Phil Hogan | TaxConnections

07 Feb 2019

Taxpayer Moved From Canada To The U.S. Has Problems With Canada Revenue Authority (CRA) Tax Notices

Tax Question

I moved to the US from Canada 3 years ago and I’ve recently received some CRA tax notices that have been causing me problems. When I left in 2012 I neglected to tell my broker that I was moving. It wasn’t until the next year that I realized (because he told me) that I should have turned my account into a non-resident account and taxes should have been withheld and sent to CRA on my dividends.

After many months of going back and forth with CRA I managed to get the tax withholdings resolved. However now I have a different problem. I’ve also paid US tax on these dividends and now I have CRA notices telling me that I also have to pay tax on the same dividends. From my calculations I’m paying about 10% US tax and 15% Canadian tax on these dividends. Should I really be paying 25% total on dividends from Canada?

I tried to get some help from my US CPA but he keeps telling me that there’s nothing I can do and to just pay the CRA bill.

Is this really my only option? They also continue to withhold the 15% tax. Am I stuck with 25% tax. If so, should I move these investments to the US?

Written by TaxConnections Admin | Posted in Canada Revenue Authority Notices

30 Jan 2019

Who Needs To File Form 114 Foreign Bank Account Reporting

FBAR stands for “Foreign Bank Account Reporting”. Originally numbered as TDF 90-22.1, the FBARs current form number as revised a few years ago is currently form 114.

Who Needs To File Form 114 (FBAR)?

Form 114 is required to be filed by all US citizen, Green Card Holders and tax residents of the USA that meet the FBAR filing threshold requirement. This compliance form reports all foreign financial accounts (defined below) held by US taxpayers. The filing threshold is calculated by taking the total aggregate highest balance in all “foreign financial accounts”. If the total calculated exceeds $10,000, the taxpayer is required to file FBAR forms.

What Is A “Foreign Financial Account”?

A foreign financial account is defined as a “financial account” held outside of the USA. A financial account is defined in the instructions for form 114 as:

Written by Phil Hogan | Posted in Form 114- Foreign Bank Account Reporting

25 Jan 2019

IRS Expands Compliance Reviews In International Areas

Phil Hogan - IRS International Compliance Reviews

In 2018/2019 the IRS is expanding their compliance review in several international areas. We expect that our cross border clients will be receiving some additional review on these items. I have included a list of notable international examples below (see the full list here):

1120-F Delinquent Returns Campaign
Corporate Direct (Section 901) Foreign Tax Credit (“FTC”)
F3520/3520-A Non-Compliance and Campus Assessed Penalties
FATCA Filing Accuracy
Foreign Earned Income Exclusion Campaign
Forms 1042/1042-S Compliance
Form 1120-F Chapter 3 and Chapter 4 Withholding Campaign
Form 1120-F Non-Filer Campaign
Individual Foreign Tax Credit (Form 1116)
Individual Foreign Tax Credit Phase II
Nonresident Alien Schedule A and Other Deductions
Nonresident Alien Tax Treaty Exemptions
NRA Tax Credits
Offshore Service Providers
OVDP Declines-Withdrawals Campaign
Related Party Transactions Campaign
Repatriation Campaign
Section 965 Transition Tax

Phil Hogan

Written by TaxConnections Admin | Posted in IRS International Compliance

24 Jan 2019

Canada Revenue Agency (CRA) Has Shared Over 1.6 Million Documents With The IRS To Date

Phil Hogan - Canada- US Cross Border Tax Issues

The Canada Revenue Agency (CRA) continues to supply information to the IRS on U.S. Citizen owned investment and bank accounts. According to CBC, CRA has already shared over 1.6 million Canadian banking records with the IRS. Even with the significant sharing of documentation we are still not seeing an increased level of new clients being contacted by the IRS.

You would think that if the IRS has such a large of amount of banking information from United States citizens abroad they would be enforcing compliance by reaching out to these Americans. This might be something that has yet to happen and may be on the horizon.

Written by Phil Hogan | Posted in Canada-US Cross Border Taxes