Jack Ciattarelli speaks at a town hall in Pitman on Sept. 16, 2025. (Dana DiFilippo | New Jersey Monitor)
Republican Jack Ciattarelli, who’s running to become New Jersey’s next governor, gave the press a peek at 13 years of his federal tax returns Friday after escalating calls for financial disclosure from his Democratic opponent in the race, Rep. Mikie Sherrill.
The returns show that Ciattarelli, 63, a former state assemblyman who started and sold two medical publishing businesses, has made almost $14.9 million in income and paid almost $4 million in federal, state and local taxes since 2012.
His most profitable year came in 2017, when he retired and sold his second medical publishing business. That year, he reported almost $7.1 million in total income, the returns show. Otherwise, his total reported annual income fluctuated between $600,946 (in 2014) and more than $1.3 million (in 2016) before he retired, and $168,433 (in 2022) and $854,966 (in 2018) after he retired, the returns show.
The returns were joint returns, filed with his ex-wife Melinda. The couple’s divorce was finalized this year. She reported little income most years, with $22,138 of total income reported in 2024, the returns show.
Ciattarelli paid an average effective tax rate of 28% per year when he was working full-time, with a high of 38% in 2016, his campaign spokespeople said.
The campaign gave reporters two hours to view but not copy a towering stack of returns at Ciattarelli’s accountant’s office in Clinton. In an accompanying press release, Ciattarelli called the disclosure “an unprecedented level of transparency for any gubernatorial candidate ever.”
“Now, it’s Mikie Sherrill’s turn,” he said in a statement, urging her to release her returns back to 2018 when she was first elected to Congress.
Micah Rasmussen, director of the Rebovich Institute for New Jersey Politics at Rider University, found the timing of the disclosures noteworthy — two days before the first gubernatorial debate of the general election, with Ciattarelli and Sherrill scheduled to square off at 7 p.m. Sunday at Rider in Lawrenceville.
“It’s definitely something that I would have liked to have seen earlier in the campaign, because we have a limited amount of time to weigh this stuff out, but we got it on the eve of the first debate,” he said. “It’s pretty obvious that the goal here is to not fall under the criticism on Sunday night that he hadn’t disclosed his taxes.”
But he applauded Ciattarelli for disclosing returns back to 2012, his first full year in the New Jersey Legislature. He served in the Assembly from December 2011 until January 2018, making an annual salary in that post of $49,000.
“I think that’s a good standard, is to say: ‘You saw my finances while I was in office,’” Rasmussen said.
Ciattarelli did not release his returns when he ran for governor in 2021. Then, he ran against incumbent Gov. Phil Murphy and came close to unseating him. He also ran for the post in 2017 but lost to then-Lt. Gov. Kim Guadagno in the Republican primary.
Financial disclosures are important so voters can learn the sources of candidates’ income and any conflicts of interest and go to the ballot box armed with more information about the candidates, Rasmussen said.
The details of Ciattarelli’s finances could deflate his criticism of Sherrill as a wealthy politician who cashed in on her time in Congress, Rasmussen said.
“I think it sort of levels the playing field from the public perception,” Rasmussen said. “You can’t really say that Mikie’s the millionaire here, because they both are candidates who have significant assets and significant income and significant means. I’m not going to compare income brackets, but it puts them more or less at parity. They both are candidates with significant incomes.”
Sherrill and her husband, a broker at UBS Securities, reported roughly $3.2 million in income for 2024, their tax returns say. They were billed $1.08 million in federal income tax; $279,010 in New York state income tax (UBS Securities is based in New York City); and $29,002 in New Jersey state income tax in 2024.
SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX
Connecticut residents know that their state is becoming more expensive, but some new studies provide documentation of the ongoing problem.
New data shows that Connecticut ranks ninth nationwide for the highest rental rates. The average two-bedroom apartment costs more than $2,100 per month, which requires a salary of nearly $41 per hour to afford, one study said. Luxury apartments in places like Fairfield County and West Hartford can cost even more, while rents are lower in Norwich and communities across rural eastern Connecticut.
According to ZipRecruiter, the average hourly wage in Connecticut this month is $25.51 an hour. Further, according to the Massachusetts Institute of Technology Living Wage Calculator, a single person with no children needs $52,581 a year before taxes in Connecticut, which would be about $25 per hour. In that calculation, the housing cost is estimated at $15,496 per year, or about $1,291 a month.
The Out of Reach report, by the National Low Income Housing Coalition found that in Connecticut, the Fair Market Rent for a two-bedroom apartment is $1,842 and to afford that rent (and utilities) keeping to no more than spending 30% of income on housing a person would have to earn $6,139 a month or $73,664 a year.
According to Smart Asset you need $48.26 and hour, or $100,381 a year to live comfortably as a single in Connecticut.
Here’s what you have to earn to reach ‘comfort threshold’ in CT. Many of us don’t make it.
The most expensive rent in the nation is in Massachusetts, where a two-bedroom apartment costs an average of $2,920 per month. The rents vary widely as Boston and Cambridge are far higher than western towns at the other end of the commonwealth. Officials estimate that renters need to earn $56 per hour to afford the rent in Massachusetts if they are spending the traditional standard of 30% of their gross monthly income.
Across the country, the rent for two bedrooms averages more than $2,500 per month in California and Washington, D.C., while it is more than $2,300 per month in New Jersey, New York, and Hawaii. Prices in places like Manhattan and Honolulu can be far higher.
The lowest rents were in South Dakota, North Dakota, West Virginia, Arkansas, and Oklahoma, which were all below $1,200 per month for two bedrooms.
The survey of all 50 states was conducted by South Carolina-based Bluefield Realty Group with information from the Rent Cafe property listing service. The wages needed to afford the average rents are based on a 40-hour work week.
