News and Updates

IRS Sets Withholding Tables as GOP Pledges Paycheck Increase

By Alexis Leondis
Bloomberg

The Internal Revenue Service released guidance for employers about how much tax they should withhold from workers’ paychecks in 2018 — and said it would soon offer an online calculator employees can use to make sure the amounts are correct.

Companies have been awaiting details from the IRS, following the sweeping tax overhaul passed at the end of last month that changes tax rates and brackets, increases the standard deduction and repeals personal exemptions. Employers should begin using the new withholding tables as soon as possible, but not later than Feb. 15, according to the IRS notice issued Thursday.

Republicans have promised that American wage earners will see bumps in their paychecks starting in February — after employers have made the withholding adjustments. House Majority Leader Kevin McCarthy of California has said taxpayers should “check their check.”

Read the full article at bloomberg.com.

How Green Card holders can get the most out of TFSAs and RRSPs

By Cleo Hamel
MoneySense

Q.  I am a  Green Card holder as well as a Canadian resident, and have two questions: No.1. Which are the best securities to invest inside my TFSA to be “friendly” from an Internal Revenue Service and Federal Treasury Board (IRS/FTB) tax point of view? And No. 2. Which are the best securities to invest in an RRSP—again, to be “friendly” from an IRS/FTB tax point of view? Thank you, Mirjana G.

Hi Mirjana. Regarding your RRSP account, you can own any investment you like inside of an RRSP without any issue while you live in Canada. You may even want to hold any dividend-paying U.S .stocks inside your RRSP instead of a non-registered account.

Generally, dividends paid by U.S. companies to Canadians are subject to a tax treaty withholding rate of 15%. The tax treaty waives the withholding on U.S. stocks owned inside of RRSP accounts and is not subject to the passive foreign investment rules (PFICs)…

Read the full article at moneysense.ca.

Victims Of IRS’s Tea Party Bias — And Taxpayers — Must See Lois Lerner’s Testimony, Lawyer Says

By Legal Newsline
FORBES

Lois Lerner, formerly of the Internal Revenue Service when it discriminated against applicants for tax exemptions based on their viewpoints, claims Americans have no right to read statements she made under oath about why she did it.

Lerner, the former director of the IRS’s Exempt Organizations Division, wants U. S. District Judge Michael Barrett to maintain under seal a deposition she gave in June for a civil suit that victims brought in 2013. Unsealing it would place her safety in jeopardy, she says.

Her former IRS colleague, Holly Paz, seeks the same after they targeted groups with “tea party” names and groups that didn’t like how the government was run…

Read the full article at Forbes.com.

2017 Tax Reform

By Mary Beth Lougen
Expat Tax Tools

On December 22, 2017, President Trump signed the Tax Reform and Jobs Act of 2017, which will provide the first significant reform of the U.S. tax code since 1986.

If you are a US person living outside the US, it is not likely you will be impacted in any meaningful way this tax season.

If you are residing in the US and itemize deductions, you have an opportunity to act now to lower your taxes this year and take advantage of deductions that will be disallowed in 2018 (see the section on property taxes below). Most of the changes will affect your 2018 tax returns, which leaves precious little time to act on the few provisions that can benefit you in 2017. Please read below and see the attached pdf for some of the key changes.

If you are a nonresident alien filing Form 1040-NR, you should expect to pay more tax starting in 2018 to the US due to the restriction on state and local tax deductions and the repeal of personal exemptions.

Download the CCH handout in PDF format.

Read the full article at American Expat Tax Services.

Consider putting your U.S. home in a cross-border trust

By TESS KALINOWSKI
Real Estate Reporter

It could mean tax savings for your loved ones if you die, said lawyer David Altro, a cross-border specialist.

Dan and Colette Craig have owned a condo in Cape Coral, Fla., for almost a decade. They know better than to talk politics with the neighbours when they visit.

