Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Amend A Tax Return

File Only State Taxes Online FreeWhere Can I File My 2012 Taxes For FreeMilitary Star CardFiling Tax Extension 20122011 Form 1040ezE File 2010 Tax Return FreeAmending A ReturnFiling 2010 Taxes OnlineHrblock Free FileHow To File A 1040x AmendmentState Income Tax TablesDownload 2012 Tax FormsDownload A 1040ez Federal Tax FormHrblock ComCan I Efile My 2011 TaxesTax ActHr Block 2005 Taxes1040Free E File 20122011 1040xAmend Tax FormAmend 2009 Tax Return2012 Irs 1040ez InstructionsFederal Tax Ez Form 20112012 Irs 1040ez Form2012 1040ez FormWww Irs Gov Form1040xH&r Block Coupons 2012 PrintableFree 1040nr SoftwareFree Tax Act 2012Ma Taxes Ng Army Mil1040nr EfileMilitary Turbo TaxOnline TaxesTurbo Tax 1040xCan I File 2010 Taxes In 2012Form 1040xHelp Amending Tax ReturnHow To Fill Out A 1040x InstructionsFree State Tax Filing Online

Amend A Tax Return

Amend a tax return 2. Amend a tax return   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. Amend a tax return The pay may be in cash, property, or services. Amend a tax return It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. Amend a tax return For information about deducting employment taxes, see chapter 5. Amend a tax return You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. Amend a tax return Empowerment zone employment credit (Form 8844). Amend a tax return Indian employment credit (Form 8845). Amend a tax return Work opportunity credit (Form 5884). Amend a tax return Credit for employer differential wage payments (Form 8932). Amend a tax return Reduce your deduction for employee wages by the amount of employment credits you claim. Amend a tax return For more information about these credits, see the form on which the credit is claimed. Amend a tax return Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. Amend a tax return Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. Amend a tax return These and other requirements that apply to all business expenses are explained in chapter 1. Amend a tax return In addition, the pay must meet both of the following tests. Amend a tax return Test 1. Amend a tax return It must be reasonable. Amend a tax return Test 2. Amend a tax return It must be for services performed. Amend a tax return The form or method of figuring the pay does not affect its deductibility. Amend a tax return For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. Amend a tax return Test 1—Reasonableness You must be able to prove that the pay is reasonable. Amend a tax return Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. Amend a tax return If the pay is excessive, the excess pay is disallowed as a deduction. Amend a tax return Factors to consider. Amend a tax return   Determine the reasonableness of pay by the facts and circumstances. Amend a tax return Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. Amend a tax return   To determine if pay is reasonable, also consider the following items and any other pertinent facts. Amend a tax return The duties performed by the employee. Amend a tax return The volume of business handled. Amend a tax return The character and amount of responsibility. Amend a tax return The complexities of your business. Amend a tax return The amount of time required. Amend a tax return The cost of living in the locality. Amend a tax return The ability and achievements of the individual employee performing the service. Amend a tax return The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. Amend a tax return Your policy regarding pay for all your employees. Amend a tax return The history of pay for each employee. Amend a tax return Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. Amend a tax return Employee-shareholder salaries. Amend a tax return   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. Amend a tax return The excessive part of the salary would not be allowed as a salary deduction by the corporation. Amend a tax return For more information on corporate distributions to shareholders, see Publication 542, Corporations. Amend a tax return Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. Amend a tax return For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. Amend a tax return Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. Amend a tax return If you give property to an employee as an employee achievement award, your deduction may be limited. Amend a tax return Achievement awards. Amend a tax return   An achievement award is an item of tangible personal property that meets all the following requirements. Amend a tax return It is given to an employee for length of service or safety achievement. Amend a tax return It is awarded as part of a meaningful presentation. Amend a tax return It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. Amend a tax return Length-of-service award. Amend a tax return    An award will qualify as a length-of-service award only if either of the following applies. Amend a tax return The employee receives the award after his or her first 5 years of employment. Amend a tax return The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. Amend a tax return Safety achievement award. Amend a tax return    An award for safety achievement will qualify as an achievement award unless one of the following applies. Amend a tax return It is given to a manager, administrator, clerical employee, or other professional employee. Amend a tax return During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). Amend a tax return Deduction limit. Amend a tax return   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. Amend a tax return $400 for awards that are not qualified plan awards. Amend a tax return $1,600 for all awards, whether or not qualified plan awards. Amend a tax return   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. Amend a tax return   A highly compensated employee is an employee who meets either of the following tests. Amend a tax return The employee was a 5% owner at any time during the year or the preceding year. Amend a tax return The employee received more than $115,000 in pay for the preceding year. Amend a tax return You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. Amend a tax return   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. Amend a tax return To figure this average cost, ignore awards of nominal value. Amend a tax return Deduct achievement awards as a nonwage business expense on your return or business schedule. Amend a tax return You may not owe employment taxes on the value of some achievement awards you provide to an employee. Amend a tax return See Publication 15-B. Amend a tax return Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. Amend a tax return However, the total bonuses, salaries, and other pay must be reasonable for the services