Connecticut has had high housing prices for decades, but officials said the problem has become particularly acute for young homebuyers as prices have skyrocketed since the coronavirus pandemic.
With inventories low, prices have jumped exponentially as buyers have scrambled for condominiums and homes after they have been out-bid by more well-heeled buyers. The bidding has prompted buyers to pay above the asking price for Greenwich mansions to New Haven condominiums to Greater Hartford homes.
In another report, National Business Capital said that Connecticut ranks second as the “most at-risk state” this year for entering stagflation, which is a combination of inflation and stagnant growth.
“This report is yet another blaring neon warning sign: Connecticut is unaffordable for working class families,” said Senate Republican leader Stephen Harding of Brookfield. “It follows a survey from last week which revealed that more than half of Connecticut parents struggle to afford basic needs. And it comes on the heels of United Way of Connecticut’s annual report which revealed that the percentage of Connecticut households facing financial instability has risen 17% since 2019.”
Harding blamed the Democrats who control the state House of Representatives, Senate, and the governor’s office for the problems.
“Under one-party Democrat rule, Connecticut continues to get more and more unaffordable for hard working families, and our economy is stagnant,” he said. “Senate Republicans will continue proposing common sense solutions to cut taxes, reduce electricity bills, and help struggling working families.”
But the two top Democrats in the Senate, President Pro Tempore Martin Looney of New Haven and majority leader Bob Duff of Norwalk, said the problems have been generated by the Republican president.
“Stagflation is a term most Connecticut families never even heard of until Donald Trump’s reckless tariffs and disastrous economic policies helped bring it back,” the senators said. “Yet instead of standing up to the Washington Republicans who spiked inflation, electric rates, and grocery costs, Connecticut Republicans root for failure here at home.”
They added, “The facts tell a different story: Connecticut has a record Rainy Day Fund, balanced budgets, historic income tax cuts for the middle class, strong job growth, and rising incomes. While we’re working to make our state even more affordable, Senator Harding and his colleagues continue to pay fealty to Donald Trump because they would rather curry favor with their corrupt leader than better our state. Connecticut families deserve better than that kind of cynicism.”
CT economic outlook for year ahead on tariffs, taxes, Wall Street, prices
The senators were referring to the passage in June 2023 of a bipartisan, two-year, $51.1 billion budget that included the largest cut in the state income tax in Connecticut history. The Senate voted 35-1 with one Republican against, while the House had approved the measure after 1:30 a.m. on the same day by 139-12.
The bill called for a family earning $100,000 per year to see their state income tax cut in 2024 by nearly $600 — the largest dollar amount in a sliding scale. With the relief targeted toward the middle class, the tax cuts are not available for individuals earning more than $150,000 per year and couples earning more than $300,000 per year. Overall, 1 million tax filers — or 60% of the total — have been targeted for relief.
The fiscal plan has also helped senior citizens by smoothing out the sharp “cliff” in the state income tax for those with income from pensions, IRAs, and annuities, starting in 2024. This is designed to largely help individuals with federal adjusted gross incomes of $75,000 to $100,000, as well as couples earning between $100,000 and $150,000. Seniors at higher income levels do not benefit.
Christopher Keating can be reached at ckeating@courant.com
President Donald Trump’s tariffs are bad. But even if one were opposed to the tariffs on principle, they might be seduced by the revenue they generate and the potential of that revenue to make some progress toward reducing the deficit. The tariffs are expected to collect $300 billion annually—nearly matching the amount collected by the corporate income tax ($350 billion). It’s not a small amount of money. Trump has stated that his goal is to eliminate income taxes and replace them with tariff revenue.
Last month, Trump and Sen. Josh Hawley (R–Mo.) proposed tariff rebate checks, similar to the stimulus checks that were handed out during the COVID-19 pandemic, in an amount equal to the revenue that is to be collected—or possibly more. Hawley’s legislation proposes sending at least $600 to eligible adults and dependent children, and Trump has voiced support for sending money to “people of a certain income level,” who are most likely to spend that money quickly rather than save or invest it. This is a massively inflationary impulse, much like what we saw during the pandemic, and it will expand the deficit even more. This is a bad idea layered on top of bad ideas, and it will make the tax code even more progressive by effectively creating a negative income tax for those in the bottom tax brackets while fueling inflation.
We are currently running a budget deficit of close to $2 trillion, which Trump has made practically no effort to reduce by cutting expenses. He pledges instead to cut the deficit by increasing revenue from tariffs but plans to hand out the windfall in the form of rebate checks. Our last experience with a give-back program like this was a quarter-century ago.
The government was running a fairly large budget surplus in FY 2000—totaling over $236 billion—and lawmakers made impassioned arguments about how to spend it: Some wanted new domestic programs, others pressed for tax cuts, while then–Federal Reserve Chairman Alan Greenspan urged paying down the debt and retiring Treasury bonds. When George W. Bush became president shortly thereafter, he proposed immediate tax relief in the form of $300 and $600 rebate checks to singles and married couples, respectively, a key piece of the Economic Growth and Tax Relief Reconciliation Act of 2001.
Bush prevailed, and roughly 95 million households received checks. The surplus evaporated, federal spending surged on defense and homeland security following 9/11 later that year, and that was the end of the surplus—forever.
