Cross Border Tax Changes for 2017

Several new tax filing changes should be noted by advisors working with Canadians who have assets in the United States or U. S. citizens living in Canada.

A review of the following provisions should be discussed with taxpayers who fall into these categories:

• The Affordable Care Act in the U.S. requires individuals and families to have a required amount of health insurance coverage for the entire year.  If they do not there may be a penalty on the tax return.  (U.S. citizens living outside the U.S. are automatically assumed to have the appropriate coverage.)

• The foreign earned income exclusion is $102,100 in 2017

• The personal exemption amount is $4,050 in 2017 (which is the same as it was in 2016)

• The F.I.R.P.T.A. withholding tax rate will increase to 15% for sales closing after February 16, 2016 with a sale price exceeding $1,000,000; however, the 10% withholding rate will still apply if the proceeds are between $300,000 and $1,000,000 and the buyer is using the home as a principal residence

• U.S. lifetime gift and estate exemption has increased to $5,490,000

Knowledge Bureau Report thanks Angela Preteau, author of Canadians and the IRS  and the certificate course entitled Cross Border Taxation available online from Knowledge Bureau for submitting this report.

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