performed. Amend a tax return If the bonus is paid in property, see Property , later. Amend a tax return Gifts of nominal value. Amend a tax return    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. Amend a tax return Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. Amend a tax return For more information on this deduction limit, see Meals and lodging , later. Amend a tax return Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. Amend a tax return Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. Amend a tax return For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. Amend a tax return Fringe Benefits A fringe benefit is a form of pay for the performance of services. Amend a tax return You can generally deduct the cost of fringe benefits. Amend a tax return You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. Amend a tax return You also may not owe employment taxes on the value of the fringe benefits. Amend a tax return See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. Amend a tax return Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. Amend a tax return Certain fringe benefits are discussed next. Amend a tax return See Publication 15-B for more details on these and other fringe benefits. Amend a tax return Meals and lodging. Amend a tax return   You can usually deduct the cost of furnishing meals and lodging to your employees. Amend a tax return Deduct the cost in whatever category the expense falls. Amend a tax return For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. Amend a tax return If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. Amend a tax return Deduction limit on meals. Amend a tax return   You can generally deduct only 50% of the cost of furnishing meals to your employees. Amend a tax return However, you can deduct the full cost of the following meals. Amend a tax return Meals whose value you include in an employee's wages. Amend a tax return Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. Amend a tax return This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. Amend a tax return Meals you furnish to your employees at the work site when you operate a restaurant or catering service. Amend a tax return Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. Amend a tax return Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). Amend a tax return This does not include meals you furnish on vessels primarily providing luxury water transportation. Amend a tax return Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. Amend a tax return This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. Amend a tax return Employee benefit programs. Amend a tax return   Employee benefit programs include the following. Amend a tax return Accident and health plans. Amend a tax return Adoption assistance. Amend a tax return Cafeteria plans. Amend a tax return Dependent care assistance. Amend a tax return Education assistance. Amend a tax return Life insurance coverage. Amend a tax return Welfare benefit funds. Amend a tax return   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. Amend a tax return For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. Amend a tax return ). Amend a tax return Life insurance coverage. Amend a tax return   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. Amend a tax return See Regulations section 1. Amend a tax return 264-1 for more information. Amend a tax return Welfare benefit funds. Amend a tax return   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. Amend a tax return Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. Amend a tax return   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. Amend a tax return If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. Amend a tax return   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. Amend a tax return The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. Amend a tax return The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. Amend a tax return These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. Amend a tax return   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. Amend a tax return Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. Amend a tax return However, if the employee performs no services, treat the amount you advanced as a loan. Amend a tax return If the employee does not repay the loan, treat it as income to the employee. Amend a tax return Below-market interest rate loans. Amend a tax return   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. Amend a tax return See Below-Market Loans in chapter 4. Amend a tax return Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. Amend a tax return The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. Amend a tax return You can claim the deduction only for the tax year in which your employee includes the property's value in income. Amend a tax return Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. Amend a tax return You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. Amend a tax return Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. Amend a tax return These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. Amend a tax return Restricted property. Amend a tax return   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. Amend a tax return However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. Amend a tax return    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. Amend a tax return This means that the recipient is not likely to have to give up his or her rights in the property in the future. Amend a tax return Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. Amend a tax return However, your deduction may be limited. Amend a tax return If you make the payment under an accountable plan, deduct it in the category of the expense paid. Amend a tax return For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. Amend a tax return If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. Amend a tax return See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. Amend a tax return Sick and Vacation Pay Sick pay. Amend a tax return   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. Amend a tax return However, your deduction is limited to amounts not compensated by insurance or other means. Amend a tax return Vacation pay. Amend a tax return   Vacation pay is an employee benefit. Amend a tax return It includes amounts paid for unused vacation leave. Amend a tax return You can deduct vacation pay only in the tax year in which the employee actually receives it. Amend a tax return This rule applies regardless of whether you use the cash or accrual method of accounting. Amend a tax return Prev  Up  Next   Home   More Online Publications
Español

Air Travel

Find travel warnings, air travel security tips, real-time airport status, and more.