It is possible that the tariff rebate checks will not be inflationary. No one knows all the variables that cause inflation. Milton Friedman famously argued that it was “always and everywhere a monetary phenomenon,” but inflation is also a psychological phenomenon—when people believe prices will rise, they often act in ways that make it happen. Trump is playing with fire, especially as he is in search of a Fed chairman who will be amenable to large interest rate cuts. The 2021–22 experience is instructive: a combination of pandemic-era stimulus checks, ultralow interest rates, and supply-chain bottlenecks helped fuel the fastest inflation in four decades, peaking at over 9 percent in mid-2022. We could find ourselves in an environment where Trump successfully creates inflation with the rebate checks and then has a captive Federal Reserve that is powerless to do anything about it.
The Bush rebate checks totaled about $38 billion. Trump’s proposal could amount to hundreds of billions. Still, the inflationary effect would depend partly on whether households spend the checks quickly or save them.
One of the criticisms of Bush’s rebate checks was that they were unevenly applied and did not go to the people who mainly paid the taxes—they went to everyone, which is a very populist approach. The argument could be made that, by aiming these proposed rebate checks specifically at lower-income households, they will benefit those who shoulder the hidden cost of tariffs, since tariffs disproportionately raise the price of basic consumer goods such as clothing, food, and household items, which make up a larger share of lower-income budgets.
It’s possible that one of the ulterior motives of the tariffs is flattening the tax code. This would shift the tax burden to people of all income levels, rather than the current income tax, which burdens half of the population while the other half pays very little or nothing. That is not something that has been articulated by the administration, however, and returning all the collected revenue seems counterproductive.
Trump has also proposed eliminating income taxes entirely for people making less than $200,000 a year, which would result in only the top 5 percent of taxpayers paying any income taxes at all. Trump is trending toward policies that would have only the wealthy pay taxes—an idea shared by the likes of Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.). Fiscal conservatives, however, voted for Trump in droves on his promises to reduce the deficit and lower taxes, and they are having buyer’s remorse. We shouldn’t have tariffs, and to the extent that we have income taxes at all, they should be flat and fair. Instead, we are headed toward a hyperprogressive tax code, accompanied by growth-killing tariffs.
Jared Dillian
Source link
This form is typically used for foreign bank accounts, foreign investment accounts or foreign rental properties, but it can include other foreign assets. Foreign investments, including U.S. stocks, must be reported even if they are held in Canadian investment accounts. Foreign personal-use properties, like a snowbird’s condo that is not earning rental income, may be exempt.
Foreign asset disclosure applies to taxable investments, so assets held in tax-sheltered accounts like registered retirement savings plans (RRSPs), tax-free savings accounts (TFSAs), pensions and other non-taxable accounts are generally exempt.
U.S. citizens or green card holders must generally file U.S. tax returns despite living in Canada. The United States is one of the few countries in the world that has this requirement for non-residents. As a result, you may have to report both Canadian and U.S. income, deductions, credits and foreign tax payable.
Adding to the complexity is that certain types of income are taxable in one country but not the other, and some deductions or credits may only apply on one tax return.
If you have not reported foreign income or declared foreign assets in the past and you should have done so, you may be able to file a voluntary disclosure with the CRA. This program may allow relief on a case-by-case basis for taxpayers who contact the CRA to fix errors or omissions for past tax returns.
There are five conditions to apply:
Before pursuing a voluntary disclosure, you should seek professional advice. The CRA also offers a pre-disclosure discussion service that is informal and non-binding, and it does not require the disclosure of your identity.
When you are a Canadian tax resident, whether you are a citizen or not, you have worldwide income and asset disclosure requirements on your tax return. Some Canadian residents, despite living abroad, may still be considered factual residents or deemed residents of Canada with ongoing tax-filing requirements.
Jason Heath, CFP
Source link
It’s important to clarify, Ken, that if you have a minimum RRIF withdrawal with no tax withheld, that does not mean that income is tax-free. When you report your RRIF and other income sources on your tax return for the year, you may still owe tax.
Canada has progressive tax rates so that higher levels of income are taxed at higher rates. For example, in Ontario, the first $12,000 or so you earn has no tax. The next roughly $3,000 has 15% tax. And the next $36,000 of income after that has about 20% tax. The type of income you earn may change these rates, as will tax deductions and credits. But if we kept going to higher incomes, there would be incremental increases in tax rates.
If you have a higher income, your entire income is not taxed at the higher tax rate. Incremental tax rates lead to income being taxed at different rates as you move up through the tax brackets.
This is why retirees tend to have tax owing. If you have a $10,000 pension, you may have no tax withheld at source. But if you have $60,000 of other income, you might owe 30% tax on that pension income.
If you owe more than $3,000 of tax in two consecutive years (or $1,800 in tax for two years in Quebec), the Canada Revenue Agency (CRA) (or Revenu Quebec) will start asking you to prepay your tax for the following year. This is called a quarterly income tax installment request.
Installments—along with OAS clawbacks—tend to be the two cursed tax issues for retirees.
You can reduce your installments by requesting higher withholding tax on your CPP, OAS, pension or RRSP/RRIF withdrawals, Ken. This optional tax withholding might be preferable if you would rather not owe tax or prefer to limit your installment requirements. If you can get your withholding tax rate estimated accurately, you may be able to better spend money coming into your bank account because it is all yours, and not accruing a tax liability.
Many retirees do not have sufficient tax withheld by default. So, quarterly tax installments are common at that stage of life. But owing tax does not have to be a given if you prefer to increase your optional withholding tax.
Jason Heath, CFP
Source link
Registered education savings plans (RESPs) are used to save for a child’s post-secondary education. Contributing to an RESP can give you access to government grants, including up to $7,200 in Canada Education Savings Grants (CESGs), typically requiring $36,000 of eligible contributions. The federal government provides matching grants of 20% on the first $2,500 in annual contributions. You can catch up on shortfalls from previous years, to a maximum of $2,500 of annual catch-up contributions. But there is a lifetime limit of $50,000 for contributions for a beneficiary.
