Honan Financial Services Limited’s Post

❌Common errors we see on 🇺🇸 tax returns of pensioners living in 🇨🇦 : 1️⃣Paying too much US tax on their US pension income Substituting “Canada” and “America” in place of the generic terms throughout the Treaty, Article XVIII tells us that a pension arising in America and paid to a resident of Canada will be subject to tax in America up to a max of 15%. The problem arises where the client’s US marginal tax rate on their pension income is over 15%. CRA will only allow a Foreign Tax Credit (FTC) of 15% on their Cdn return. To rectify this, we must “re-source” some of their pension income to Canada through Form 1116, so that the US tax on this income is only 15%. The client then claims the tax paid as an FTC on their Cdn return. 2️⃣Over or Under reporting publicly-provided pension income (US - Social Security / Canada - Old Age Security and Canada Pension Plan) Paragraph 5 of Article XVIII sets out the rules for “benefits under social security legislation”, which are very different from those mentioned above. In most cases, OAS, CPP and US Social Security received by US citizens living in Canada is only subject to Canadian tax. Examples of mistakes include: Only reporting Canadian social benefits on their T1 and US social benefits on their 1040; Reporting social benefits received from both countries in full, on both returns 3️⃣Incorrectly claiming a Treaty benefit Very commonly we see US and Cdn social benefit payments excluded entirely on the US returns of new clients. The tax result is correct but, the reporting is not. The gross payments received under CPP, OAS and US Social Security are entered on lines 5a and 6a, respectively. For Americans living in Canada, the taxable amount of these payments reported on lines 5b and 6b, respectively, should be $0. Form 8833 (treaty disclosure) is used to explain the Treaty provisions being applied and must accompany the above reporting. The IRS can assess penalties of $1,000 USD per missed form! 🤕 These are general comments, if you’d like to discuss yours or a client’s specific situation, I’m happy to connect! #tax #ustax #advisor #cpa #accountant #usexpat #pensions

Coming home to live in Ireland? There will be tax implications for your income and assets: Immigrants and Irish people returning after working abroad need to consider their potential tax liabilities regarding savings, property and pensions https://lnkd.in/e2Z_XamV

What you’ll learn in our 'An expat’s guide to UK tax' guide: - The importance of your residence status – which determines whether you pay UK tax or not - Time overseas – after five years as a non-resident some aspects of your UK tax planning may be less onerous - Why where you work matters – any UK workdays could incur UK tax - Pensions and investments as an expat – certain tax-free investments such as ISAs may not be an option but it’s generally possible to contribute to your UK pension, at least for up to five years - Letting your UK property – if you hold onto your UK home there are some important tax rules to be aware of - Inheritance Tax – living away from the UK still means you’re liable for Inheritance Tax so this is a vital step to plan for - Retirement planning – if you’re expecting to retire back to the UK it’s useful to plan ahead by 12-18 months to avoid any nasty surprises as you re-enter the UK tax system Download here: https://lnkd.in/dx85qEaV

❗ 2024 UK Budget Updates are Here ❗ ✅ Expats who have been outside the UK for over 10 years are now exempt from Inheritance Tax (IHT) on non-UK assets. ✅ UK assets remain subject to IHT on any value exceeding the nil-rate band of £325,000. ✅ This includes UK pensions, which are now considered part of the IHT estate. UK pensions are IHT-exempt if passed to a spouse, so it’s essential to review named beneficiaries. ✅ QROPS and QNUPS pensions fall outside the IHT estate if you’ve lived abroad for over 10 years but become subject to IHT again if you return to the UK. ✅ Transferring a pension to a QROPS incurs a 25% tax charge, which may be lower than the 40% IHT if you remain abroad. ✅ Long-term expats who return to the UK have a four-year grace period, during which they are exempt from tax on investment income and capital gains. This period provides an extended opportunity to crystallise gains before resuming UK tax residency. ✅ Offshore life-assurance bonds are back in vogue (if set up correctly) as they defer tax on investment income and capital gains. ✅ You may also be able to earn overseas income tax-free while living in the UK for up to four years.   Ultimately, the tax implications depend on individual circumstances, including where your assets are located and the length of your UK residency. These considerations can change if you spend more or less time in the UK. Interested in learning more? You can find Andrew Talbot CFP®'s full article here: https://lnkd.in/gYXcHetp #TaxUpdates #FinancialPlanning #UKBudget #WealthManagement #InvestmentStrategy #2024UKBudget #LEOWealth

The Canadian federal government’s recently released budget outlines several initiatives noteworthy for employers and pension plan administrators, as well as supplementary information on tax measures. Some of the issues to watch include the following: · We now have more insight into the federal government’s goal of encouraging pension funds to invest in Canada and to disclose where assets are invested. · Pension corporations can claim the Clean Electricity tax credit. · There is a proposed reduction to the employee stock option deduction to match the lower capital gains exemption (details are dependent on future amendments to the Income Tax Act of Canada) · There is a proposed increase of CRA authority related to waiving withholding tax of non-resident service providers. · Proposed amendments to the Canada Labour Code will affect federally regulated employees. · The federal government indicated its intention to modernize the Employment Equity Act. Additional details about these initiatives will come through legislation to be released in the coming weeks/months. Read the full details here: https://bit.ly/4aZibhC #pensions #employment #employers #planadministrator #plansponsor #governance #advisory #regulatory Stephanie Kalinowski | Jenifer Elmy

