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June 2018

June Deadlines

There are deadlines in June that some individual tax payers may need to pay attention to. And some other optional forms with no deadlines that may apply to you or someone you care about.

Snowbirds may need to file a US tax form, quarterly installments are due, the TFSA over-contribution return may be needed, Pharmacare deductible reduction request can be filed, OAS involuntary tax withheld can be reduced, and the self-employed and their spouses all have deadlines to pay attention to.

If you are required to pay your taxes for 2018 via quarterly installments, the second installment is due June 15 (the first one was March 15). You would have been notified during 2017 and earlier in 2018 that you are required to pay CRA throughout 2018 to prepay your taxes payable.

If you owed Canada Revenue Agency more than $3,000 for your 2017 income taxes and any other recent year, CRA doesn’t want to wait until next April 2019 to get paid for the 2018 taxes. They want to get paid throughout the year. The installment due dates are the 15th of March, June, September and December. If you are required to pay them and you do not, CRA will charge you interest on the amounts you did not pay. They can add “installment arrears interest” to your 2018 taxes after you file your taxes next spring.

If you have a business that you include on your personal taxes (the business is not incorporated), you must file by June 15. Spouses of the self-employed also have to file by June 15. Even if you cannot pay the amount owing on June 15, get it filed and you can make arrangements with CRA to pay the amount owing. Often CRA will allow you to pay your amount owing during the following 12 months. The interest rate on amounts outstanding is 6%, which is a reasonable amount (that’s 50 cents per month for each $100 owed).

If you are not self-employed and still have not filed your personal taxes, get them filed now. If you have an amount owing, you will be penalized 5% of the amount you owed as at April 30, plus 1% for May and 1% for June, but get it filed before June 30 stop the penalties. They continue to add 1% for each month, so file this month and minimize the penalties. The interest will continue to add up for the amount not paid, but at least the penalties cease.

If you are a regular snowbird and often spend more than four months in the USA, you may be required to file a form called the Closer Connection Exception Statement for Aliens, IRS form 8840. This US tax form allows you to acknowledge that you spend a lot of time in the USA, but you won’t be filing a regular US tax return because you are a Canadian and have closer ties to Canada than the USA. The deadline to file this return with the IRS is June 15. If you need help with the form, call our office.

If you over-contributed to your TFSA, Tax Free Savings Account, during 2017, you may need to withdraw the excess (the sooner the better), and you may need to file a return with CRA by June 30. If you suspect you have over-contributed, you can check with CRA to confirm all your TFSA transactions. The maximum contribution room is $57,500 as at January 1 2018. If you need some help with this, contact our office and we can help you determine if you have gone over. The penalties are severe: 1% for every month you have over-contributed. And if you do not file the special return by June 30, there may be additional penalties and interest.

If you received OAS (Old Age Security) in 2017 and your individual income was more than $75,000, you had some or all of it “clawed back”. And now you may have your OAS reduced starting in July 2018 (you will receive a notice from OAS). If your income is not expected to be that high in 2018, you can ask the involuntary tax to be reduced or removed.

There is a special form to send in to CRA to report your expected income and expected tax withheld in 2018. It can be complicated, so call our office for help. There is no deadline, but the sooner the better to reduce the involuntary tax on your OAS. This is an additional tax deducted, so if you do not request it to be reduced, you do get the credit as tax pre-paid on your 2018 taxes next spring (you do not lose it).

Pharmacare deductible reduction request has no specific deadline, but the sooner the better. If your total family income for 2018 will be much lower than your 2016 (more than 10% lower), you can ask Manitoba Health to lower your deductible for the 2018/2019 year. The current year (April 1 2018 to March 31 2019) is based on your family’s 2016 total income.

You may have had a reduction in income because you retired and your income has dropped; or if you were receiving income from your RRIF (registered retirement income fund) and now it’s depleted. It doesn’t matter why your income dropped. If you have high prescription costs and your income is lower than it was two years ago, arrange to have your deductible reduced.

Also regarding the Pharmacare deductible, did you know you can have it spread over 12 months? If you have high prescription costs and often reach your Pharmacare deductible within the first few months and you find this financially difficult, you can arrange to pay for that deductible over 12 months. I know of several clients that do this so they can pay for their prescriptions at a more reasonable amount each month. There is no deadline for this, but again, the sooner the better for you. You can check out Manitoba Health website, or give us a call and we can help you.

Now that tax season is winding down, we’ll be facilitating our Death Cafés from July to November. Get on our contact list so we can call you with the dates and times of future events.

Not sure what a Death Café is? Give us a call or check out their website: DeathCafe.com. Death and “fourth quarter planning” is generally considered a taboo subject in our Western Culture. Our objective is to increase awareness of death and how being prepared can enhance your life today.

Previous Death Cafés have been very well received. Some topics that have been discussed include: Wills and Power of attorney, End of Life Care, Dying at home, Probate Fees, Joint Accounts with Adult Children, Funeral Planning, Natural Death, Natural Burial, and many other Estate Planning Topics.

Please join us at an upcoming Death Café for an interesting and valuable discussion on topics all of us need to face. We will have special ones for baby boomers that currently are, or will be, assisting an elderly parent in their “fourth quarter” of life.

Anni Markmann is a Personal Income Tax Professional and Certified Financial Planner; living, working, and volunteering in our community. Contact her at 204.422.6631 or 36 Dawson Road in Ste Anne (near Co-op) or Info@SteAnneTaxService.ca





 

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36 Dawson Road, Box 1072, Ste Anne, MB, R5H 1C1
Tel: 204 - 422 - 6631
2018