If a child is a teenager and there are a lot of missed contributions, the year-end could be a prompt to catch up before it’s too late. The deadline to contribute and be eligible for government grants is December 31 of the year that a child turns 17. And you need at least $2,000 of lifetime contributions, or at least four years with contributions of at least $100 by the end of the year a beneficiary turns 15, to receive CESGs in years that the beneficiary is 16 or 17.
Year-end may also be a prompt for withdrawals. The original contributions to an RESP can be withdrawn tax-free by taking post-secondary education (PSE) withdrawals. When investment growth and government grants are withdrawn for a child enrolled in eligible post-secondary schooling, they are called educational assistance payments (EAPs) and are taxable. If a child has a low income this year, taking additional EAP withdrawals from a large RESP may be a good way to use up their tax-free basic personal amount.
If you’re considering registered retirement savings plan (RRSP) contributions to bring down your taxable income, year-end does not bring any urgency. You have 60 days after the end of the year to make contributions that can be deducted on your tax return for the previous year.
If you are retired or semi-retired, year-end is a time to consider additional RRSP or registered retirement income fund (RRIF) withdrawals. If you are in a low tax bracket, and you expect to be in a higher tax bracket in the future, you could consider taking more RRSP or RRIF withdrawals before year-end.
If you are 64, you may want to consider converting your RRSP to a RRIF so that withdrawals in the year you turn 65 can be eligible for pension income splitting. This allows you to move up to 50% of your withdrawals onto your spouse’s or common-law partner’s tax return. If you are still working or you have variable income, this approach may not be best, since RRIF withdrawals are required every year thereafter.
If you are 71, the end of the year does bring some urgency, because your RRSP needs to be converted to a RRIF by the end of the year you turn 71. You can also buy an annuity from an insurance company. You will typically be contacted before year-end by the financial institution where your RRSP is held to open a RRIF.
For those investing or saving in a tax-free savings account (TFSA), year-end is not a significant event. TFSA room carries forward to the following year, so if you do not contribute by year-end, you can contribute the unused amount next year.
Jason Heath, CFP
Source link
Yes, there is a chart that can help; check it out here. However, you’ll still need to calculate any taxes, preferably using tax software to make the math automatic, to get to net federal taxes payable on line 42000 first.
The answer is both yes and no. The self-employed, who are unincorporated and have net business income to report, may be required to make a payment of CPP (Canada Pension Plan) contributions. It may also include EI (Employment Insurance) premiums, if the taxpayer has opted to participate in EI.
CPP and EI are in addition to taxes otherwise payable. If you are required to make quarterly tax installments, these payments are included in the required remittances. But if the balance of income taxes payable, without the CPP/EI premiums, is less than $3,000, those premiums will not be added to the installment remittance threshold.
Here are some common questions Canadians have around tax installments.
As mentioned, if you are not using the CRA’s billing method, you’ll be charged interest on late or insufficient installment payments when the T1 return is filed and that can sting. At the current quarterly prescribed rate (9% at the time of writing) that can add up quickly, as that interest is compounded daily.
It is possible to offset the compounding interest accruing when your installments are late or insufficient? Simply make the next payment early or pay more than you calculated the next payment to be.
In some cases, late or deficient installments will attract penalties if you will owe a lot of money at tax filing time. What’s a lot? CRA’s interest charge has to exceed $1,000. The penalties are 50% of the interest payable, less the greater of $1,000 and 25% of the installment interest. The penalty is calculated as if no installments had been made for the year.
If you qualify for quarterly tax remittances, you can reduce your income that is subject to tax with an RRSP or first home savings account (FHSA) contribution or by making sure that other larger deductions like child care, moving, or non-refundable tax credits like tuition, medical expenses or donations are all claimed in full.
Evelyn Jacks, RWM, MFA, MFA-P, FDFS
Source link
At a time when Canada, just like every other country, is looking for highly skilled workers, our tax rates make it more difficult for them to choose to work here. This is equally true for Canadian citizens and potential new immigrants. Anecdotally, I’m hearing more and more from clients and people in my network that their children who have chosen to study abroad aren’t coming back home because they can earn and keep more of their income elsewhere. I’m not surprised.
Our high tax rates also make it hard to attract investment into our country and for existing businesses to expand. That is essential to improve productivity, innovate, create jobs and compete against peers in lower-tax jurisdictions.
The Allan Small Financial Show, featuring three tax experts—Fred O’Riordan of Ernst & Young, Jake Fuss of The Fraser Institute and Tim Cestnick, a Globe and Mail tax columnist and CEO of Our Family Office—originally aired on September 18, 2024.
We need a better, more thoughtful tax strategy as a country—one that is fair for everyone. Canada has not taken a hard, comprehensive look at our tax system since 1962, when Prime Minister John Diefenbaker appointed the Royal Commission on Taxation.
At the very least, it would be an opportunity to streamline what is a very complicated system, as I see it. At best, it may point to a better way forward. One potential way to streamline our tax system, and make it more efficient and fair, is to implement a flat tax rate across the board. This is not a new concept for taxation.
For the past decade, Estonia has reaped the rewards of having the most competitive, simple and transparent tax system in the OECD. Its personal and corporate tax rates are 20%. It’s set to increase to 22% in 2025 to match its consumption tax, which increased from 20% to 22% in 2024. In the case of individuals, the tax rate does not apply to dividend income; and businesses only pay tax on distributed profits.
The result: the country has been very successful attracting startups and investment.
And we don’t have to leave Canada for an example of a flat tax. From 2001 to 2014, Alberta had a single 10% personal and business income tax rate, dubbed the Alberta Tax Advantage. The Fraser Institute is now calling for Alberta to implement an even lower flat tax of 8% on personal and business income to attract people, businesses and investment in the province and to encourage spending. When Canadians pay less tax, they have more to spend and put back into the Canadian economy.
