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U.S. Senate passes Tax Reform: What U.S. Taxpayers Need to Know

The U.S. Senate voted early Saturday morning to pass a tax overhaul worth just about US$1.4 trillion. The final vote was 51-49. Although the Bill is not yet finalized, the vote means that both the U.S. Senate and the U.S. House of Representatives have passed similar plans for tax reform. Negotiators from both chambers will begin meetings on Monday to agree on a single Bill that both chambers must agree on before it is sent to the President.

 

 

U.S. Taxpayers will be affected in the following ways:

Deductions

The Senate Bill retires Federal deductions for state and local income and sales taxes, but does however, allow deductions of up to US$10,000 in local property taxes.

The Senate Bill nearly doubles the standard deduction from US$6,350 to US$12,000 for individuals and from US$12,700 to US$24,000 for couples.

The Senate Bill retains the current limit for the home mortgage interest deduction to interest paid on the first US$1 million of the loan. It also retains the deduction for medical expenses not currently covered by insurance. It has retired deductions for moving expenses and tax preparation.

Personal Exemption

The Senate Bill removes the US$4,050 personal tax exemption.

Tax Brackets

The Senate Bill reduces the seven tax brackets to 10%, 12%, 22%, 24%, 32%, 35%, and 38.5%.

Small Businesses

The Senate Bill allows sole proprietors to deduct 23% of their earnings and pay the remainder at a personal income tax rate.

Corporations

The Senate Bill cuts the corporate tax rate from 35% to 20%.

Timeline

The President and the Republicans are aiming to make tax reform into law before the end of the year. Most provisions would come into effect on January 1, 2018, if this happens.

The House and Senate will vote on a motion to go to a conference on the tax bills starting Monday evening. Congress is scheduled to adjourn for the Holidays on December 15, however House Speaker Paul Ryan has stated that he will keep the House in session past that date if necessary.

 

The U.S. Senate vote brings the Trump Administration closer to its first major legislative victory.

December 2, 2017 0 Comments Taxes, U.S. , , , , , , ,

Important 2016 Tax Changes

Principle Residence

The Canada Revenue Agency has made a significant change to its policy regarding principal residency. Prior to 2016, there was a requirement to fill out form T2091 to designate your home as a principal residence. The form required you to designate the years in which the home was your principal residence. Although this form was required to be filed in the year of disposition, most individuals never filed the form because the resulting capital gain was often fully eliminated by claiming the principal residence exemption. Administratively, the CRA had waived this requirement to file if the exemption eliminated the gain.

Rule Changes

For the taxation years that end on or after October 3, 2016 (e.g., the 2016 calendar year), if you sell your principal residence, you are required to report the sale and the resulting capital gain or loss on Schedule 3 of your T1. You are also required to file the form T2091 if you are claiming the principal residence exemption. These requirements are imposed regardless of whether or not the gain is fully exempt as a result of the designation.

A failure to file and disclose the information will have serious implications. Firstly, there is no limitation period (i.e., after which your returns are considered “statute-barred”) on the CRA’s ability to reassess in the future. Therefore, the deadline which would otherwise restrict the CRA’s ability to re-open the tax return would not start unless the information had been fully disclosed in the year of disposition.

Secondly, the principal residence exemption itself will only be allowed if the sale and the designation of principal residence are reported on your income tax return. Should you realize subsequent to the year of sale and filing of your income tax return that you did not file the sale of your principal residence, the CRA is not obligated to accept a late filing that designates the sale as a principal residence sale. Even if the CRA accepts the late filing, the taxpayer will be liable for penalties that are the lesser of $8,000 or $100 for each complete month from the original filing due date to the date the required information was received by the CRA in an acceptable format.

Since these rules will be effective for the 2016 calendar year, you should remember to report the sale of your principal residence if you had a disposition during the year. If you have any questions, please contact AMR Services.

February 27, 2017 0 Comments Tax Returns, Taxes

The Enhanced Universal Child Care Benefit (UCCB)

What is it?

The UCCB is a benefit paid to eligible families for children under the age of 6 years. An amount of $100 is paid per month for each eligible child.

What is the enhancement?

The October 30, 2014 announcement included a proposal to increase the monthly UCCB benefit by $60, from $100 to $160 for each eligible child under the age of 6 years effective January 2015. The October 30 announcement also included a proposal for a monthly UCCB benefit of $60 for an eligible child who is at least the age of 6 until the child reaches the age of 18 effective January 2015.

