Taxes for Canadian Travel Nurses: CRA Reviews (Tax Video #2)

okay so guess we should start now um thank you so much everybody for joining today uh today's webinar is for one of the most hottest topics that's going on these days on taxes is C tax reviews uh the people uh who are already aware about it probably they know how much painful these reviews are uh the people who are going to file taxes in future years probably they'll come across uh these letters I would call it sweet letters uh in in sometime now uh our Focus for today will be to understand a little bit about how what are these reviews are and uh a basic idea about how do you deal with them uh and if there are any questions we we'll address the questions as well okay uh we'll start with the first slide uh K can you please okay so uh like most other tax systems Canadian tax system is Al also based on self assessment basis that means you uh assess your uh tax liabilities deductions incomes at your end and report them on the tax return and then uh uh report it to crn now uh many times we uh be claim some deductions some credits that we are not eligible for maybe due to some misunderstanding misinformation or sometimes we really do miss deductions and credits that we are eligible for now uh C has a system where they conduct uh reviews of the tax returns uh but the information that the tax payer has claimed or not claimed on their taxes uh and that's that's that's how they ensure uh that the taxpayers are aware about what can be claimed and what not what cannot be claimed uh reviews are generally uh issued and prepared uh mostly to uh reduce the uh litigations that may come later down the line and to make sure that the taxpayer knows uh their responsibilities about what can be claimed what cannot be claimed uh next slide please now one of the most most question that we get uh that why uh some why me why I'm getting reviewed every year uh is there any problem in my taxes or there's something I'm doing wrong or somebody is is is is kind of informing me about C something like this now uh I would say you're not alone because uh every year roughly 3 million tax returns do get reviewed by CRA uh and there is there is uh you're not alone you're not being picked by C because of just you as just how the system works if you're getting picked multiple times I would care I would call it unfortunate that you're getting picked but uh that's not unusual there are thousands and hundreds of thousands of people who are getting uh these reviews almost every year uh so uh there's there's no uh criteria that they pick uh but there are some understanding that we have uh about uh why people do get these reviews which will'll be explaining uh later and later sites uh now if you get a letter that you your return is getting reviewed Don't Panic that doesn't mean that you have done something wrong or there is something wrong on your taxes or you have claimed something that you're not eligible for uh it's just you have want more information on what you have claimed uh in in my experience uh in most cases people do uh get cleared off of these reviews and then uh everything settles down in couple of weeks once you make the submission uh okay next slide please so yeah uh that's that's one of the questions that we uh get most of the time why uh why our returns are getting picked or why my return is getting picked every year or what are the criteria CRA follows to uh uh to pick a return for the tax review now this is not the complete list I would say because it's it's as end but this is our observation uh why those returns get picked uh one the most basic reason is when you were are working or getting paid by a third party let's say employer a bank or anybody who's paying you and they are supposed to report that amount on your account to C and if you is that if you miss to report that income uh on your taxes that return gets automatically picked by the system uh CRS computer uh review system uh the other most common is when you claim some deductions which based upon CRS computer review system uh you may not be eligible for uh then that get return gets picked for uh review but of the most common is many time people claim uh uh dependent credits um and uh extraordinary employment expenses uh those expenses and those dependent sometimes people are not eligible for uh then these gets return gets picked up for review uh and your compliance history of course uh if you have been very adventurous on your taxes in the past uh then uh there are high chances your returns may get picked uh for the year review uh and one of the most common uh reason for these reviews is C uh random selection so C do has some system uh where they get uh they they pick these returns for R uh for reviews uh that does not mean that every return gets picked for CR review there are millions of tax returns who are who are not which are not picked for uh reviews but that does not mean that they will never get picked for reviews they can at a lat later stage as well okay uh most of the returns are reviewed and assessed by a CRS computer system and there are uh some of them do are picked by CRS manual review system now at all points we encourage and recommend all the taxpayers to keep all the supporting documents for whatever deductions credits they are claiming for and whatever income they are reporting on your taxes CRM May at a later stage uh ask for any supporting documents so it's highly recommended that you keep the uh supporting documents for the income and deduction that you're claiming next slide please can now uh when it comes to uh travel nurses because this is the platform that we're addressing the travel nurse platform uh some of the most common reviews that uh we have observed uh with travel nurses and of course the neuters uh is the the non- business foreign taxes paid uh which means uh nurses uh and taxpayers who are working across the border uh and Reporting their foreign income on a Canadian tax return and as well the taxes paid to uh the foreign country on a caran tax return these gets these returns do get often picked for CR reviews uh other part is um registered Pension Plan