Another potential way to ensure tax fairness and generate revenue to meet government responsibilities is to foster more opportunities for the public, business and government to collaborate. For example, why not give individuals and businesses the ability to invest in infrastructure projects, such as new roads and highways, and get a rate of return over time.
Allan Small, FMA, FCSI
Source link
The Canada Revenue Agency (CRA) uses an important distinction when evaluating a relationship between a worker and a business: the difference is between a contract for “services” and a “contract of service.”
A contract for services is a business relationship, like when you hire a contractor to renovate your bathroom or a snow removal company to clear your driveway. Neither the general contractor nor the snowplow driver is your employee. They do not work for you. They provide work for you.
If you own a restaurant and hire a cook, or you own a store and hire a cashier, this is a contract of service. You set the shifts and the terms of employment, so it’s a different type of relationship.
When in doubt about your employment status, the CRA considers six primary factors, Elza.
It’s also more likely that you’re an employee if you’re only providing services to a single payer. Someone who is self-employed tends to have multiple clients or customers.
If you’re self-employed and run a business that has a significant amount of risk, Elza, you may want to consider incorporating. This can limit your liability.
If you have business partners, incorporation can also be a more efficient way to involve shareholders or raise capital.
One of the main tax advantages of incorporating is the ability to retain savings within the corporation. You may benefit from a corporate small business tax rate that’s around 40% lower than the top personal tax rate.
Jason Heath, CFP
Source link
Even if you’re simply buying, trading and selling crypto as an investment, the CRA might still view your earnings as business income—especially if this is something you do frequently with the intention of turning a profit.
Some of the factors the CRA considers in determining whether investment gains count as business income include:
“Identifying your earnings as business income or capital gains is probably the most important reporting decision when it comes to cryptocurrency,” says Riley Storozuk, advanced financial planning manager at IG Wealth Management in Winnipeg. If you’re not sure whether your crypto earnings are business income or capital gains—or how to figure out crypto taxes—consult a tax professional.
As is the case with other types of capital investments, you only report gains or losses in the tax year that you dispose of them—in other words, when you cash out or trade your holdings. So, if you buy and hold cryptocurrency, it’s not a taxable event. Same goes if you send crypto from one exchange to another, assuming both wallets are yours. “That’s the only major crypto transaction that’s not taxed,” says Storozuk.
All other crypto transactions, including trading one cryptocurrency for another, cashing out your coins, buying goods or services, or gifting crypto to charity, friends or family, are taxable events. Any increase in the value of your crypto between the time you got it and when you disposed of it is a capital gain (or business income, as explained above); any decrease in value is a capital loss (or business income loss).
As for crypto ETFs, which hold either crypto coins or shares of cryptocurrency-related companies, they follow the taxation rules for securities. If you hold crypto ETFs in a registered account, such as a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA), however, their growth is tax-sheltered.
You must keep detailed records of all your crypto activity for six years, as the CRA can request to see them at any time. For each transaction, include a date and description (e.g., purchase, transfer or trade), the type of cryptocurrency and its value at the time. (View the CRA’s list of crypto records to keep, including expenses related to crypto mining.)
“If you’re using a coin-based exchange, you should be able to pull all that information by looking at your blockchain ledger,” says Maneisha. If you’re using multiple exchanges—making it difficult to track all of your activity—you could use an app such as Crypto Tax Calculator to aggregate the data, she says.
Working with a tax professional can help ensure the tax treatment of your transactions is being accounted for correctly and the positions you’re taking are reasonable, says Maneisha. “This is especially helpful in the event of an assessment or audit by the CRA.”
If you’ve determined that your crypto earnings are considered business income, you’ll need to complete form T-2125, Statement of Business or Professional Activities. You may want to consult with a tax pro, as well—if you’re running a crypto business, you should be able to deduct a variety of business expenses, such as subscriptions, memberships, your internet connection and expenses related to your home office. “Only the business portion can be deducted,” says Maneisha, “not the personal-use portions.”
If your business income from crypto (after expenses) is in the negative, it’s considered a non-capital loss, which can be deducted from any other sources of income you had that year (including employment or investment earnings) to lower your taxes. If you don’t have enough income in total to make use of the loss deduction, you can carry back non-capital losses up to three years and apply them to previous years’ tax returns, or carry them forward up to 20 years to reduce your taxable income in the future.
Capital gains or losses are reported on Schedule 3 of your personal income tax return. Keep in mind that, as with other investments, capital losses can only be used to offset capital gains. Those gains need not be from other crypto investments. “You can harvest losses from one sector to offset gains in another,” says Storozuk.
Finally, be aware of the superficial loss rule, also known as the 30-day rule. “If you buy crypto—or stock—and sell it at a loss, and you, or an affiliated person, such as your spouse, buy it back within 30 days, then it’s not considered a loss for tax purposes,” says Maneisha.
In a word, no. “You can’t hold cryptocurrencies in registered tax-sheltered accounts, such as RRSPs and TFSAs,” Maneisha says. If you want to speculate in crypto markets within such accounts, you could opt for crypto ETFs and other related investments instead.
Yes, non-fungible tokens (NFTs) are taxable, and the CRA will consider the same factors that it does when assessing crypto activity. Again, keep detailed records of your transactions and consult a tax pro if you need guidance.
If you’ve never reported your crypto earnings to the CRA, you may be on the hook for unpaid taxes, penalties and/or interest on your capital gains or business income. Voluntarily correcting your tax affairs may help you avoid or reduce these charges.
