La Quinta, CA
(760) 895-3516

Accounting Services

Located in La Quinta, California, Borders Bookkeeping focuses on year round accounting and income tax preparation services to individuals and small businesses locally in La Quinta, Indio, and Palm Desert as well as international tax services throughout the United States and Canada. Additional services include bookkeeping and software training and business planning. If you don't have a firm grasp on your business and personal finances or need assistance with bookkeeping or tax preparation, call today.

Contact Us: 760 895 3516 | Email


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Thursday, March 3, 2016

Reporting RRSP/RRIF Distributions Received on 1040 After 2014

AS OF 2015...... 

RRSP's are a great way for Canadians to save money while deferring income taxes. I love the tax deferral system in Canada!

So what happens if say you save up a bunch of money in an RRSP or RRIF and then decide to head south for retirement? The rules have changed a little as of 2014. This is a good change. No more reporting RRSP distributions on form 8891.

RRSP distributions are reported as taxable pensions & annuities using a form 1040 FEC. The GROSS distribution amount is reported here. There is no more need to use form 8891 though you have to report the RRSP/RRIF account on your FinCen 114 (FBAR) as well as your form 8938 when required.

You will then take a foreign income tax credit form 1116 for foreign passive income and apply the withheld tax that was not refunded to you from the CRA. If the tax credit is not all used up it can carry forward to the next year(s).

So.. Let's say you really don't have much of a worldwide income and your main source of income is coming from Canadian RRSP withdrawals and Canadian pensions. Let's say you were smart and bought a house in the U.S. which is all paid off now and you want to live there full time. Your gross income is only $25,000  from Canadian pensions and distributions between the 2 of you and you have little or no other income.

Does it make sense to pay 15-25% taxes on your Canadian pension only to be told you can apply that to your U.S. taxes as a credit? Your U.S. tax liability will be next to nill, so it is better to file form NR5 with the CRA to ask for a reduction or elimination of your withholding tax (cash is better than a tax credit when there's no taxes due, right?).

You will have to file a 5013-R each year the withheld tax is reduced with the CRA to show world-wide income so that the  CRA can sleep at night knowing you're not making boat-loads of money offshore while not having taxes withheld.

If you are just finding this out now, and want that withheld tax back, you can file a section 217 with the CRA to request your withheld taxes back.

Sound confusing? It is for most people who don't want to make a full time job out of understanding Canada/U.S. tax treaties. You retired for a reason, right? Give us a call and we can guide you in your tax situation regarding RRSP/RRIF accounts.

Borders Bookkeeping
(760) 895-3516

Thursday, July 30, 2015

IT-6WTH.PDF | Do You Really Need It for Non-resident Withholding?

Do you need to file IT-6WTH? In my experience, searching for IT-6WTH.PDF can lead to a lot of dead ends. It is not found on the withholding tax forms page as of the writing of this post. I wanted to share my experiences with partnerships filing an Indiana return involving non-resident partners. The question comes down to withholding tax for non-resident individuals who are partners on the composite return.

So let's say there is a partnership from another state or country operating in Indiana. If the partners are individuals, they will have to be reported on the partners composite Indiana adjusted gross income tax return. The partners have to be reported on this document yet they can opt out of the Composite return by checking the box G for each partner that would like to pay the tax liability on an individual return.

If box G is checked on IT65 comp, the partners will have to fill out form in-compa and the partnership will have to keep the form which is an affidavit on hand at all times. The affidavit basically states that the individual has the ability and will pay the Indiana tax on an individual return.

Now suppose the partnership files their return and pays the individual taxpayer's liability. Furthermore, the individual files an Indiana return. What is to be done about the withheld tax does a partnership has already paid?

As stated in information bulletin # 72 from the state of Indiana Department of Revenue, and I quote, 

"unless they have income from other Indiana sources, individual non-resident shareholders are then relieved of the obligation to file an individual adjusted gross income tax."

This is of course if they have been identified on the IT - 65 comp and the partnership has paid the income tax liability for the individual non-residents.

If an individual has filed a personal non resident income tax return for the state of Indiana when they have no other income from Indiana but that of a partnership which has paid the tax liability already, in my experience, they will need to amend their Indiana income tax return To omit the financial data relating to the partnership.

To summarize, a partnership who is made up of individuals who are non residents of Indiana can pay the partners income tax liability through the Indiana schedule it - 65 comp, but the non residents individuals should not file an income tax return with the state of Indiana.

