporation that would otherwise be taxed at a much higher personal tax rate if you earned the same income as a sole proprietor or as a partner.

Commencing in 2006, family members of doctors and dentists may hold non-voting shares of the professional corporation. Other professional corporations may not have family members as shareholders.

Non-voting shares may include both non-voting common and non-voting special shares. Common shares participate in the value of the corporation, preferred or special shares do not. The advantage in having family members as shareholders is that the corporation may pay your parents, adult children and spouse, dividends taxed at lower tax rates to finance tuition and other personal expenditures as opposed to you receiving the income and having to pay more tax at your marginal tax rate to finance the same expenditure. Dividends are not paid to minor children because they will be subject to tax at 32.57% (ie., kiddie tax). Read more

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