One last thing to note as you’re prepping your tax return: The CRA won’t accept payment in cryptocurrency. So, if you do owe taxes this year, make sure to have enough cash on hand to remit your payment. “That has been shocking to a lot of people I talk to who have all of their wealth/liquidity tied up in crypto,” says Maneisha. “They didn’t realize they’d have to cash out to pay their taxes.”
This is an editorially driven article or content package, presented with financial support from an advertiser. The advertiser has no influence on the creation of the content.
Presidential candidates commonly trot out new tax proposals as part of their campaign platforms, often pledging to help ease the financial burden on taxpayers. This year, the plans emerging from rivals Kamala Harris and Donald Trump could affect voters’ paychecks in very different ways.
Former President Donald Trump would seek to extend the tax cuts enacted through the Tax Cuts and Jobs Act, his signature 2017 legislation that reduced taxes for most Americans, although research has shown the top earners received the biggest benefits. He’s also proposing to eliminate taxes on tips and on Social Security income, while also lowering the corporate tax rate.
Vice President Harris has proposed introducing more generous tax benefits for families, as well as hiking the corporate tax rate to help offset spending from bigger tax credits.
The two proposals reflect different views of how best to support U.S. families and fuel economic growth. On the one hand, Trump’s plan would provide tax cuts for all income groups, but the biggest winners would be higher-income Americans. The greatest benefits under Harris’ plan would go to the lowest-income Americans, while she would up the taxes of the top-earning households.
“It’s true that Trump looks like he’s winner for everybody, but he’ll provide much bigger giveaways to the top 1% and top 0.1%, whereas Harris will be negative for these people,” said Kent Smetters, faculty director of the Penn Wharton Budget Model, a group within the University of Pennsylvania’s Wharton School that analyzes the budgetary impact of government policies.
Ultimately, both plans would come with significant price tags, although the combination of Trump’s tax cuts for corporations and individuals would prove more expensive, Penn Wharton forecast. It estimates that his proposal would add $5.8 trillion to the federal deficit over the next decade, compared with $2 trillion for Harris’ plan.
In an email, Republican National Committee spokesperson Anna Kelly said that Trump’s tax policies will “shrink deficits” as well as “lower long-term debt levels” through cuts in federal spending, increasing energy production and deregulation.
The Harris-Walz campaign, meanwhile, is pointing to the Penn Wharton Budget Model’s analysis as evidence that Trump would create a “deficit bomb agenda.”
“Donald Trump’s campaign may want to mute Donald Trump on the debate stage, but they can’t mute our strong economy and Trump’s disastrous agenda that will explode the deficit, increase costs on the middle class by nearly $4,000 a year, and send our economy hurtling into a recession by mid-next year,” Harris-Walz spokesman James Singer said in an email.
Although Harris’ tax proposal would potentially have a smaller impact on the nation’s deficit than Trump, Smetters noted that both parties would ultimately add to the nation’s growing fiscal burden.
The federal budget deficit in fiscal year 2024 is projected to hit $1.9 trillion, the Congressional Budget Office forecast in June. That represents a 27% increase from its prior February forecast, due partly to new funding provided to Ukraine, Israel and other countries.
Deficits may seem abstract to many taxpayers, but at the simplest level they show the country is spending more than it’s taking in through tax revenue. That, in turn, increases the national debt to finance the deficit. Many economists warn that comes with a cost, such as higher interest payments to service that growing debt.
“Essentially we’re on this explosive path right now,” Smetters said.
At some point, soaring U.S. debt could sow doubt in capital markets about the federal government’s ability to either raise taxes or cut spending enough to avoid defaulting on that debt, he added.
“Neither candidate is being serious about addressing the big issue —the house is burning down and the candidates are arguing over the furniture,” Smetters said. “They are just making things worse and harming the economy.”
Here’s the problem: your child-care expense deduction will decrease if you pay less to your child-care provider. As a result, your taxes payable will likely increase, depending on your income level. A reduced child-care expense deduction will also increase the net income on your tax return. This is the figure your refundable tax credits, like the Canada Child Benefit (CCB) are based on. These important monthly benefits, therefore, could shrink.
To understand this fully, take a look your tax return from last year. The child-care expense used as a deduction is found on line 21400 after being calculated on form T778. Net income is at line 23600. That important line is used for government “income testing” for a number of provisions on the return, including refundable tax credits like the Canada Child Benefit, the Canada Worker’s Benefit and the GST/HST Credit. It will also determine how much OAS (Old Age Security) seniors will get, or whether employment insurance (EI) benefits will be clawed back. Just as important, non-refundable tax credits, like the spousal amount, may be affected.
When your net income goes up because of your lower child-care expenses, these benefits are reduced, unfortunately.
There is some good news for astute investors, howeve,. To keep your family’s net income low despite the reduction in your child-care expense deduction, make an RRSP (registered retirement savings plan) contribution. The resulting RRSP tax deduction reduces your net income and your taxable income and, in the process, works to increase income-tested refundable and non-refundable tax credits too! Check out how much RRSP room you have on your notice of assessment from the Canada Revenue Agency (CRA) to make the contribution.
The same effect occurs if you can claim a deduction for contributions made to the first home savings account (FHSA). An annual deduction of up to $8,000 may be claimable.
The final way to shore up the tax benefits from your child-care expenses is to make sure you claim all of them and to your best tax advantage.
Child-care expenses are often missed entirely by parents. If this has happened to you, did you know you can go back and adjust prior filed returns to make that claim and receive the tax-credit benefits and tax refunds you missed? Especially if you are a first-time filer, be warned, however, that the claim for child care is complex and often audited. Be prepared to provide receipts to justify your claim.
