Income Tax: Tax Payer US Tax
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Income Tax Is The Divider In US Senate
Here is one glowing example of how important Income Tax is in our daily life and politics.
As a country U.S. is in a dire economic situation.
After all the news, views of political pundits that recession is over, they got a so called “shock of a lifetime” with U.S. labour market job data.
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Canada Revenue Agency Income Tax Real Estate: IRS US Tax
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Tax Issues To Consider By Canadians Investing In US Real Estate Market
I am often being approached by many Canadians asking about the current investment opportunity in US real estate market.
The opportunity might be very attractive, but investing in US or any other country for that matter is very complex for ordinary Canadians.
There are major tax implications to consider for investment property from both US and Canadian Tax agencies.
As a Canadian investor, you must report all your foreign investment over $100,000 to Canada Revenue Agency and also your income from your foreign investment sources to determine tax payer taxable income,
In US, Canadian investor must also file US income tax return and report all income from investment property to the US tax authority. Canadians also must obtain a US tax payer identification number (TIN) from IRS. Without a TIN, Canadian investor would not be able to realize the income from the property and transfer it to Canada. There is also the possibility of 30% source deduction of any profit from the investment property by the IRS.
If you are considering investing in US properties, it would be prudent to seek advice from a qualified tax or investment advisor, who are experts in cross border taxation.
Canada Revenue Agency Income Tax: IRS US Tax
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Income Tax on World Series of Poker Winner
You probably heard from any of your favourite Canadian news sources that Jonathan Duhamel, 23 year old from Canada has won the World Series of Poker in Las Vegas. The winning awards him US$8.9 million in prize money.
Unlike the Vancouver Lotto Jackpot winners, who don’t have to pay any income tax on their $50 million winning, Duhamel, will have to pay tax in USA, Canada and his province of residence. There have been interesting developments in tax on Poker winnings in Canada for last few years.
An increasing number of Canadians are playing online poker regularly and winning. To begin with, lottery and gambling winnings in Canada are not subject to income tax, as I mentioned in my previous post, since these income are not from an “income from a source” of employment, business or investment income.
This all changes when Poker or Gambling winning becomes a source of income from a running a business. If you spend a significant amount of time, playing poker, spend a substantial amount of money for playing poker and pay for your living expenses from your poker winning you are in a business and you must report your income from playing poke to Canada Revenue Agency. Canada Revenue Agency can decide if your poker winnings are taxable or not by reviewing taxpayer’s poker playing habit.
Regarding Jonathan Duhamel’s winning, he won in a professional poker tournament that makes his winning taxable both in Canada and USA. Since he won the prize money in USA, he will get the prize money after tax. If he has a Social Security number, he can get all the winning but he will have to report the winning in his USA tax filing and pay tax on the winning.
Since he is a Canadian citizen, and assuming he does not have a US Social Security no., he will get his prize money after 30% tax deduction by IRS. He will have to request for a US non resident Tax Payer Identification (TIN) no. and file a US tax return and could get some of the tax deduction back from IRS.
In Canada, he will have to report his winning in his Income Tax Return and also the taxes that he has paid in USA. Since Canada and USA have income tax treaty, he will get credit for taxes paid on his winning in USA and will pay a smaller amount of Tax to the Federal Government. Then the Province of his residence will come after him for their share of Dhuamel’s winning.
After doing a rough calculation, he is expected to net $4.6 million after tax from his $8.9 million prize winning.
I am assuming that he will claim that he is not a professional poker player, to avoid reporting his income in Canada. So far, all the news I have reviewed about Jonathan Duhamel, I don’t think his claim is going to fly over CRA. His Tax Advisors will have a hard time to prove that he is not a professional poker player.
Bloomberg news reported that there is an evilcpa, and Las Vegas poker players bring her to keep their poker winnings from IRS’s tax grab. Jonathan Duhamel should seek her help too.
Canada Revenue Agency Income Tax: CRA Income Tax payroll tax Tax Tax Rate US Tax
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How Much Tax Do You Pay on $50 Million Jackpot Winning?
After a $50 million Jackpot was won in Vancouver, people are curious as to how much tax do you pay for that Lotto winning?
The winners should thank their luck that they have won the Jackpot in Canada.
If they had won the Lotto in USA, they would have to pay 38% or more of their winning to IRS.
Since they have won it in Vancouver and are not U.S. citizens, their Tax liability to the Canada Revenue Agency is, “0”.
Lotto or any other lottery winning is not taxable in Canada.
As per Canadian Income Tax Act “Income from a source” of employment, business or investment is taxable income. Since lottery winning is not a regular source of income, not a single penny of the winning is Taxable under Canadian Income Tax Act.
Unfortunately it is a different situation for U.S. citizens or lottery winning in USA.
If you are a U.S. citizen, it does not matter where in the world you win a lottery; you must report and pay income tax on your lottery winning.
If you are not a U.S. citizen and you win lottery/gambling in U.S.A. 30% to 38% of your winning will be taken out and sent to IRS, before you are given the winning proceeds. You must file a Non-Resident Income Tax Return, to get the tax deducted at source back. How much you will get back, depends your foreign residential status and any tax treaty agreement between the USA and your country of residence.
Income Tax: Canada IRS US Tax
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U.S. Tax Revenue To Take A Dive With This Election Result
After largely getting rejected by the US voters on midterm election, the U.S. President came out with the first compromise on Income Tax for middle class families.
In his after election defeat press conference, He said that he will work with the Republican controlled Congress to keep the tax increase at a minimum for middle class families. There is still the issue of Tax Increase of upper-income families.
The President was ready to let expire the Bush tax cut on Upper-income families
With the Congress now under the republican control, it will be next to impossible without some major compromise on other issues for the Democrat President to expire the Bush tax cut.
What it mean on the macro level for U.S. economy?
It is already being called scary. The current U.S. deficit is on a rising trend and is at US$200 trillion. If U.S. was a corporation, it would have been declared bankrupt.
Since the Tax increase is going to be rejected and blocked by the Congress, there is no way U.S. will be able to reduce the deficit to a more manageable level. Instead it will keep ballooning.
As soon as other countries will realize the dire situation the U.S. economy is in, they will refuse to do business with U.S.
Would you like to give credit to a Bankrupt company? Do the Banks give credit to a Bankrupt person?
How would you like to do business with a Bankrupt U.S.?
U.S. will bear the burden of this midterm election for a long long time.