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Archive for the Tax Category

IRS Loosens Aug. 31 Deadline for Offshore Tax Disclosures

The IRS is conducting its second voluntary offshore disclosure program, allowing taxpayers to pay penalties related to undeclared accounts to avoid criminal prosecution.

The program requires those who come forward to pay as much as 25 percent of the highest annual amount in the account from 2003 through 2010, plus back taxes, interest and other penalties.

Read more here>

Why Lower Corporate Tax Rates in Canada are Bad for Investors

As mentioned in a previous post the Government of Canada has been lowering the tax rate corporations pay in Canada. This may be a function of the law of untended consequences but the result of lower corporate taxes reduces the value of the dividend tax credit Canadian investors now enjoy. The bottom line is that Canadian investors will receive less after tax income from their dividend paying stocks. Combined with low interest rates and now with reduced after tax income, the challenge for income investors becomes even more challenging. See more here.

Foreclosed? The tax man may want his cut

 Did you lose your house to foreclosure this year? Did your lender forgive some of your mortgage debt because the house sold for less than it the mortgage balance?If so, you could be facing a big tax hit. Check out the details here.

Tax Evader? No Passport for You Report Suggests

 Lawmakers looking to bolster the nation’s finances may want to consider withholding U.S. passports from people with unpaid tax bills. Doing so might have netted almost $6 billion in 2008 alone, according to a report made public by the U.S. Government Accountability Office on Monday. More Here.

Tax Loss Harvesting with Exchange-Traded Funds

Be careful! Swapping similar ETFs for tax loss purposes may trigger the wash sale rule and invite some nasty tax treatment from the IRS and/or the CRA. The rules are not really clear but it may not be worth the risk to find out. See a recent analysis here.

Expect to Be Audited if You Donate to a Gifting Tax Shelter!

Heads Up. If you are considering making a donation to a  gifting tax shelter in Canada then you can expect a tax audit by the Canada Revenue Agency. See the CRA tax bulletin here.

Tax Issues Cross-Border Persons

Cross-Border persons such as Americans resident in Canada and Canadians resident in the USA, along with domestics in Canada or the USA with financial accounts in the other country, have special tax considerations.

These persons have two tax masters, the IRS in the USA and the CRA in Canada and are governed the the Canada US Tax Treaty.

It gets complicated!

Read a short overview here written by Tim Chestnick at the Globe & Mail.

The US Estate Tax is Back

For most Americans and Canadians the US estate tax resumption is a non-event in that if your total estate value is less than 5 million US dollars then you are exempt. For those estates over 5 million the tax rate is 35%.

Canadians who aren’t U.S. citizens can’t use the full exemption but must use a prorated exemption under the Canada-U.S. tax treaty which allows Canadian residents to prorate the US$5-million exemption based on the fraction of their U.S. situs property (e.g. U.S. stocks or real estate) divided by their worldwide estate.

Read more: http://www.financialpost.com/personal-finance/Estate+rises+from+dead/4037619/story.html#ixzz19hcpSMyF

Is 70 the new 65 - For Pensioners?

Given that cash strapped governments around the world are looking for funding, it comes as no suprise that the Canadian government is looking to raise the penionable threshold. In fact many countries around the world have already have done so. For those investors who are pre-retirement age today maybe a rethink of the financial and retirement plan is in order. We  have some thoughts…

Read more here at the Financial Post.

Tax Planning for US Taxable Investors

Unless the Bush tax cuts are extended by the end of this year, tax rates on capital gains and dividends will increase in 2011. Taxable US investors are locking in investment gains this year and not risking an increase in tax rates beginning in 2011.

Read more here.