The Internal Revenue Service (IRS) has stepped up their search for U.S. citizens living outside of the country and not filing their returns. Thousands of “lost” U.S. citizens living in Canada are getting the call from the IRS. Here are some tips on how to get caught up:
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Taxes
How will the average Canadian taxpayer benefit?
As the new government gets to work in Ottawa, the tax measures proposed in the March budget should soon be passed. Here are some of the changes you can expect to see on your tax return soon:
Children Arts Credit: Parents with children under 16 who are enrolled in artistic, cultural, recreational or developmental programs will be eligible to claim up to $500 in registration or membership fees. This includes things like scouting, credits, painting, pottery and tutoring. If a child is disabled, there is an additional $500 supplement.
Here are some of the most common questions:
- Do I need a business number? – You do not need a business number to report business income on a T2125 Form. This form records your business income and expenses as part of your personal return. And you need to pay CPP premiums if you earned more than $3,500.
- Can I have losses? – You can have losses on your business that can be used to offset other income. If the losses exceed your income from other sources, you have a non-capital loss which can be carried forward to years when you have more income.
Avoid the late filing penalty: Even if you can’t pay your balance owing, file your tax return by the deadline. It will save you the late filing penalty.- Both spouses should file: Make sure you or your spouse or common-law partner file a tax return on time if you want to begin or continue receiving the Canada Child Tax Benefit payment.
Deal with it: Open all the brown envelopes you receive from the Canada Revenue Agency (CRA) promptly. If you receive a call from the CRA, return it. Ignoring the problem will not result in it going away. If you are being reviewed or audited, you need to respond and provide the information requested.
Meet the deadlines: If the CRA is reviewing your moving expenses, they will give you a due date for providing the documentation. Make sure you meet their deadlines. Even if you have the right paperwork, but you are late sending it, they will re-assess your return without the credit. Then you will have to file an adjustment to make the claim again.