The other option is to opt out of the it - 65comp filing requirements by using schedule in-compa. The non resident individual shareholders are then responsible and must file a State return for Indiana.
Please remember if there are sources of income other than the partnership the taxpayer is receiving, this will not work. 

Every situation is different and you should do your own investigating and consult a tax specialist before choosing how to file personal and partnership tax returns in Indiana, as well as filing IT-6WTH or IT6-WTH.PDF files. Contact Borders Bookkeeping in the Coachella Valley, California for more information.

Monday, May 25, 2015

The Child and Dependent Care Credit

The Child and Dependent Care Tax Credit is not to be confused with the Child Tax Credit. This tax credit is available to those who have child/dependent care expenses that have incurred in order to enable you (the taxpayer) to be gainfully employed.

As the taxpayer, you must therefore provide more than half the cost of maintaining the household. The child dependent must be under the age of 13 at the end of the tax year, unless the dependent is physically/mentally incapacitated. In that case there is no age restriction.

You are eligible for the Child or Dependent Care Credit if:

  • The care costs were only for the purposes of enabling you to earn income
  • You provide more than half the cost of maintaining the household
  • Your child/dependent is under 13 at the end of the tax year 
    • OR your dependent/spouse is physically/mentally incapacitated

 Want to claim the Child or Dependent Care Credit? We provide tax preparation services to taxpayers and can help you with any child or dependent care credit questions. Contact us today.

Most Personal U.S. Tax Credits are Non-Refundable

The majority of income tax credits in the United States for personal taxes are non-refundable. This means after the tax credit wipes out your taxes due for the year, you will not receive money back. There are some U.S. income tax credits that are refundable. The non-refundable tax credits are listed below for personal income taxes.

U.S. Personal Non-Refundable Income Tax Credits

  • Child & Dependent Care Tax Credit
  • Elderly or Disabled Income Tax Credit
  • Residential Mortgage Interest Tax Credit
  • Adoption Tax Credit
  • American Opportunity Tax Credit
  •  Lifetime Learning Credit

Even though the credit is non-refundable, it may still be a good idea to use the tax credit in the case that there is a refundable tax credit available so that the non-refundable credit can reduce your taxes to zero, and then the refundable tax credit can be refunded to you.

Contact Borders Bookkeeping for any income tax preparation needs you may have.

5 Most Common Tax Mistakes of Canadians Moving to the United States

If you've been hypnotized by warm weather or the American dream and are considering moving permanently to the United States from Canada you need to read this. Here are some common mistakes that Canadians make when moving south:

    1. Selling your home in Canada AFTER you are a resident of the United States for income tax purposes. If you are no longer a resident of Canada when you sell your home, you do not qualify for the capital gains tax exemption for the sale of a main home.
    2. Leaving Stocks in Canada. Some stocks are excluded from the exit tax, but why take the risk? At the very least, call your stock broker to find out for sure whether these stocks can be excluded from the Canada Exit Tax. 
    3. Not selling or dissolving your Canadian Corporations BEFORE emigrating. Once residency is established in the United States, you will be taxed on world-wide income. 
    4. Leaving bank accounts in Canada. If you have foreign bank accounts outside the U.S., you will have to file FBAR's for each account if the total is $10,000 or more in US funds. Not reporting these accounts can mean forking over 5%-50% of the bank account totals to the IRS if you are lucky. If willful act is determined, it could mean jail time plus gut wrenching penalties and fines.
    5. Not filing a T1 Exit Return. You should file a T1 Exit return in Canada for the tax year you left. You will only have to pay tax on world-wide income before the exit date. After the exit date, you only pay tax on Canadian sourced income. 

Waiting until AFTER the move to sell or transfer assets is the most common mistake made by Canadians moving to the United States. When filing your T1 Exit return, you will specify an emigration date. On the date you specify, the CRA will look at every asset you hold and consider it sold by you (the Resident of Canada "you") and bought back by you (the Non-Resident of Canada "you").

If you have any questions about tax implications of moving from Canada to the United States, do not hesitate to contact a professional tax preparer such as myself. Waiting can cost dearly. Call today.

Borders Bookkeeping (760) 895 3516

Tuesday, May 19, 2015

If Death & Taxes are Similar, What does that make the IRS? We can Help You!