The Amend A Tax Return

Amend a tax return Publication 597 - Main Content Table of Contents Application of Treaty Personal Services Pensions, Annuities, Social Security, and AlimonyRoth IRAs. Amend a tax return Tax-deferred plans. Amend a tax return Investment Income From Canadian Sources Other Income Charitable ContributionsQualified charities. Amend a tax return Income Tax Credits Competent Authority Assistance How To Get Tax HelpText of Treaty U. Amend a tax return S. Amend a tax return Taxation Canadian Taxation Application of Treaty The benefits of the income tax treaty are generally provided on the basis of residence for income tax purposes. Amend a tax return That is, a person who is recognized as a resident of the United States who has income from Canada, will often pay less income tax to Canada on that income than if no treaty was in effect. Amend a tax return Article IV provides definitions of residents of Canada and the United States, and provides specific criteria for applying the treaty in cases where a taxpayer is considered by both countries to be a resident. Amend a tax return Saving clause. Amend a tax return   In most instances, a treaty does not affect the right of a country to tax its own residents (including those who are U. Amend a tax return S. Amend a tax return citizens) or of the United States to tax its residents or citizens (including U. Amend a tax return S. Amend a tax return citizens who are residents of the foreign country). Amend a tax return This provision is known as the “saving clause. Amend a tax return ”   For example, an individual who is a U. Amend a tax return S. Amend a tax return citizen and a resident of Canada may have dividend income from a U. Amend a tax return S. Amend a tax return corporation. Amend a tax return The treaty provides a maximum rate of 15% on dividends received by a resident of Canada from sources in the United States. Amend a tax return Even though a resident of Canada, the individual is a U. Amend a tax return S. Amend a tax return citizen and the saving clause overrides the treaty article that limits the U. Amend a tax return S. Amend a tax return tax to 15%. Amend a tax return    Exceptions to the saving clause can be found in Article XXIX, paragraph 3. Amend a tax return Treaty-based position. Amend a tax return   If you take the position that any U. Amend a tax return S. Amend a tax return tax is overruled or otherwise reduced by a U. Amend a tax return S. Amend a tax return treaty (a treaty-based position), you generally must disclose that position on Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), and attach it to your return. Amend a tax return Personal Services A U. Amend a tax return S. Amend a tax return citizen or resident who is temporarily present in Canada during the tax year is exempt from Canadian income taxes on pay for services performed, or remittances received from the United States, if the citizen or resident qualifies under one of the treaty exemption provisions set out below. Amend a tax return Income from employment (Article XV). Amend a tax return   Income U. Amend a tax return S. Amend a tax return residents receive for the performance of dependent personal services in Canada (except as public entertainers) is exempt from Canadian tax if it is not more than $10,000 in Canadian currency for the year. Amend a tax return If it is more than $10,000 for the year, it is exempt only if: The residents are present in Canada for no more than 183 days in any 12-month period beginning or ending in the year concerned, and The income is not paid by, or on behalf of, a Canadian resident and is not borne by a permanent establishment in Canada. Amend a tax return    Whether there is a permanent establishment in Canada is determined by the rules set forth in Article V. Amend a tax return Example. Amend a tax return You are a U. Amend a tax return S. Amend a tax return resident employed under an 8-month contract with a Canadian firm to install equipment in their Montreal plant. Amend a tax return During the calendar year you were physically present in Canada for 179 days and were paid $16,500 (Canadian) for your services. Amend a tax return Although you were in Canada for not more than 183 days during the year, your income is not exempt from Canadian income tax because it was paid by a Canadian resident and was more than $10,000 (Canadian) for the year. Amend a tax return Pay received by a U. Amend a tax return S. Amend a tax return resident for work regularly done in more than one country as an employee on a ship, aircraft, motor vehicle, or train operated by a U. Amend a tax return S. Amend a tax return resident is exempt from Canadian tax. Amend