It’s also important to know that the spouse with the lower income is the one that must claim child-care expenses, except in certain defined circumstances: when the lower earner is unable to care for the children due to a mental or physical infirmity, is in full time attendance at a qualifying school, or in hospital or incarcerated for at least two weeks, for example. Another exception is when there is a breakdown in the conjugal relationship for at least 90 days, but a reconciliation takes place within the first 60 days of the year. The usual $5,000, $8,000 or $11,000 maximum amounts claimable by the higher earner may be reduced, however, with a maximum weekly calculation.
Evelyn Jacks, RWM, MFA, MFA-P, FDFS
Source link
The other excellent reason to charge GST and HST is that it pays off in dollars and cents.
One of the great advantages of being self-employed is that when you charge these taxes, you only give the government what you charged minus the GST or HST you pay on your deductible business expenses.
For freelance writers like us, this is the sales tax we pay on printer paper, internet service, professional development workshops and more. The government lets us in essence deduct the sales taxes we pay on deductible expenses from the sales taxes we charge our clients. We then pocket the difference. The amount we save each year is roughly enough to pay for a trip to Europe.
The good news is that we don’t have to add up every bit of GST and sales tax we pay on our expenses to take advantage of this. That’s because we use the “quick method” for our calculations.
The government gives you two choices for paying GST and PST/HST instalments: the “detailed method” and the “quick method.” With the quick method, you simply pay 3.6% of the 5% GST you collect. In the case of provinces with HST, it’s a percentage of the HST: so, in Ontario, you only pay 8.8% to the government from the 13% you collect.
The advantage of the quick method is that it’s much less work. You must only add up how much sales tax you charge your clients or customers. My spouse and I use the quick method and find it easy to do our calculations with an Excel spreadsheet. There is no need to keep a detailed account of the sales tax you pay on all the pens, paper, printer cartridges and more you claim as deductible expenses.
There’s another bonus to using the quick method. Governments offer a credit of an additional 1% on the first $30,000 of gross revenue. So, for example, in Ontario you pay 7.8% (instead of 8.8%) of the 13% HST you collect for that amount and pocket the other 5.2%. However, if you use the quick method, you must add the credit to your total revenue when you file your income tax return.
The detailed method involves more work, since you must add up the GST and PST/HST you paid on each of your expenses and subtract it from the taxes you collect to determine the amount you have to pay. But this calculation method is useful if your taxable expenses are proportionately high, amounting to roughly more than 50% of your income. The advantage of the detailed method is that you don’t have to add the amount you retain to your revenue when you file your income tax return.
Julie Barlow
Source link
An executor is a person named in your will who will be responsible, after you die, for making sure that your assets are distributed according to your wishes and that your estate is settled properly. This includes a wide range of activities, from filing a final tax return and cancelling your credit cards to giving away your jewellery or collectibles, and selling your home and investments.
Read the full definition of executor in the MoneySense Glossary.
Executor compensation in Canada is not standardized, and the regulations governing it are determined by each province. As a result, there can be considerable differences in the amount and rules for compensation from one province to another. Here is an overview of some key variations:
As with everything in life, there are good and bad to certain decisions. When contemplating whether or not to take executor compensation, consider the following benefits and pitfalls:
In Canada, executor’s compensation is generally considered taxable income. This means that the amount received as compensation is subject to income tax. Executors are required to report this income on their personal tax return for the year in which they receive the compensation.
The income tax rate applied to executor compensation depends on the province or territory in which the executor resides. Different provinces have different tax rates, which can significantly impact the final amount an executor retains after taxes. Additionally, executors who receive compensation must ensure they receive a T4A slip from the estate, indicating the total compensation they’ve received. Think of the estate becoming the employer of the executor, and the payment made to the executor is like a salary for the work they have done.
Executors must maintain accurate records of all financial transactions related to the estate, including the compensation they receive. These records should be kept for a specific period, as beneficiaries and even tax authorities may request them for verification. Estate accounting statements are the financial story of the estate’s administration and the most powerful tool in the executor’s arsenal when making a claim for compensation. While there’s not a mandatory requirement to formally pass accounts through the court, it is still a legal duty of the executor to maintain and record the financial transactions of the estate and provide them to the beneficiaries of the estate.
When we consider that most executors do not have previous experience in administering an estate, the pains and troubles could be quite severe for someone in the role for the first time. In a poll conducted by Bank of Montreal in 2011, executors reported difficulties with the following categories:
It’s reasonable to think that these categories and issues have not changed much over the course of the last 13 years, bringing the importance of working with professionals even more to the forefront. Whether it’s deciphering the varying provincial rules, navigating the complexities of taxation or ensuring compliance with legal requirements, professional guidance can provide clarity and peace of mind.
Executors who seek the assistance of legal, financial or tax professionals can make informed decisions, reduce the risk of errors and ensure that they fulfill their duties with precision and integrity. By doing so, they not only protect their interests but also safeguard the interests of the estate beneficiaries, ultimately upholding the deceased’s wishes with diligence and transparency.
Debbie Stanley, TEP, MTI
Source link
How you choose to spend your tax refund will often boil down to your tax bracket and debt profile, Forward explains, and working with a certified financial planner (CFP) can help you cut through the noise and allocate it wisely. Here are 10 savvy ways to spend your tax refund.
“If you’re carrying credit card balances, you might want to go in that direction to get rid of any of those balances so that you’re not paying interest that you don’t need to pay,” says Forward. Eliminating or significantly reducing credit card debt with your tax refund can save you money in the long run and improve your overall financial health and creditworthiness.
Building an emergency fund with your tax refund can provide a financial safety net for unexpected expenses and prevent you from going into debt during emergencies. Consider a high-interest savings account (HISA) for your emergency fund to earn interest on your savings and interest on the interest, which is called compound interest. (Check out MoneySense’s compound interest calculator).