deductions so uh in Canada if let's for example uh in Canada if you are contributing to uh foreign Pension Plan let's say us uh Pension Plan uh employer sponsored Pension Plan let's put it this way uh then you are allowed to claim deductions of the uh pension contribution that you are doing in a US uh registered Pension Plan LS uh it's a pretty handy Tool uh it does help to reduce your taxes quite AIT in in many cases uh then the medical expenses uh any medical expenses that you have paid from your pocket uh and you are eligible to claim but many times people do claim uh expenses and these expenses uh uh are often reviewed by CRA U union dues uh the nurses of course pay lots of new union dues for their registration association fee they malpractice insurance fee all these are claimable uh but again nurses do see reviews about these expenses claimed on their taxes U other employment expenses that includes uh nurses that are claiming travel uh supplies uh other expense that they're paying from their pocket which the which they are supposed to pay because of their Employment contract uh and and they are not getting reimbursed for and the last but not the least is the donations uh donations is is uh one of the item that also gets reviewed uh quite often uh if the claim is is is is is a higher amount okay next slide please now uh many times uh we do get questions about how do we handle these reviews uh and what what should be done to at their end at the and to uh respond to the information that they are CS requesting uh we'll go one by one okay but the most common topics that we just just discussed in the last slide uh about the non- business foreign taxes paid uh C mostly is looking for a proof that whatever amount that you have claimed on your Canadian taxes uh that you have Pro proof on and how you ended up with the calculations now in in most cases uh if you have claimed uh foreign tax credits on your Canadian taxes uh you might see a form called p2209 on the tax return package that either you have prepared online or you have a professional doing it for you uh you may see that form attached to your package if it's not there you can certainly request from your professional or download from the online software and a form called t236 uh that's gain uh a form that you may find on your tax package uh shared by the professional or you can simply download uh from your uh from the software that you're using uh the t209 is a federal form that shows how much Federal foreign tax credits you have claimed uh and d236 is a provincial form that shows how much provincial foreign taxs you have claimed and the second part is they would also want to see a copy of the tax assessment or the tax returns that you have filed with the foreign jurisdiction for in our case let's say uh United States uh and the copy of the federal uh sorry state tax return that you have filed with the respective state that you working uh in most in many cases people do have city tax liabilities as well so if you have filed taxes with a city that you're working in uh also make sure to attach the copy of the city tax return return as well uh the the most important part uh C would also want to see the tax liabilities that you're showing on all the tax returns in the US uh matches what IRS has assessed for you now in many cases account transcript is from a federal taxes is is a good example uh but if you don't have that account transcript uh you can either show them the proof of the payment that you have made or uh if you have receive the refund or copy of the refund check or onine deposit uh should also work in many cases uh that that kind of reflects that uh the tax that you have filed are assessed the way you have filed uh for example let's say if you have claimed uh $100 of refund on your US taxes okay on a federal tax return and you have received the same $100 in your bank account uh that gives us a nice idea and the C that that uh your return has been assessed the way it was filed uh and the the taxes that are paid on us tax return are correct uh can you next do the next slide please K uh sorry I may go back to the uh the previous slide please there's a little important point that I wish to mention here now in in some cases I have seen people do receive less or more re refund uh instead of uh what is set on their tax return in these kind of cases I uh generally recommend to uh contact C or a tax professional uh to see what was your exact tax liability uh so that you don't see a reassessment at CRS end uh next slide please now the next topic we had uh that's most gets reviewed is registered Pension Plan deduction uh people who are contributing to uh for uh us registered pension plan in most cases 401k or 403b plan uh you are eligible to claim that registered Pension Plan deduction U now in these kind of cases let's say if you if you re receive a review for uh questioning about your forign registered Pension Plan deduction a copy of uh form called RC 268 uh that form is generally uh prepared uh when you are uh claiming that deduction uh in most cases it should be shared by the professional that you're hiring or you can certainly download from your uh uh online tax utility uh copy of this form and a copy of the w t uh these two documents should be good enough uh to uh support your claim for the registered financial plan ction uh in many cases I have observed uh people do miss to uh completely fill this RC 268 and some columns are left blank uh C May test the claim if the RC 268 form is not complete so make sure when you're sending this RC 268 to C make sure it's it's 100% complete uh next slide please okay the other thing is uh the most common one of the most common reviews that people see is uh medical expenses uh if you are claiming the medical expenses make sure you have all the receipts for those uh medical expenses that you claiming uh including the receipts for yourself or your spouse or the dependent dependence that you have in your family uh there is uh the receipt should show that the amount of expenses that you have claimed uh and uh in many cases uh people do have uh insurance medical uh insurance and the amounts do