a tax return Income from self-employment (Article VII). Amend a tax return   Income from services performed (other than those performed as an employee) are taxed in Canada if they are attributable to a permanent establishment in Canada. Amend a tax return This income is treated as business profits, and deductions similar to those allowed under U. Amend a tax return S. Amend a tax return law are allowable. Amend a tax return   If you carry on (or have carried on) business in both Canada and the United States, the business profits are attributable to each country based on the profits that the permanent establishment might be expected to make if it were a distinct and separate person engaged in the same or similar activities. Amend a tax return The business profits attributable to the permanent establishment include only those profits derived from assets used, risks assumed, and activities performed by the permanent establishment. Amend a tax return   You may be considered to have a permanent establishment if you meet certain conditions. Amend a tax return For more information, see Article V (Permanent Establishment) and Article VII (Business Profits). Amend a tax return Public entertainers (Article XVI). Amend a tax return   The provisions under income from employment or income from self-employment do not apply to public entertainers (such as theater, motion picture, radio, or television artistes, musicians, or athletes) from the United States who receive more than $15,000 in gross receipts in Canadian currency, including reimbursed expenses, from their entertainment activities in Canada during the calendar year. Amend a tax return However, this provision for public entertainers does not apply (and the other provisions will apply) to athletes participating in team sports in leagues with regularly scheduled games in both the United States and Canada. Amend a tax return Compensation paid by the U. Amend a tax return S. Amend a tax return Government (Article XIX). Amend a tax return   Wages, salaries, and similar income (other than pensions) paid to a U. Amend a tax return S. Amend a tax return citizen by the United States or any of its agencies, instrumentalities, or political subdivisions for discharging governmental functions are exempt from Canadian income tax. Amend a tax return   The exemption does not apply to pay for services performed in connection with any trade or business carried on for profit by the United States, or any of its agencies, instrumentalities, or political subdivisions. Amend a tax return Students and apprentices (Article XX). Amend a tax return   A full-time student, apprentice, or business trainee who is in Canada to study or acquire business experience is exempt from Canadian income tax on remittances received from any source outside Canada for maintenance, education, or training. Amend a tax return The recipient must be or must have been a U. Amend a tax return S. Amend a tax return resident immediately before visiting Canada. Amend a tax return   An apprentice or business trainee can claim this exemption only for a period of one year from the date the individual first arrived in Canada for the purpose of training. Amend a tax return Pensions, Annuities, Social Security, and Alimony Under Article XVIII, pensions and annuities from Canadian sources paid to U. Amend a tax return S. Amend a tax return residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Amend a tax return Canadian pensions and annuities paid to U. Amend a tax return S. Amend a tax return residents may be taxed by the United States, but the amount of any pension included in income for U. Amend a tax return S. Amend a tax return tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident. Amend a tax return Pensions. Amend a tax return   A pension includes any payment under a pension or other retirement arrangement, Armed Forces retirement pay, war veterans pensions and allowances, and payments under a sickness, accident, or disability plan. Amend a tax return It includes pensions paid by private employers and the government for services rendered. Amend a tax return   Pensions also include payments from individual retirement arrangements (IRAs) in the United States, registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) in Canada. Amend a tax return   Pensions do not include social security benefits. Amend a tax return Roth IRAs. Amend a tax return   A distribution from a Roth IRA is exempt from Canadian tax to the extent it would be exempt from U. Amend a tax return S. Amend a tax return tax if paid to a U. Amend a tax return S. Amend a tax return resident. Amend a tax return In addition, you may elect to defer any tax in Canada