Having IRS/tax problems? Can't sleep at night? The IRS has been a God-send for the folks that manufacture sleeping aid medications, but just about the opposite for everyone else.

Borders Bookkeeping offers tax solutions for anyone in the Coachella Valley, CA area. We focus on cross borders tax issues between Canada and U.S., but we'll help you out regardless of your situation/location.

We offer bookkeeping for small businesses and income tax preparation as our bread and butter services, so if you'd like to get your business on track and up to date, give us a call.

Monday, May 18, 2015

The Canadian W-2 Equivalent | Canada Employment Income Tax Form

What's the Canadian equivalent to a W2? That sounds like the start of a lame joke, but it's not. Each year, Canadians receive a tax form from the Canadian Revenue Agency stating employment income received and income tax withheld, just like a W-2 form here in the U.S.A.

Each year, Canadians working as employees will receive a T4 slip, statement of remuneration paid. This is much like a W-2 slip, stating the employment income, federal tax withheld, taxpayer identification, and other benefits.

A Canadian T4 Income Tax Form for Employment Income - Similar to the U.S. W-2
Do you have U.S. and Canadian income tax issues? Borders Bookkeeping can help you file income tax returns for Canada and U.S. Check out our website or give us a call for more information.

Call Us Today (760) 895 3516

5 Need-to-Know Tax Tips For Americans North of the Border

U.S. taxes are just about the most complicated thing on earth. These are 5 amazing income tax tips for U.S. Citizens and greencard holders living and working in Canada in plane English that anyone can understand. Here they are:

You Could Be Subject to the Shared Responsibility Payment. 

As a U.S. Citizen living abroad, you can qualify for exemption C on form 8965 if you spent less than 35 days in the United States as an American expat living in Canada (or anywhere else). If you are a bonafide resident of Canada or another country (i.e. you have established a resident status in Canada and file a T1 as a resident of Canada), you can also claim exemption C on form 8965.

You Must File A Form 1040 & Claim All World-Wide Income

As a citizen or greencard holder living in Canada, you are subject to the same tax laws as residents of the United States. This means you file a 1040 each year just as if you were living in the U.S. Your Canadian based income is claimed on the 1040. You may claim the foreign income exclusion if you are out of the U.S. for 330 full days for the tax year or if you have established resident status in Canada. You may also claim the foreign income tax credit (my personal preference) or claim both forms 2555 and 1116 on your 1040 tax return.

You Must Report Activity from All Non U.S. Bank Accounts

Take a look at all your bank statements for all accounts in banks outside of the United States. Take the highest balance for each account in the given tax year. Add the highest amounts from each account together. Convert that amount using the end of year treasury conversion rate for the given tax year. If the amount equals $10,000 USD or more, you need to file FBAR FinCen report 114 to the BSA for each account. This is true for individual accounts, joint accounts, and corporate accounts.

Depending on your residency and filing status, you may also need to report your bank accounts to the IRS on form 8938.

Additional Child Tax Credit Is Available to Expats in Canada

The additional child tax credit is available to U.S. Citizens and Greencard holders with children in certain age ranges living in Canada. The maximum refundable tax credit amount is $1,000 per child up to $3,000. In order to claim this refundable tax credit, you will need to show an adjusted gross income. You will need to file the foreign income tax credit for at least some of your income if you did not earn any income inside of the United States. Children will have to be living with you and either U.S. or Canadian citizens.

Self Employment Tax in U.S. if Self Employed in Canada

Better think twice about starting a small business in Canada as an American Citizen or greencard holder. You are subject to self employment tax in the United States if you are self employed in Canada.

That's it for now, I hope these 5 tax tips for U.S. Citizens working in Canada were helpful to you. Borders Bookkeeping offers U.S. Canadian income tax preparation to Americans living in Canada. Contact us today for any tax preparation needs you may have.

Call Now - (760) 895 3516

Thursday, May 14, 2015

Non Resident Selling Real Estate in These States? There WILL be withholding tax

Selling real estate as a non resident triggers withholding tax on a federal level of 10% if no withholding certificate is applied for. There are also some states that withhold income tax from non resident aliens (Canadians who own property in the United States but do not meet substantial presence test or closer connections test).

Selling property is different than renting property. On the federal level, income from real estate rentals owned by foreign non resident aliens can have income tax withheld at 30%, though most foreign landlords subject to this withholding tax on the federal level are exempt because they choose to be taxed as a business effectively connected to the U.S.

