• Kaman Kwok Inc.

Impact of US Tax Reforms and How the Tax Cuts and Job Act of 2017 Affects Cross-Border Tax

Recently President Trump signed into law a new tax reform known as ‘The Tax Cuts and Job Act of 2017’. It is one of biggest overhauls of US taxation since 1986, and has far-reaching impact on both sides of the border. Canadians, including individuals and businesses who are tied to the US tax reform are major stakeholders, and these shifts in US taxation will affect the approach to cross-border tax structures and future planning.

By being prepared and well informed, we can most effectively position and adjust cross-border tax situations to your greater benefit. At Kaman Kwok Inc., our goal is to help you understand the implications and make informed responses to this pivotal new reform.

We have taken the full ‘Act’ and assessed it’s potential impact on Canadian individuals who file U.S. tax returns. We will provide some of the key highlights in a series of articles over the next few weeks.

Contact us if you have questions, or would like to set up a consultation with our tax specialists.

This week the focus is on some key impact areas related to Personal Tax:

Highlights of Personal Tax Changes:

Effective Date: Taxable years beginning January 1, 2018.

Sunset Date: Taxable years beginning after December 31, 2025.

Standard deduction – almost doubled.

In 2018, the standard deduction for individuals filing U.S. tax returns, and not electing to itemize deductions, increases from $6,350 to $12,000 for single filers. For married taxpayers filing jointly, and certain surviving spouses it increases from $12,700 to $24,000. For the head of household filers, it increases from $9,350 to $18,000. The amounts will be subject to inflation adjustments starting in 2019.

Tax rates – top rate reduced.

The Act reduces tax rates, moving the top marginal rate down to 37 percent from 39.6 for single filers with income over $500,000, and for married taxpayers filing jointly with income over $600,000. This rate structure is in force for 2018 taxable year and will reve