on income accrued within the Roth IRA but not distributed by the Roth IRA. Amend a tax return However, you cannot defer tax on any accruals due to contributions made after you become a Canadian resident. Amend a tax return Tax-deferred plans. Amend a tax return   Generally, income that accrues in a Canadian RRSP or RRIF is subject to U. Amend a tax return S. Amend a tax return tax, even if it is not distributed. Amend a tax return However, a U. Amend a tax return S. Amend a tax return citizen or resident can elect to defer U. Amend a tax return S. Amend a tax return tax on income from the plan until the income is distributed. Amend a tax return Form 8891 is used to make the election. Amend a tax return Annuities. Amend a tax return    An annuity is a stated sum payable periodically at stated times, during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered). Amend a tax return Annuities do not include: Non-periodic payments, or An annuity the cost of which was deductible for tax purposes. Amend a tax return Special rules. Amend a tax return    Special rules apply to pensions and annuities with respect to: Short-term assignments, Cross-border commuters, and Individuals who participate in a Canadian qualifying plan. Amend a tax return Generally, distributions in such cases are deemed to be earned in the country in which the plan is established, without regard to where the services were rendered. Amend a tax return Social security benefits. Amend a tax return   U. Amend a tax return S. Amend a tax return social security benefits paid to a resident of Canada are taxed in Canada as if they were benefits under the Canada Pension Plan, except that 15% of the amount of the benefit is exempt from Canadian tax. Amend a tax return Alimony. Amend a tax return   Alimony and similar amounts (including child support payments) from Canadian sources paid to U. Amend a tax return S. Amend a tax return residents are exempt from Canadian tax. Amend a tax return For purposes of U. Amend a tax return S. Amend a tax return tax, these amounts are excluded from income to the same extent they would be excluded from income in Canada if the recipient was a Canadian resident. Amend a tax return Investment Income From Canadian Sources The treaty provides beneficial treatment for certain items of Canadian source income that result from an investment of capital. Amend a tax return Dividends (Article X). Amend a tax return   For Canadian source dividends received by U. Amend a tax return S. Amend a tax return residents, the Canadian income tax generally may not be more than 15%. Amend a tax return   A 5% rate applies to intercorporate dividends paid from a subsidiary to a parent corporation owning at least 10% of the subsidiary's voting stock. Amend a tax return However, a 10% rate applies if the payer of the dividend is a nonresident-owned Canadian investment corporation. Amend a tax return   These rates do not apply if the owner of the dividends carries on, or has carried on, a business in Canada through a permanent establishment and the holding on which the income is paid is effectively connected with that permanent establishment. Amend a tax return Interest (Article XI). Amend a tax return   Generally, Canadian source interest received by U. Amend a tax return S. Amend a tax return residents is exempt from Canadian income tax. Amend a tax return   The exemption does not apply if the owner of the interest carries on, or has carried on, a business in Canada through a permanent establishment and the debt on which the income is paid is effectively connected with that permanent establishment. Amend a tax return Gains from the sale of property (Article XIII). Amend a tax return   Generally, gains from the sale of personal property by a U. Amend a tax return S. Amend a tax return resident having no permanent establishment in Canada are exempt from Canadian income tax. Amend a tax return However, the exemption from Canadian tax does not apply to gains realized by U. Amend a tax return S. Amend a tax return residents on Canadian real property, and on personal property belonging to a permanent establishment in Canada. Amend a tax return   If the property subject to Canadian tax is a capital asset and was owned by the U. Amend a tax return S. Amend a tax return resident on September 26, 1980, not as part of the business property of a permanent establishment in Canada, generally the taxable gain is limited to the appreciation after 1984. Amend a tax return Royalties (Article XII). Amend a tax return   The following are exempt from Canadian tax: Copyright royalties and other like payments for the production or reproduction of any literary, dramatic, musical, or