If you were to sell a piece of real estate in the United States as a non-resident, these are the states that would withhold income taxes. The tax rates will be given by state that will withhold the tax.

California = 3.33%

The state of California withholds 3.33% from non resident property sellers. This includes U.S. Citizens and U.S. residents that live in other states.

1031 Exchanges in California

If you are doing a 1031 exchange in California, you should submit form 593-C Real Estate Withholding Exemption Certificate for Individual Sellers and certify that the sale of your property is a part of a 1031 exchange.

Non Resident Sellers Seeking Withholding Exemption in California

If you will not be making a profit on the sale of your U.S. real estate, or are filing for an exemption for any reason, you should submit form 593-C, or 593-W Withholding Exemption Certificate and Waiver Request for Non-Individual Sellers if you are selling your property through a corporation.

Colorado = 2%

The state of Colorado withholds 2% of the sales price. The sales price must be over $100,000. No income tax is withheld from non resident sellers of Colorado real estate if the sales price is under $100,000.

1031 Exchange in Colorado

If you are selling your property as a part of a 1031 exchange, you must sign an Affirmation of No Reasonably Estimated Tax to be Due" as per Colorado DOR DR 1083. The same is true for non residents who are selling the property seeking a withholding tax exemption in Colorado.

Georgia = 3%

Georgia state withholding tax on real estate sold by non residents is 3% of the sales price of any property over $20,000. Georgia state withholding tax is similar to California, only slightly lower.

1031 Exchange and Withholding Exemption in Georgia State

Non resident sellers selling property in Georgia doing a 1031 real estate exchange in Georgia are exempt from withholding tax and will have to submit form IT-AFF3. If the seller is not purchasing property in Georgia, they cannot seek exemption from the state withholding tax.

Hawaii = 5%

The state income tax withheld on real estate sold by non residents is 5% of the sales price regardless of price amount.

1031 Exchange and Withholding Exemption in Hawaii

As a seller who is not a resident of Hawaii, you will need to submit form N-289 and state that you are not required to recognize a gain because the sale is a part of a 1031 exchange, or because there is no gain from the sale of the property.

Maine = 2.5%

2.5% is the amount withheld from the sales price for non resident sellers in the state of Maine. The state of Maine has a threshold of $50,000 for the withholding tax to apply.

1031 Exchange and Withholding Exemption in Maine

As a non resident selling real estate, you must submit form REW-5 at least 2 weeks prior to the closing date. This Request for Exemption or Reduction in Withholding of Maine Income Tax on the Disposition of Maine Real Property will be used as well for 1031 exchanges, much like the case in most other states.

 Maryland =  4.75%

If you are a non resident selling real estate in Maryland, you are subject to 4.75% of the total price withheld from the sale. If you are selling the property as a corporation or any non individual business structure, you will be subject to a 7% state withholding tax.

1031 Exchange and Withholding Exemption in Maryland

 You must fill out and submit form MW506AE to the Maryland Comptroller's office in the case that there will not be a capital gain. The handler of the transfer will need to send a letter as well, certifying the amount of net gain/loss in your case.

Mississippi = 5%

If you choose to sell your prestigious retirement real estate in the state of Mississippi and don't live there, the state withholding tax will be 5%. The threshold is $100,000 for real property sold in Mississipi.

1031 Exchange and Withholding Exemption in Mississipi

 If the seller is preforming a 1031 exchange or there will be no net gain from the sale of the property in Mississippi State, the seller must submit an affidavit stating that there will be no gain recognized to the buyer.

New Jersey = 2%

If you are a non resident of the state of New Jersey and sell real estate, there will be a 2% income tax withheld that you will have to get back on the tax return. This is an exit tax.The buyer of your real estate must submit form C-9000 at least 10 days before the sale of the property. The division then forwards a notice of the amount to be withheld according to tax debts, delinquencies, etc. plus the 2%.

1031 Exchange and Withholding Exemption in New Jersey

You must send in a GT/REP-3 Seller Assurance to be exempt from withholding tax either because of a 1031 exchange or because there will be no net gain. Tax may still be withheld if there is prior tax due as explained above.