The new tax year has brought more than just the latest Budget changes but also some already announced in previous years. As we outline in the latest edition of our newsletter, while year end tax planning is often emphasised, making an early start with an understanding of your position is a worthwhile exercise. Those involved with property are faced with particular hurdles. Despite the cut to the higher rate of capital gains tax for residential disposals from 28% to 24% that took effect from 6 April, other key tax reliefs are being removed. From 1 June relief on the purchase of multiple dwellings in England and Northern Ireland will end and from April 2025 furnished holiday lettings relief will go the same way. The new tax year also sees two new allowances to replace the previous pensions lifetime allowances. The lifetime lump sum allowance and the lump sum and death benefit allowance will now limit the tax-free cash benefits on retirement and death. Find out more about these and other stories in the latest edition of our newsletter: #tax #property #NMW #selfemployed #pensions

It is challenging to determine an exact number of people who face unnecessary tax burdens upon retirement due to a lack of planning, as such statistics are rarely directly compiled. However, there are indications based on research and expert insights: UK-Specific Context: - Reports suggest that many retirees fail to optimize their pensions, savings, or investments effectively before retirement. According to research by organizations like Age UK and various financial planning firms, up to 40% of retirees may not have adequately planned their financial strategy, potentially leading to higher tax bills. - Common pitfalls include not using tax allowances, failing to account for residency rules, or not seeking professional advice early enough. Global and Expat Retirees: - For expats, the percentage could be even higher due to the complexity of international tax systems. Studies from financial consultancies like deVere Group highlight that a significant portion of expat retirees—estimated at 30-50%—face unnecessary tax liabilities because they did not plan for cross-border tax implications, such as double taxation treaties or the rules for International Pension Schemes. Key Causes of Tax Burdens: - Not maximizing use of the personal allowance or pension tax-free lump sums. - Ignorance of the Statutory Residence Test (SRT) and its impact on tax liability for overseas income. - Failing to transfer pensions to a tax-efficient jurisdiction when retiring abroad. - Overlooking the impact of inheritance tax for UK-domiciled retirees. Estimated Impact: While exact numbers vary, financial advisors frequently estimate that hundreds of thousands of retirees globally could significantly reduce their tax burdens with proper planning. For UK citizens alone, this likely impacts tens of thousands annually, with financial losses ranging from minor to substantial depending on their wealth and financial complexity. Proactive planning, especially starting 5-10 years before retirement, could prevent many of these issues.

CGT, IT, IHT (and PJs ✈️) If you work with these acronyms, then you mostly likely work with Private Clients. In which case, save yourself the time of wading through Budget commentary and spend 2 minutes reading this short but insightful blog from my fellow Parnter Angharad Lynn TEP instead!

Wondering how the latest changes in the Labour Party budget could impact your UK pensions and inheritance plans? You’re not alone! In our latest webinar, we took a deep dive into these updates and unpacked the real implications for expats. 📊 Key Highlights:  • Strategies to achieve tax-free income on your UK pension while residing in South Africa.  • The looming threat of Inheritance Tax (IHT) and how you can plan to minimize its impact.  • A practical approach to consolidating multiple UK pension pots for simplified, effective management tailored for expats.  • Why UK pension providers can make it challenging for expats to manage their assets and how we offer a solution that keeps you in control. Mark McAllister shared insights on how to navigate these complex changes, the best ways to protect your assets, and options available to achieve tax efficiency on your retirement income. This session is a must-watch for any expat concerned about their financial future amidst the UK’s changing tax landscape! 👉 Watch the full webinar here: https://lnkd.in/dt4kaNbZ and gain clarity on your financial planning as an expat. Any information provided herein is for informational purposes only and does not constitute financial, tax, legal, or other professional advice.

Wondering how the latest changes in the Labour Party budget could impact your UK pensions and inheritance plans? You’re not alone! In our latest webinar, we took a deep dive into these updates and unpacked the real implications for expats. 📊 Key Highlights:  • Strategies to achieve tax-free income on your UK pension while residing in South Africa.  • The looming threat of Inheritance Tax (IHT) and how you can plan to minimize its impact.  • A practical approach to consolidating multiple UK pension pots for simplified, effective management tailored for expats.  • Why UK pension providers can make it challenging for expats to manage their assets and how we offer a solution that keeps you in control. Mark McAllister shared insights on how to navigate these complex changes, the best ways to protect your assets, and options available to achieve tax efficiency on your retirement income. This session is a must-watch for any expat concerned about their financial future amidst the UK’s changing tax landscape! 👉 Watch the full webinar here: https://lnkd.in/da-C_Qjz and gain clarity on your financial planning as an expat. Any information provided herein is for informational purposes only and does not constitute financial, tax, legal, or other professional advice.