If home ownership is a future goal for you, setting up a first home savings account (FHSA) with your tax refund can kickstart your journey to becoming a homeowner. You’re limited to $8,000 a year and a maximum of $40,000, but it’s a solid first step to owning your first property that only first-timers can take advantage of.
If you haven’t created any financial goals yet but still want to be intentional with your tax refund, opening a tax-free savings account (TFSA) with your tax refund can help you grow your savings tax-free and provide flexibility for future financial goals.
Contributing to an RRSP with your tax refund can help you save for retirement and reduce your taxable income. Still, Forward explains that this option may be less important if you need the money sooner or already have a pension. “A younger person might not be thinking about RRSPs because they’ve just started their career,” says Forward. “RRSPs make more sense when you’re in your highest tax bracket, and you can get the most bang for your buck.”
If you have a mortgage with a prepayment privilege, you may use your CRA tax refund to make a prepayment on your mortgage. It goes directly toward your principal owing, so you can reduce the overall interest you pay and shorten your mortgage term. Most lenders limit how many times you can pre-pay each year, but maxing out allowable prepayments can save you a lot of interest in the long run.
If you’ve got any lingering student debt, using your tax refund to pay down student loans can help you reduce your debt burden and save on interest payments over time. For more tips, check out “Student Money: “How to pay for school and have a life—a guide for students and parents.”
Alicia Tyler
Source link
I am guessing you have downsized your home to move to a condo and now have money to contribute more to your registered retirement savings plans (RRSPs) as a result. First, we will start with a quick rundown of how RRSP to RRIF conversion works.
A registered retirement income fund (RRIF) is the most common withdrawal option for RRSP savings. By December 31 of the year you turn 71, you need to convert your RRSP to a RRIF or buy an annuity from an insurance company. So, the conversion must take place not by his June birthday, Chris, but by December 31, 2025. You have a little more time than you might think.
A RRIF is like an RRSP in that you can hold cash, guaranteed investment certificates (GICs), stocks, bonds, mutual funds, and exchange traded funds (ETFs). In fact, when you convert your RRSP to a RRIF, the investments can stay the same. The primary difference is you withdraw from it rather than contributing to it.
RRIFs have minimum withdrawals starting at 5.28% the following year if you convert your account the year you turn 71. This means you have to take at least 5.28% of the December 31 account value from the previous year as a withdrawal. Those withdrawals can be monthly, quarterly or annually, as long as the minimum is withdrawn in full by year’s end. Each year, that minimum percentage rises.
There is no maximum withdrawal for a RRIF. Withdrawals are taxable, though. If you are 65 or older, you can split up to 50% of your withdrawal with your spouse by moving anywhere between 0% and 50% to their tax return when you file. You do this to minimize your combined income tax by trying to equalize your incomes.
You can base your withdrawals on your spouse’s age and if they are younger, the minimum withdrawals are lower.
If you have funds available from your condo downsize, Chris, you could contribute to your husband’s RRSP. He can contribute until December 31, 2025. If you are younger than him, he can even contribute to a spousal RRSP in your name until December 31 of the year you turn 71, whereby he gets to claim the deductions, but the account belongs to you with future withdrawals made by you.
However, just because you have money to contribute, it doesn’t mean you should. Say your husband has $10,000 of RRSP room and his taxable income from Canada Pension Plan (CPP), Old Age Security (OAS), investments, and other sources is $50,000. He could contribute and deduct that $10,000 to reduce his taxable income to $40,000. In most provinces, the tax savings would be about 20%. His tax refund would be about $2,000.
Jason Heath, CFP
Source link
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
Watch CBS News
Be the first to know
Get browser notifications for breaking news, live events, and exclusive reporting.
CNN
—
Here’s a look at the annual income tax filing deadline in the United States. April 15, 2024, is the deadline to file 2023 income tax returns.
In fiscal year 2022, the IRS amassed more than $4.9 trillion in gross tax collections.
(Source: Center on Budget and Policy Priorities, FY 2023)
Medicare, Medicaid, CHIP, marketplace subsidies 24%
Social Security 21%
National Defense 13%
Economic security programs 8%
Benefits for veterans & federal retirees 8%
Interest on debt 10%
Education 4%
Transportation 2%
Natural resources and agricultrue 1%
Science and medical research 1%
Law enforcement 1%
International 1%
All other 4%
1862 – During the Civil War, the IRS is born when President Abraham Lincoln and Congress create the Commissioner of Internal Revenue and enact an income tax to pay war expenses. The first income tax levies 3% on incomes between $600 and $10,000 and 5% on anything over $10,000. This income tax lasts until 1872.
1895 – The Supreme Court rules in Pollock v. Farmers’ Loan and Trust Co. that taxing incomes uniformly throughout the United States is unconstitutional.
1913 – The 16th Amendment is ratified by the states, giving Congress the authority to enact an income tax. Congress also introduces the first 1040 form and levies a 1% tax on personal incomes over $3,000 with 6% surtax on incomes of more than $500,000.
1954 – The tax filing deadline is moved from March 15 to April 15, to give taxpayers more time to prepare their returns.
January 3, 1996 – Congress enacts the Taxpayer Bill of Rights to ensure relief from overzealous collection efforts on the part of IRS personnel.
March 20, 2020 – Secretary of the Treasury Steven Mnuchin tweets that tax day is moving from April 15 to July 15 due to the coronavirus pandemic.
March 17, 2021 – The IRS announces the filing deadline has been moved from April 15 to May 17, to allow filers more time to navigate tax situations complicated by the coronavirus pandemic.