“We tend to avoid conversations with any U.S. folks regarding (U.S. President Donald) Trump. We don’t initiate that. From an outsider looking in, you really don’t know what you’re talking about,” says Dan.

Politics have nothing to do with the Craigs’ enjoyment of their Florida home and they dream of spending more time there in the future…

Read the full article at thestar.com.

Now That The GOP Tax Bill Is Approved, The IRS Gets Busy

By Brian Naylor
NPR

Republicans in Congress are promising that their tax bill will create jobs. One place where we know it’s going to create a lot of work is at the IRS.

That agency will have to figure out how to interpret and implement the hundreds of pages of changes to the tax code that were just passed, at a time when it is already struggling with budget cuts and staff reductions.

The Trump administration says it’s already working with the IRS to update tax forms and withholding tables, promising that most taxpayers will notice a difference in their pay stubs by February…

Read the full article at www.npr.org.

Will your 2018 taxes fit on a postcard? Probably not.

By JANE C. TIMM
NBC News

To hear Republicans tell it, filing your taxes under the new law will be a revelation.

“We’re making it so simple that almost nine out of 10 taxpayers can do their taxes on a form like a postcard,” House Speaker Paul Ryan told NBC News on Wednesday after GOP lawmakers passed a final version of their bill.

Ryan’s promise comes a week after Trump boasted at the White House that one of the families there promoting the bill would “be able to file their taxes on a single, little beautiful sheet of paper.” A month earlier, Trump kissed a prop postcard mocked up to look like a tax return with just a handful of questions.

Read the full article at nbcnews.com.

Fallout from allegations of tea party targeting hamper IRS oversight of nonprofits

By Robert O'Harrow Jr.
WashingtonPost

Years of conservative attacks on the Internal Revenue Service have greatly diminished the ability of agency regulators to oversee political activity by charities and other nonprofits, documents and interviews show.

The fall in oversight, a byproduct of repeated cuts to the IRS budget, comes at a time when the number of charities is reaching a historic high and they are becoming more partisan and financially complex.

It represents a success for conservatives who have long sought to scale back the IRS and shrink the federal government. They capitalized on revelations in 2013 that IRS officials focused inappropriately on tea party and other conservative groups based on their names and policy positions, rather than on their political activity, in assessing their applications for tax-exempt status. Among conservatives, the episode has come to be known as the “IRS targeting scandal.”

Read the full article at washingtonpost.com.

Bitcoin investors beware: The IRS wants its cut and you may not know it

By Sarah O'Brien
CNBC

  • Bitcoin and its brethren are viewed as property, not currency, by the IRS.
  • A U.S. court has ordered Coinbase to turn over identifying information on 14,000 accounts.
  • The onus is on investors to report gains to the IRS.

Roger McNamee: Here’s what matters about bitcoin  12:14 PM ET Wed, 29 Nov 2017 | 03:21
If you’re a bitcoin investor and have cashed in on your gains — or made purchases using the cryptocurrency — don’t forget the Internal Revenue Service is entitled to a piece of the action.

The value of one bitcoin has surged this year to more than $9,000 as of Thursday morning from $997 (and up from less than a dollar in 2010). There’s a good chance if you have cashed out or paid for anything using it, you have capital gains to report to the IRS…

Read the full article at cnbc.com.

IRS Wins Bitcoin Fight, Gets Access to 14,000 Coinbase Accounts

By Jeff John Roberts
Fortune

Bitcoin speculators aren’t the only ones who stand to cash in from the crypto-currency boom. Uncle Sam is now set to collect back taxes from thousands of customers of a digital currency exchange who failed to report bitcoin transactions.

In a ruling on Tuesday, a federal court judge ordered San Francisco-based Coinbase to comply with a summons that requires it to identify 14,355 accounts, which have accounted for nearly 9 million transactions.

The order, which covers transactions between 2013 and 2015, comes after a prolonged court fight that began when the IRS demanded that Coinbase provide detailed personal information for more than a million customer accounts…

Read the full article at fortune.com.