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Has anyone used SimpleTax (now Wealthsimple Tax) for Canadian Non resident taxes? I heard they support non-resident returns but I'm not sure if it's comprehensive enough for my situation with both US and Canadian income.
Don't forget that the deadline for non-resident Canadian returns is still April 30, unlike the US deadline which is in mid-April (or June 15 for US citizens living abroad). I've missed this deadline before and had to pay penalties, so mark your calendar!
Actually, if you have Canadian self-employment income, the deadline is June 15, even for non-residents! But any balance owing is still due by April 30 to avoid interest charges.
Just want to add that I was in this exact situation in 2019. I forgot to include a W-2 from a 2-month contract job, realized it the next year, and decided to just "let it slide" because the difference was only about $300. BIG MISTAKE. The IRS sent me a notice almost exactly 18 months later. By that time, with interest and the late payment penalty, I ended up owing almost $450 instead. Plus it was super stressful getting that IRS letter. If I could go back, I would have just filed the amended return right away.
Thanks for sharing your experience. This is exactly what I was worried about. I think I'm going to go ahead and file the amended return this week. Better to just deal with it now than have it hanging over my head.
Good call! It's definitely the smart move. The peace of mind alone is worth it. And like others have mentioned, the penalties are usually much less severe (or even waived completely) when you correct the issue yourself instead of waiting for them to find it.
Don't freak out but definitely fix it. IRS has a First Time Penalty Abatement program if this is ur first time making a mistake like this. Just file the 1040-X, pay what u owe, and include a letter requesting "first time penalty abatement" explaining it was an honest mistake. Worked for me last yr!
Can confirm this works! First Time Penalty Abatement saved me about $200 in penalties when I messed up some 1099 income reporting two years ago. You just need a clean compliance history for the past 3 years.
One thing nobody's mentioned yet - make sure you're allocating expenses properly if you lived in the condo for part of December before moving to your new primary residence. You can only deduct expenses from the period when the property was held for rental purposes. Also, regarding the new flooring, if it was installed while you were still using it as your primary residence, before you made it available for rent, you might have to treat it differently. The timing matters a lot here.
That's a good point I hadn't considered! I actually moved out completely in late November, and the flooring work was completed in early December before I signed with the property management company on December 15th. Would that affect how the flooring is treated? And would the HOA fees for December be fully deductible then?
Since you moved out in late November and the flooring was installed in early December before signing with the property management company, that timing actually helps your case. The flooring work was done while the property was being prepared for rental use, not while you were using it as a personal residence. The HOA fees for December would likely be fully deductible since the property was no longer your personal residence during that month. Just make sure you have documentation showing you had moved out in November and that the property was being prepared for rental use in December. The property management agreement from December 15th is excellent supporting documentation of your intent to rent the property.
Don't forget about the possible passive activity loss limitations. If your adjusted gross income is under $100k, you can deduct up to $25,000 in passive rental losses against other income. This phases out as your AGI increases from $100k to $150k. If your AGI is over $150k, you generally can't deduct rental losses against other income - they get carried forward to future years.
This is super important! I got hit with this last year when I couldn't deduct my rental losses because my income was too high. The carry-forward helped eventually, but it wasn't what I expected when filing that first year with the rental property. Also, doesn't the fact that OP is actively participating in rental management affect this? Or does using a property management company automatically make it non-active participation?
Another thing to consider is whether you've already claimed the AOTC for 4 tax years. The AOTC can only be claimed for a maximum of 4 tax years per student. If you've been in school for more than 4 years or took some time off, you might have already maxed out your eligibility.
I've only claimed it for 3 previous tax years (2020, 2021, and 2022), so this would be my 4th and final year of eligibility. I did check that part!
Perfect! Then you should be good to go on that front. The 4-year limit trips up a lot of people, especially if they've taken gap years or had a non-traditional education path. Since this is your 4th year claiming it, make sure to keep extra good documentation in case of an audit.
Confused about one thing - if the student is claimed as a dependent, who actually gets to claim the AOTC? The student or the parent? My son is in college and we claim him as dependent.
If you claim your son as a dependent, then YOU (the parent) would claim the AOTC on your tax return, not your son on his return. The person who claims the student as a dependent gets to claim the education credits. The only exception is the refundable portion we're discussing here. If your son meets all AOTC qualifications but doesn't meet the disqualifying factors (like not being a full-time student for 5+ months), then he could potentially receive the refundable portion on his return even if you claim the non-refundable portion.
Kristin Frank
9 One important thing nobody's mentioned - if you're earning self-employment income, even as a dependent, you can start contributing to a Roth IRA! It's a great way to start saving early. Just make sure you don't contribute more than you actually earn. I started doing this when I was 17 with my freelance income going through my mom's accounts and it was one of the best financial decisions I ever made.
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Kristin Frank
β’3 Wait, is that really true even if you're claimed as a dependent? I thought dependents couldn't open retirement accounts.
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Kristin Frank
β’9 Yes, it's absolutely true! Being claimed as a dependent doesn't affect your ability to contribute to a Roth IRA. The only requirements are that you have earned income and don't exceed the contribution limits (either your total earned income or $6,500 for 2023, whichever is lower). Many parents miss this opportunity for their working teens. It's a fantastic way to start building tax-free retirement savings early, and the compound interest over decades is incredible. I opened mine at Vanguard with help from my parents when I was still in high school.
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Kristin Frank
16 Make sure to also consider state taxes in your planning! Depending on where you live, you might need to file a state return as well. I learned this the hard way when I didn't file a state return for my side gig and got a surprise bill with penalties.
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Kristin Frank
β’11 Good point! Does anyone know if you need to file state taxes if you're under 18? I'm in California and making about $8,000 this year through my parent's Venmo.
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