artistic work (other than payments for motion pictures and works on film, videotape, or other means of reproduction for use in connection with television, which may be taxed at 10%), Payments for the use of, or the right to use, computer software, Payments for the use of, or the right to use, any patent or any information concerning industrial, commercial, or scientific experience (but not within a rental or franchise agreement), and Payments for broadcasting as agreed to in an exchange of notes between the countries. Amend a tax return   This rate or exemption does not apply if the owner of the royalties carries on, or has carried on, a business in Canada through a permanent establishment and the right or property on which the income is paid is effectively connected with that permanent establishment. Amend a tax return   This exemption (or lower rate) does not apply to royalties to explore for or to exploit mineral deposits, timber, and other natural resources. Amend a tax return Other Income Generally, Canadian source income that is not specifically mentioned in the treaty, may be taxed by Canada. Amend a tax return Gambling losses. Amend a tax return   Canadian residents may deduct gambling losses in the U. Amend a tax return S. Amend a tax return against gambling winnings in the U. Amend a tax return S. Amend a tax return in the same manner as a U. Amend a tax return S. Amend a tax return resident. Amend a tax return Charitable Contributions United States income tax return. Amend a tax return   Under Article XXI, you may deduct contributions to certain qualified Canadian charitable organizations on your United States income tax return. Amend a tax return Besides being subject to the overall limits applicable to all your charitable contributions under U. Amend a tax return S. Amend a tax return tax law, your charitable contributions to Canadian organizations (other than contributions to a college or university at which you or a member of your family is or was enrolled) are subject to the U. Amend a tax return S. Amend a tax return percentage limits on charitable contributions, applied to your Canadian source income. Amend a tax return If your return does not include gross income from Canadian sources, charitable contributions to Canadian organizations are generally not deductible. Amend a tax return Example. Amend a tax return You are a U. Amend a tax return S. Amend a tax return citizen living in Canada. Amend a tax return You have both U. Amend a tax return S. Amend a tax return and Canadian source income. Amend a tax return During your tax year, you contribute to Canadian organizations that would qualify as charitable organizations under U. Amend a tax return S. Amend a tax return tax law if they were U. Amend a tax return S. Amend a tax return organizations. Amend a tax return To figure the maximum amount of the contribution to Canadian organizations that you can deduct on your U. Amend a tax return S. Amend a tax return income tax return, multiply your adjusted gross income from Canadian sources by the percentage limit that applies to contributions under U. Amend a tax return S. Amend a tax return income tax law. Amend a tax return Then include this amount on your return along with all your domestic charitable contributions, subject to the appropriate percentage limit required for contributions under U. Amend a tax return S. Amend a tax return income tax law. Amend a tax return The appropriate percentage limit for U. Amend a tax return S. Amend a tax return tax purposes is applied to your total adjusted gross income from all sources. Amend a tax return Qualified charities. Amend a tax return   These Canadian organizations must meet the qualifications that a U. Amend a tax return S. Amend a tax return charitable organization must meet under U. Amend a tax return S. Amend a tax return tax law. Amend a tax return Usually an organization will notify you if it qualifies. Amend a tax return For further information on charitable contributions and the U. Amend a tax return S. Amend a tax return percentage limits, see Publication 526, Charitable Contributions. Amend a tax return Canadian income tax return. Amend a tax return   Under certain conditions, contributions to qualified U. Amend a tax return S. Amend a tax return charitable organizations may also be claimed on your Canadian income tax return if you are a Canadian resident. Amend a tax return Income Tax Credits The treaty contains a credit provision (Article XXIV) for the elimination of double taxation. Amend a tax return In general, the United States and Canada both allow a credit against their income tax for the income tax paid to the other country on income from sources