When will this start?

Now that Royal Assent has been received, the CRA will be in a position to make the first increased payment in July 2015. This payment will include any increased benefit applicable from January to June of 2015.
Source: Canada Revenue Agency
June 22, 2016 0 Comments Tax Credit, Taxes

Caregiver Amount & Family Caregiver Tax Credit

Our government is committed to recognizing the sacrifices that many Canadians make to care for their loved ones with medical conditions. The Family Caregiver Tax Credit is a non-refundable credit, which is 15% credit on an amount of $2058, meaning you could qualify for up to $220.83 per month, per dependent. This credit was created by the Federal Government to help Canadians who take care of family members. It allows caregivers to claim an additional amount for dependents who have impairments in physical or mental functions. Those dependents can be your spouse, common-law, partner, child, or another relative.

 

If at anytime during 2014, you maintained a residence where you, and the person you supported lived (excluding spouse or partner), you may be eligible to claim a maximum amount of $4530 under the Caregiver Amount, for each eligible dependent.

 

Need more information? Contact Us!

April 17, 2015 0 Comments Tax Credit, Taxes

Children’s Fitness Tax Credit & Children’s Arts Tax Credit

Children need to be active in order to not only promote their healthy growth, but it is also a way of making exercise enjoyable and a social activity. Art allows children to have creative experiences that are fundamental to the building blocks of children development and encourages children to express themselves. That is why our government has the Children’s Fitness Tax Credit & Children’s Arts Tax Credit to allow parents to claim up to $500 per child under the age of 16 against the fees of sports and programs. For more info, contact us!

April 16, 2015 0 Comments Tax Credit, Taxes

First Time Donor’s Super Credit

This credit is great for first time charity donors! However, this credit also benefits individuals if neither they nor their spouse has claimed the Charitable Donations Tax Credit since 2007. The new first-time donor’s super credit gives you an extra 25% non-refundable federal tax credit when you claim your charitable donation tax credit. This means that you can get a 40% credit for up to $200 in cash donations and a 54% credit for the part of the cash donations that is over $200, but not more than $1,000. This is in addition to the provincial credit. For more info, contact us!

April 15, 2015 0 Comments Tax Credit, Taxes

Home Buyer’s Plan

There’s nothing quite like owning your first home. Buying your first home is exciting and is also an expensive purchase. To help Canadians save for their first big purchase, the government has created a program known as The Home Buyers’ Plan (HBP). The HBP allows you to withdraw funds from your RRSP to buy or build a qualifying home for yourself or for a related person with a disability. You can withdraw up to $25,000 in a calendar year! Generally, you have to repay all your withdrawals to your RRSP within a period of no more than 15 years. Your first home is more attainable than you think. For more info, contact us!

Video via RateHub.com.

April 14, 2015 0 Comments Tax Credit, Taxes

Increasing the Age Limit for Converting RRSPs to RRIFs

RRSP provides Canadians with an opportunity to invest in their futures by saving for their retirement. A RRIF is an extension of the RRSP. While your RRSP is used to save for your retirement, a RRIF is used to systematically draw income during your retirement. However, once an RRSP is converted into a RRIF, you can no longer make contributions and you are required to make a minimum annual withdrawal, as set out by Federal regulations. The funds you withdraw from your RRIF are taxable as this amount is added to your taxable income for that year. Our government has increased the age limit for converting RRSP’s to RRIF’s from 69 to 71. This tax saving is great for Canadian Seniors. For more info, contact us!

Video via BrighterLife.ca.

April 13, 2015 0 Comments Tax Credit, Taxes

Pension Income Splitting

Pension Income Splitting helps ease the tax burden to Canadian Pensioners. Generally, individuals who are 65 or older can allocate for tax purposes up to a maximum of 50% of the annual income received from a lifetime annuity, registered pension plan, RRSP annuity, registered retirement income fund (RRIF), or deferred profit sharing plan annuity to a spouse. In addition, the receiving spouse is not required to be 65 or older to receive an allocation. The amount allocated can be changed each year for the benefit of the couple. This is great news for senior couples! To find out more, contact us!

Video via the Canada Revenue Agency.

April 10, 2015 1 Comment Tax Credit, Taxes
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