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The April 18, 2023 deadline to file your 2022 U.S. Form 1040 – U.S. Individual Income Tax Return is quickly approaching. However, if you reside outside the U.S. on April 18, 2023, the deadline to file your 2022 U.S. Form 1040 is automatically extended to June 15, 2023. Please note that all taxes owing must be paid by April 18, 2023 to avoid any interest and penalties from accruing regardless of your filing deadline.
Due to changes in tax laws and the ever-increasing complexity in preparing personal tax returns, please gather your required tax information and submit the information to us no later than March 16, 2023.
How to get your tax documents to Lipton
You can deliver your documents to your Lipton LLP advisor in various ways. Documents can be scanned and emailed to your Lipton representative, or you can use our convenient, contactless, and secure electronic client portal.
Our online portal will allow you to deliver your 2022 personal tax documents to your trusted Lipton LLP adviser safely and conveniently. Simply navigate to our website at https://www.liptonllp.com using your preferred web browser and click on the Client File Upload to access our secure client portal. Our client portal is secure, convenient, and easy to use. Your documents are uploaded and delivered to your Lipton LLP advisor quickly and safely.
Step-by-step instructions can be viewed here.
Foreign Bank Account Reporting – FBAR (Form FinCEN 114 formerly known as TDF 90-22.1)
The IRS requires individuals to report their financial interest in, signing authority or other authority over one or more financial accounts in foreign countries. This applies to individuals where the aggregate value of the financial accounts exceeds U.S. $10,000 at any time during the year.
All Canadian financial accounts are considered foreign accounts for U.S. tax reporting purposes. These accounts include both registered and non-registered accounts, chequing accounts, savings accounts, investment accounts, RRSPs, RESPs and TFSAs.
This form must be filed electronically. In order to assist us with completing the TDF 90-22.1 please provide the following information:
- Name(s) of account holder
- Name of the financial institution
- Account number
- Mailing address of the financial institution
- Maximum value of the account (in U.S. dollars) during the year.
Statement of Specified Foreign Financial Assets – Form 8938
Form 8938 must be filed with your income tax return if you satisfy the reporting thresholds discussed below. Please note that the thresholds for U.S. taxpayers living in the U.S. are different from the thresholds for U.S. taxpayers living abroad.
Thresholds for U.S. Taxpayers Living Abroad
Unmarried taxpayers: The total value of your specified foreign financial assets is more than U.S. $200,000 on the last day of the tax year or more than U.S. $300,000 at any time during the tax year.
Married taxpayers filing a joint income tax return: The total value of your specified foreign financial assets is more than U.S. $400,000 on the last day of the tax year or more than U.S. $600,000 at any time during the tax year.
Married taxpayers filing separate income tax returns: The total value of your specified foreign financial assets is more than U.S. $200,000 on the last day of the tax year or more than U.S. $300,000 at any time during the tax year.
All Canadian accounts are considered foreign bank accounts for U.S. tax reporting purposes. These accounts are comprised of both registered and non-registered accounts and include chequing accounts, savings accounts, investment accounts, RRSPs, RESPs, and TFSAs.
Information Return of U.S. Persons With Respect To Certain Foreign Corporations
If you are a shareholder, director or officer of a Canadian corporation, please let us know immediately as additional reporting may be required.
Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts
If you have transactions with a foreign trust during the year (a Canadian trust is considered a foreign trust for U.S. tax reporting), please let us know as additional reporting may be required.
Information Return to Report Gifts
If you are a U.S. person you must file a gift tax return (whether or not any tax is ultimately due) in the following situations:
- If you gave gifts to someone in 2022 totaling more than $16,000 (other than to your spouse), you will likely need to file Form 709. However, there are certain gifts that are not taxable but must still be reported. Further, there are certain cases where the lifetime gift tax exemption can apply.
- Certain gifts, called future interests, are not subject to the $16,000 annual exclusion, although you must file Form 709 even if the gift was under $16,000.
Canadian Mutual Funds:
The IRS classifies Canadian mutual funds as corporations for U.S. tax purposes. For Canadian residents who are U.S. taxpayers, the benefits from this form of investment may be mitigated by increased U.S. tax compliance and additional U.S. tax liabilities. Please contact your Lipton advisor to discuss the implications of an investment in Canadian mutual funds by U. S. taxpayers.
Net Investment Tax – commonly known as the ‘Obamacare’ tax (NIT):
The NIT applies to a U.S. taxpayer whose modified adjusted gross income (MAGI) is at least U.S. $200,000 (a single filer), U.S. $250,000 (joint filers) and US $125,000 (married filing separately). The taxable amount is the lesser of (1) the excess MAGI over the taxpayer’s threshold and (2) the taxpayer’s net investment income, which includes interest, dividends, capital gains, rental and royalty income, income from business involved in trading financial instruments or commodities, and income from businesses that are passive activities to the taxpayer (Code section 469).
Tax Free Savings Account – TFSA and Registered Education Savings Plan – RESP:
U.S. taxpayers resident in Canada may have U.S. tax compliance and U.S. tax liabilities where they hold TFSA and RESP investments. Please contact your Lipton advisor to discuss the implications of holding these types of financial accounts.
Sale of home:
When you sell your principal residence, you may qualify for an exclusion of up to $250,000 of the capital gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your Spouse.
In general, this exclusion applies where you have owned and used your home as your principal residence for a period, aggregating at least two out of the five years prior to its date of sale.
Virtual currencies:
Starting in 2019, the IRS requires a disclosure of any trading with respect to virtual currencies.
In order to complete this disclosure, please provide details with respect to any transactions in virtual currencies completed in the year.
We look forward to hearing from you early in the tax season!