get reimbursed by those uh medical insurance as well now in those cases uh you can only claim the portion that is not reimbursed uh by your medical insurance uh you can only claim in many cases there are deductibles to pay so uh anyone uh any amount that you are paying from your pocket at a deductible U you are eligible to claim some of those amounts uh I have seen people claiming the full amount on their taxes even though the part of uh the medical expenses was reimbursed by the insurance companies in these kind of cases uh people generally see reimbursements uh sorry reassessments happening at C's end now uh if you are sending a statement from the insurance company make sure the statement should show the patient's name uh amount paid uh and the uh name of the drug that you are claiming uh now what I have observed uh while looking into these uh uh statements that many of times uh people uh forget to claim the uh insurance deductible for their kids or their spouses uh just to make make sure that you are eligible to claim uh medical expenses for your dependents and the kids and the other part is uh people are allowed to pick a 12 months period uh now the period has to end uh in the current tax year uh for which you're filing uh for example let's say if you're filing for 2023 uh now you can pick any period That's that ends in 2023 and back it to 12 months for example let's say I can go uh 31st March 223 that's my ending date and my start date will be 1st April 2022 uh it appears to fall in two two years but you are allowed uh this gives the flexibility uh sometimes to uh claim more expenses because uh there is a threshold which is 3% uh and or I think there is roughly 2400 I'm not sure uh this is the minimum threshold so anything less than 3% of your income uh you cannot claim as a medical expenses so sometimes people uh people do have that flexibility of 12 months and they can back with a higher uh deductible higher uh medical expenses uh next slide please now uh one of the most uh reviewed topic here is other employment expenses now uh uh professionals nurses and other taxpayers who are paying expenses from their own pocket uh because of their Employment contract uh and but they're not reimbursed by their employer uh they are eligible to uh claim those expenses on their taxes provided uh their employer issues them from D200 uh it's called Declarations of conditions of employment it's I think roughly two pager form or three pager form that shows what were the agreements uh when you ended up when you started your job uh in most cases uh nurses who travel uh because to see their patients and because of their job uh those are the nurses I have seen claiming their travel expenses uh gas parking tickets and whatnot now in these kind of cases you I do expect to see Farm D200 signed uh and dated by by your employer of course filled by your employer as well uh and a and a form called t7 uh this form if you have claimed the uh any uh other employment expenses you would find that form uh in your tax return package or you can download from your uh C sorry online utility that you just use to for file taxes and if you don't find it if you have tax professional just just contact tax professional they should be able to give it to you uh apart from these two forms C would also want to see uh receipts of all the expenses that you are claiming uh that that's something uh crucial to claim all these expenses so the next St is UN union dues uh these are the most common uh deduction that almost all the nurses claim is called uh union dues uh all the expenses that we are paying for our association uh malpractice Insurance uh anything that that any dues that you're paying to keep your legal status in your profession uh that that's claimable uh and you just need a proof of uh receipt or uh payment confirmation uh from your uh Association or whever you are paying uh as a proof then you just send it to them and it should be there's no form required because there's no format you just claim these expenses as a line item on the on the tax return so you just send these for uh receipts and should be all good donations uh you are eligible to claim uh donations that you are doing uh making uh the CH the donation uh IC do expect to see uh donation receipts that should show the name and address of the donation organizations uh the DAT donations was made uh and the one of the most important part is the donation should be uh Canan donation with uh that has issued official tax receipt uh that's just that's uh very important now if you are working in the US some us donations are also CLA uh as long as you have uh next slide please next slide please okay now uh after understanding what what we need uh to respond to uh and to support claim uh how do we prepare those responses how do we prepare a combined package and submit it to CRA so that they they they accept the submission I always encourage to prepare a nice cover letter that explains how and what amounts we have claimed uh in in in our office we generally uh name the all the pages uh and index them what what all we are claiming uh C do expects to see uh your your social insurance number written on all the pages uh and the reference number so whenever you get a review letter from C generally you would find a reference number on top of the on the top of the first page uh they would want to see the reference number written on each page of the all the pages uh that you're submitting to them now uh many times uh it's easier to submit online uh but sometime people don't have their own online account or they find it more challenging to merge all those PDFs uh in an in a one file uh or sometimes the files are so heavy that c photo doesn't take it uh in those kind of cases you can either mail the uh mail the uh complete package to The Address given on the Ser letter or you can fax it either way it should be okay uh generally uh you would see the fax number on the serial letter uh in in most cases uh but if there is no fax number then mail or online submission are the only options now uh my team has has pointed out this is not me my team pointed out uh the most common three