New York = 8.82%

Selling a real estate property as a non resident in the state of New York triggers one of the highest Income Tax Withholdings among the United States. The rate is 8.82%

1031 Exchange and Withholding Exemption in New York

 To file an exemption from this states withholding tax, you must fill out a form IT2663 and provide a brie summary of the exchange before closing.

North Carolina = 4%

The withholding income tax on the sale of a real property in North Carolina owned by a foreign non resident alien comes to 4% of the sales price.

1031 Exchange and Withholding Exemption in North Carolina

You must file a NC-1099NRS form with the DOR in North Carolina to apply for an exemption because of a 1031 exchange or no net gain.

Oregon = 4%

Oregon enforces a 4% withholding tax on those who do not call Oregon home when real estate is sold, unless 8% of the gain is smaller than 4% of the sales price. If the total net gain is less than 4% of the sales price AND less than 8% of the taxable gain, net proceeds distributed to the seller will be withheld.

1031 Exchange and Withholding Exemption in Oregon

 If the sale of the Oregon property is part of a 1031 exchange, withholding is waived (there is some fine print on that, do your own due diligence research). If you are applying for an exemption because there will be no net gain, file a form WC.

Rhode Island = 6%

The total withheld income tax on the sale of a real property in Rhode Island where the seller is not a Rhode Island resident is 6%. If the property being sold is owned by a corporation from another state or country, the withheld income tax is 9%.

1031 Exchange and Withholding Exemption in Rhode Island

The seller who is a non resident will need to fill out and submit form RI 71.3 Nonresident Election of Gain and Certificate of Withholding Due. This applies to 1031 exchanges and non residents who will not be making a profit on the sale of the real estate.

South Carolina = 7%

You will end up having 7% of the estimated gain being withheld from you if you are a non resident selling real estate in South Carolina. If you are a corporation selling real estate and are not located in the state of South Carolina, your withholding tax on the sale will be 5% of the estimated gain. Buyers will have to file form I-290 and estimate the sellers gain, based on the seller's affidavit.

1031 Exchange and Withholding Exemption in South Carolina

The seller is required to fill out form I-295 to apply for a withholding exemption in the state of South Carolina.

West Virginia = 2.5%

West Virginia imposes a 2.5% withholding tax on either the gain or the sales price. File a WV.NRAE no more than 21 days before the closing of the sale if you would like to apply for a reduction or exemption from the withholding tax.


Vermont = 2.5%

Vermont withholding tax from the total sales price of the property where the seller is a non resident alien to the state is 2.5%. The buyer of the property will submit a RE-171.

These are the Withholding income taxes imposed on Non Resident sellers of real estate. Most states offer reductions and exemptions that will have to be filed before the closing date. To have the state withheld income tax recovered or refunded to you as a non resident, you will need to file a tax return and in most cases, claim the state tax withheld as an estimated income tax payment.

If you need to have withheld tax recovered from the sale of a property in any of these states, or if you would like to recover federal income tax withholding on a property sold in the United States, call Borders Bookkeeping and Tax Preparation. We prepare taxes refunding the taxpayers for withheld income taxes on the sale of real estate by non residents.

(760) 895 3516

Tuesday, May 12, 2015

LLC Income Tax Preparation La Quinta, California

Borders Bookkeeping offers professional income tax preparation for LLCs in the Coachella Valley, California area. We are located in La Quinta, CA.

Tax Preparation for LLCs

Income tax preparation for an LLC can be prepared on a schedule C, 1165 Partnership return, 1120-S S Corporation return for pass through corporations, and 1120 for C Corporations.

Annual Franchise Tax for LLCs

The annual franchise tax in California is currently $800 per year, which should be paid the previous year with the voucher from your income tax return. This holds true regardless of how your LLC is held; as a partnership, S-Corp, C-Corp, or even as a sole proprietor (disregarded entity) when business income is reported on Schedule C.

LLCs held as corporations and partnerships tend to be more complex as there are typically more items on the balance sheet, with higher profit and losses.

Fees For LLC Tax Preparation

The cost to prepare an LLC return will be more than a personal business reported on a schedule C if the LLC is a corporation or partnership. A typical LLC tax preparation fee starts at around $750, depending on the complexity.Tax filing prices for LLCs active in multiple states may run higher. Our income tax preparation fees and schedules for LLCs are competitive for the La Quinta, CA area.

If you have an LLC and need income tax preparation, we hope you will call Borders Bookkeeping.

CALL: (760) 895 3516