in that other country. Amend a tax return For detailed discussions of the U. Amend a tax return S. Amend a tax return income tax treatment of tax paid to foreign countries, see Publication 514, Foreign Tax Credit for Individuals. Amend a tax return See paragraphs (4) and (5) of Article XXIV for certain provisions that affect the computation of the credit allowed by the United States for Canadian income taxes paid by U. Amend a tax return S. Amend a tax return citizens residing in Canada. Amend a tax return Competent Authority Assistance Under Article XXVI, a U. Amend a tax return S. Amend a tax return citizen or resident may request assistance from the U. Amend a tax return S. Amend a tax return competent authority when the actions of Canada, the United States, or both, potentially result in double taxation or taxation contrary to the treaty. Amend a tax return The U. Amend a tax return S. Amend a tax return competent authority may then consult with the Canadian competent authority to determine if the double taxation or denial of treaty benefits in question can be avoided. Amend a tax return If the competent authorities are not able to reach agreement in a case, binding arbitration proceedings may apply. Amend a tax return It is important that your request for competent authority assistance be made as soon as you have been notified by either Canada or the United States of proposed adjustments that would result in denial of treaty benefits or in double taxation. Amend a tax return This is so that implementation of any agreement reached by the competent authorities is not barred by administrative, legal, or procedural barriers. Amend a tax return For information that you should include with your request for competent authority assistance, see Revenue Procedure 2006-54, 2006-49 IRB 1035, available at www. Amend a tax return irs. Amend a tax return gov/irb/2006-49_IRB/ar13. Amend a tax return html. Amend a tax return The request should be addressed to:  Deputy Commissioner (International) Large Business and International Division Attn: Office of Tax Treaty  Internal Revenue Service 1111 Constitution Ave. Amend a tax return , NW Routing: MA3-322A Washington, D. Amend a tax return C. Amend a tax return 20024 In addition to a timely request for assistance, you should take the following measures: File a timely protective claim for credit or refund of U. Amend a tax return S. Amend a tax return taxes on Form 1040X, Form 1120X, or amended Form 1041, whichever is appropriate. Amend a tax return This will, among other things, give you the benefit of a foreign tax credit in case you do not qualify for the treaty benefit in question. Amend a tax return For figuring this credit, attach either Form 1116, Foreign Tax Credit (Individual, Estate, or Trust), or Form 1118, Foreign Tax Credit — Corporations, as appropriate. Amend a tax return Attach your protective claim to your request for competent authority assistance. Amend a tax return Take appropriate action under Canadian procedures to avoid the lapse or termination of your right of appeal under Canadian income tax law. Amend a tax return How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS and the Canada Revenue Agency in several ways. Amend a tax return Text of Treaty You can get the text of the U. Amend a tax return S. Amend a tax return —Canada income tax treaty from: Superintendent of Documents U. Amend a tax return S. Amend a tax return Government Printing Office P. Amend a tax return O. Amend a tax return Box 371954 Pittsburgh, PA 15250-7954 The treaty can also be found on the Internet at IRS. Amend a tax return gov. Amend a tax return U. Amend a tax return S. Amend a tax return Taxation During the filing season, the IRS conducts a taxpayer assistance program in Canada. Amend a tax return To find out if IRS personnel will be in your area, you should contact the consular office at the nearest U. Amend a tax return S. Amend a tax return Embassy or consulate. Amend a tax return Mail. Amend a tax return For answers to technical or account questions, you can write to:   Internal Revenue Service International Section Philadelphia, PA 19255-0525 Phone. Amend a tax return You can call the IRS for help at (267) 941-1000 (not a toll-free call). Amend a tax return Canadian Taxation You can get information on Canadian taxation from the Canada Revenue Agency. Amend a tax return The International Tax Services Office can be contacted on 1-800-267-5177 (from anywhere in Canada and the U. Amend a tax return S. Amend a tax return ) or on the Internet at www. Amend a tax return cra-arc. Amend a tax return gc. Amend a tax return ca. Amend a tax return Prev  Up  Next   Home   More Online Publications