uh errors that we found out uh that people when they when they fil themselves uh about deduction that we claim and uh just just to educate people out there uh that people do you are allowed to claim uh 401K PL deduction as a registered plan deduction which we discussed a few minutes ago uh but if some people if if somebody has uh a 41k Roth contribution plan that plan is not dedu deductible in Canada and not in the US as well so when people see uh hey my 401k plan contribution is there but if they have a Roth uh contribution plan that amount is not deductible in Canada so if you do have and have claimed it and your can taxes uh you may see that dis allowance by Si now uh what the other most important uh not most important common mistakes that we have found among the people who who file them themselves is when they have multiple jobs in the US uh and they are uh contributing to uh Social Security uh let's say for example in 2023 the maximum contribution to Social Security was 9,932 40 anything uh any contribution beyond that amount you are allowed to claim as the deductions as a refund from uh IRS uh many times people do forget to claim that refund uh but CR will not allow uh any any contribution Beyond 9,9 93240 even if you have claimed the refund or not okay um now other part is like I think I explained a few minutes ago that the portion of medical expenses uh you can only claim that is not being reimbursed by your insur Insurance uh any amount that is reimbursed by Insurance you should not claim it uh we have seen people claiming the full amount even though the amount was reimbursed by their insurance as well some of the uh common mistakes that we found uh that people are claiming as a foreign tax redit on their uh credent tax return uh most common is investment tax redit if if you have in investments in the US in in many cases uh you may you may be you may not up paying investment uh additional investment taxes in the US that investment additional investment taxes are not claimable in Canada uh sometimes people do pay sales taxes sorry uh sales taxes are not claimable in Canada uh property taxes foreign property taxes are also not claimable in Canada now the other most important uh errors that we found uh on on while looking at the taxes is uh sometimes people do pay taxes on the income on the US side but that income is exempt in Canada so if you paid any foreign taxes on any income that is exempt in Canada those taxes will not be allowed in Canada the most common is is taxfree savings account uh tax any money that you make in uh tax fee savings account is taxable in the US but not in Canada so if you are claiming uh any taxes that you have paid on the income that's getting taxed in the US on taxfree savings account uh that may be disallowed the other part is uh foreign pensions if you are a Canadian resident uh and you're getting Social Security uh and other income uh that that is taxed just Social Security is taxed in Canada only not in the US many times people do claim uh file taxes in the US and claim Social Security income as taxable even though they are Canadian resident uh and then they claim the Canadian taxes on the Social Security taxes and but it gets later on disallowed uh other most common is is uh capital gains we all know the uh the a part of capital gain is taxed in Canada so let's say if you're making $100 of capital gain uh before the the the June 2024 changes uh 50% of the uh total capital gain was taxable uh which means uh if you made a $100 of capital gain in the US uh and that $100 is taxable in the US uh at the same time if you if you are reporting $100 of capital gain in Canada only $50 is tax was taxable so which means only 50% of taxes what you pay to the US will be allowed in Canada uh what I have seen people claiming the full amount uh whereas they are only eligible to clim the half of the amount only so this is the time people may see uh disal by CR uh next slide please can now one of the very most important part is make sure uh whenever you get the CR review you respond to the crvw within 30 days uh if you need some more time or you unable to respond uh in my experience you always allowed to call C Tax Center that you that they're working on your review and ask for extension uh in many cases we have seen tax Centers do allow extensions [Music] and additional time to respon um and in our experience working through those reassessments are are very challenging because uh they take quite long sorry would you be able to repeat that one there it just kind of broke up like a technical which oh sorry uh the last part the last slide okay so whenever you get this year review the most important part is uh you must uh respond to the reviews in 30 days this is the most common timelines we have seen uh over the years on those C reviews the recommendation is to either respond to the C within 30 days or call the tax Center who is working on your tax on your C review uh and get an extension uh in in almost all the cases you would find the contact number of the tax center that is working on your review and get an extension if you don't respond to uh the review within 30 days or the timeline that is given on the letter the return Then goes to a reassessment uh and then uh reassessment generally is to disallow the amount that you have claimed on your taxes and which was being reviewed uh that does not mean that it's end of the world you can still uh question the assessment uh but that takes months to resolve which could have been resolved uh that's all for me for today I hope I enough to uh perect there was a little bit technical technical glitches but I think uh you pretty much covered everything right fixed itself um I think maybe if there's any questions from anybody you can type it in the chat or you can unmute yourself if you're ready for them K yes sh it please okay and if it's anything that it's like it's going to be very very in-depth or a future webinar you know we can cover that or come up write a jot it down for the next one yeah of course of course you know I had some questions actually maybe I can get it going um so um one thing I was curious oh here we