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Estate Planning in the COVID-19 Context
Recently, the world woke up to the health risks posed by COVID-19. Society at large is taking steps to curtail the impact of the virus. Closer to home, the virus should prompt people, especially those who are older, to make sure their affairs are in order. People...
IRS Update on COVID-19 Relief
The IRS has just announced limited relief for certain taxpayers due to the COVID-19 pandemic (Notice 2020-17). However, as currently drafted, this relief would not apply to US citizens or residents residing abroad. In particular, section III of Notice 2020-17 grants...
IRS Guidance on RESP, RDSP and TFSA Exemptions
New IRS guidance exempt RESPs and RDSPs, but not TFSAs from annual US information reporting requirements. Our view remains that TFSAs are not foreign trusts and thus not subject to 3520 + 3520-A reporting (read more). All told, with this Revenue Procedure US taxpayers...
US Tax Refunds from Pooled Fund Investments
Many Canadian tax-exempt investors invest in US equities through a standard Canadian pooled fund. This means that they pay the 15% US dividend withholding tax on US equity investments. This can be refunded. To illustrate, assume that a Canadian charity invests in...
The Expansion of the Form 8858 Filing Requirement
In tax year 2018, the coverage of Form 8858 was expanded to require the reporting of not only interests related to foreign disregarded entities (“FDEs”), but also foreign branches (“FBs”). This revision to Form 8858 to expand its coverage to FBs have given rise to...
Tax issues when Canadians have U.S. executors
A common and problematic occurrence in cross-border families is for a Canadian to select a close relative in the U.S. as an executor. Clients considering this option should weigh the potential consequences. To illustrate the problems, let’s use an example. Fictional...
Estate Planning for Canadians with US real estate
Canadians who own US real estate need to make sure that their wishes after they die are carried out on both sides of the border. This is a different issue than the US federal estate tax exposure faced by Canadians who own US assets. Each Canadian province and US state...
Watch out for Form 3520 and Form 3520-A penalties
Recently, the IRS has significantly increased in the number of penalties issued for late or incorrectly filed Form 3250 (“Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts”) and Form 3520-A (“Annual Information Return of...
Eliminating US Tax for Canadian Tax-Exempt Investors
Many Canadian tax-exempt organizations invest in the United States as part of a diversified portfolio. As these investors are exempt from tax in Canada, any US tax paid on the investments is a net cost to them. Thus, eliminating US tax is an important step to...
IRS allows 50% deduction against GILTI for Individual Taxpayers
In recently released proposed regulations related (see pages 49-50, 53, 70-71) to the impact of GILTI on individual US taxpayers, the IRS has surprisingly taken a taxpayer friendly position. They are allowing the 50% deduction against GILTI income if an individual...