go so the Alvin asks the 9,932 limit for W2 limit is that in USD or cat USD USD ah there we go um my question was kind of more about the travel mileage and if you can claim things like auto repair or oil changes like maintenance things or is it just like the IRS mileage uh are you I think we are covering the Canadian part at this point is that type question question I'm not sure just C in general okay so both sides are are different so uh I'll address the Canadian part at this point okay uh so you are allowed to claim uh expenses that are part of your uh contract so in let's say if your contract is to visit patients every day or every other uh day uh and then uh your employment contract states that you are uh you're obligated to use your own vehicle at your own expense then yes you can certainly uh claim all those oil changes anything that happens to your vehicle now just keep in mind uh C do expect you to uh maintain a log uh that shows how much uh vehicle was used for personal and how much vehicle was was used for uh business purpose uh there is a template um that for the log uh I can probably share with you and then you probably you can share with your uh uh group as well to maintain that blog that I think I claimed mileage too because I guess my agency was based in bamer tone Florida and over six months they sent me to two different hospitals as their clients and so I was definitely traveling for work so that worked out well okay and then um let's see here um now just curious about what you meant about uh us donations I know in Canada they have to be registered if you you know if you're in the States you might come across different things that you want to donate to so are they really not claimable in Canada or only on one side or not at all there are certain uh uh in most cases you are eligible to claim registered Charities uh but the most common I found gofund me that's not claimable in in almost all the cases that makes sense okay and medical insurance is that something that we can claim as Canadians going to the states yes if you are paying from your pocket you can certainly claim medical insurance any other questions from anyone if you're shy you can use the chat or you can send me a fall be if if that helps that's true that's true oh yeah do you want to put your contact information in there or is it on the last oh it's not on the last side if you put it if not I could put in the video oh somebody put I was going to ask about medical insurance we Canadians don't like paying it yeah I know I know especially medical insurance I mean we pay such a high make Insurance yeah yeah um one thing I had a question about was uh let's say you wanted to get something covered but you know you need to file that t2200 um to your I found when I tried doing that with my American agency to get some things covered that was for work they had no idea what this Canadian form was yeah now I I think I read a case that was like if you submitted it if you really really tried to get them to fill it out then you know you're kind of you know exempt but if you didn't even bother then you know might get thrown out if it ever you know got is that kind of yeah that's just a little unfortunate uh the requirement uh uh and in the case because employer in most cases they have no idea what this form is and sometimes they are hesitant to sign anything that they don't understand uh but yeah that is a requirement unfortunately and uh see in in almost all the cases would want to see that form signed and dated by employer I know it's unfortunate but that's how it is and this one gets asked a lot because I think people are kind of sweating before they ask it stiens definitively not taxed in Canada and the US right uh I would say incorrect stifin are taxed in Canada in most cases really yes uh in most cases not in the US so if the stiens are like you meet all the IRS criteria and then when you get your W2 they're not even on the W2 what about in that situation because that's how most of them I think pay as travel nurses yeah in in those kind of cases uh we generally buy work Case by case uh we work through their past UPS uh or their summaries that they're preparing I think but it's it's a very uh what do you call it may need a another webinar on just on the Sten because it's a very uh detailed question to answer okay we have our next one any other questions from anyone I'll give it like a minute okay if there's no other questions I guess the last big one would be if you filed on your own or you filed uh you know and it's not going well or something like that and they want to come to you to fix it and kind of dump the documents on you do you have like a a rate for that or what should they do just kind of reach out to you and that's that or yeah so uh especially for uh a travel nurse group Facebook group and the Instagram operated by cat in uh we are offering 50% off uh which is roughly which bring it not oh I'm sorry we are uh uh pricing it to $50 the the standard price is 150 so if somebody's coming for the year tax 2023 and 2022 if they have uh CR reviews uh we should be able to handle for them U at a very reduced price uh why did they mention uh P group's name that's pretty awesome because I mean it's the phone call loone is worth 50 bucks um I do see Alvin asked here how to turn housing allowance or housing rent into stiens to reduce tax does longer contract does a longer contract work better versus shorter contract on this matter because rent is so expensive um I think we can I think we can cover this question uh in the next webinar for the I think stiens are going to be a big webinar all on their own yeah yeah sorry but Elvin you can probably email him um you know and clarify a paragraph kind of question there what you want to know if that's because there's a lot more I need to ask to understand the situation and then probably answer the question perfect okay if not this has been lovely okay thank you so much everybody I think it was a great session and hopefully we'll see another one soon uh thank you so much for all the questions I hope I was able to answer uh and yeah uh enjoy the great enjoy the coming weekend