live in USA, work in Montreal - Live in Quebec, work in US -
I am glad to see that your listserv is going on... I was in touch with you a few years back when you started on-line... We moved back to the Canada a couple of years ago... and
I will need to make a decision in the next year or two: I now work for a companie in Montreal (I am Canadian), but eventually I will also do some work in NY state (a new job). I was wondering if I should primarily live in NY State even though most of my work will be in Canada so that I can have the tax benefits of living in the US. You see, I have the choice of living in Canada or in the US and do the same job.
In other words, where are you better off living if you work in both countries???
Thanks
xxxxxx
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david
ingram replies:
The only way to tell is to do a proforma tax return for Quebec and a proforma
tax return for the state of New York. When you do it, remember to consider
what happens with your medical premiums because if you are living in New York,
you will not qualify for Quebec Medical And be paying anywhere from $300 to $600
a month to replace it unless your company covers you in New York
state.
If you are the only working spouse in a married relationship, then the joint tax provisions in New York state may tilt the factors in New York state's favour.
I have done several of these over the last well and you might want to
read the following. I have a sneaky idea that it might even be a reply to
you originally:
Hi David,
1. If I work in Canada as well as in NY state,
will I only pay income taxes in the country where I am a
resident?
2. If I have the choice to live live either in NY
state or in Quebec province and work in both places, it seems that it would be
financially advantageous to live in NY state... is that
correct?
Thanks for your time,
-----------------------------------------------------
david ingram replies:
To make it simple, If you lived in Niagara Falls Ontario and
worked in Niagara Falls, New York State, you would pay tax first to New York and
the US federal Government and then report the income again in Canada and claim a
foreign tax credit for the tax paid to the US.
Just for the fun of it, I decided to take 2 hours and
calculate the tax for a single self employed person in downtown New York City
and a single Self-employed person in downtown Montreal, Toronto and
Calgary.
I used $100,000 and 2007 Income tax rates.
I have not used any special deduction because any self
employed Canadian (and most others as well) can make their Canadian
Mortgage interest deductible and it is a better deduction in Canada when you do.
(see my November 2001 Newsletter in the top left hand box at www.centa.com).
If you were living in in NYC
City self employed tax $
3,400
State of New York
5,455
City of New York
735
US Federal
Tax 17,288
- does not include a Medical premium - Min $3,600 for equivalent
US Social Security
14,130 - this is analogous to our CPP
For total US taxes of $
41,000
In Montreal
Quebec Income Tax $
17,772
Quebec Pension Plan
3,979
Quebec Medical
1,237 - US equiv over
$3,600 but not mandatory
QPIP (parental)
434
Canada Federal Tax
18,167
For total Canadian taxes $ 41,589
but it includes medical AND prescription insurance.
In Toronto
Ontario Income
Tax $
10,194
Canada Pension Plan
3,979 - The Ontario Medical premium would be
$900
Federal Income
Tax
18,167
for total Canadian Taxes $
32,340
In Calgary
Alberta Income
Tax $
8,059
Canada Pension
Plan 3,979
The Alberta medical Premium is $528
Federal Income
Tax 18,167
for total Canadian Taxes $30,205 Note
that there is no Provincial sales tax as well
In Vancouver
BC Income Tax
$ 7,948
Canada Pension
Plan 3,979
The BC Medical Premium is $648
Federal Income
Tax 18,167
for total Canadian Taxes $30,094
In Seattle - Anchorage, Las Vegas, Dallas, Miami
US Federal
Tax 17,288
- does not include a Medical premium - Min $3,600 for equivalent
US Social Security
14,130 - this is analogous to our CPP
For total US taxes of $
31,418
Note that Alberta along with Nevada and Oregon, has no sales
Tax.
Following are the answers to some other
questions:
QUESTION: Hello, My wife and I (both US citizens) are considering moving to Vancouver. I'm a xxxxxxxx, telecommuting for a start-up company (Delaware company with its office in New York City). And I'm trying to start a new career as a screenwriter/cameraman/director. I'm trying to make a general comparison of the taxes we'd pay as residents of Seattle, or Portland, OR, or Vancouver. We believe Vancouver would be the best fit, but we're concerned about Canadian taxes. Current salary through the company is $62,500 (US). Other interest income from U.S. accounts totals about $23,000 per year (US). Can you give me a basic summary of what I might expect as U.S. versus Canadian (federal/provincial/city) taxes to expect? Also, if the start-up is successful, it may mean a buy-out in two or more years. Through annual stock options, my portion could mean value of seven figures. Any obvious considerations in that regard. Great website! I'm subscribing to the newsletter, and have no doubt where I'm coming for my tax help if we end up in Vancouver. Thanks very much, ---------------------david ingram replies:
It is tax season and I am too busy to do this what-if. Maybe if you send it back in July, it might get into the free list.
in the meantime, this older question might help. BC has slightly lower taxes than Ontario.
Washington State has no State income tax and is generally lower than BC.
Oregon has a state income tax and but no state sales tax. Washington and Oregon both cheaper overall tax than Michigan.
On my opinion, the career of screenwriter cameraman director is a tough one in Vancouver at the moment. Vancouver has a lot of those people out of work at the moment because of the 40% drop in the value of the US dollar.
------------------------------------------
My_question_is: Applicable to both US and
Canada
Subject: US citizen working in Canada; what are my tax liabilities?
Expert: [email protected]
Date: Friday January 04, 2008
Time: 12:54 AM -0000
QUESTION:
I am planning to start working for a Canadian company in Toronto, Ontario on February 1st, 2008. I have a wife and 4 kids whose ages at the end of 2008 will be 18, 16,14 and 3. My wife is a homemaker and the children will provide no additional income. My estimated gross will be 195,000 with rental costs of approx. 30,000. My questions are the following: What is my estimated provincial and federal tax liabilities and what credits am I eligible for? I will also be maintaining a residence in Knoxville, tn USA and will be reporting the month of January's income earned in the USA. Next Question is what are my liabilities/credits for the income earned in Ontario,CA? Thanks for your assistance in this matter.
-----------------------------------------------------------------------------------------------------Subject: US citizen working in Canada; what are my tax liabilities?
Expert: [email protected]
Date: Friday January 04, 2008
Time: 12:54 AM -0000
QUESTION:
I am planning to start working for a Canadian company in Toronto, Ontario on February 1st, 2008. I have a wife and 4 kids whose ages at the end of 2008 will be 18, 16,14 and 3. My wife is a homemaker and the children will provide no additional income. My estimated gross will be 195,000 with rental costs of approx. 30,000. My questions are the following: What is my estimated provincial and federal tax liabilities and what credits am I eligible for? I will also be maintaining a residence in Knoxville, tn USA and will be reporting the month of January's income earned in the USA. Next Question is what are my liabilities/credits for the income earned in Ontario,CA? Thanks for your assistance in this matter.
david ingram replies:
You really require someone to do the calculations for you and your family.
We would charge in the $400 range to do that for you.
In he meantime, the following which I did answer in November might give you an idea.
In your case, because all the income is in your name, tax will be significantly higher in Canada because you will be paying on one income and you will be paying Ontario Tax while coming from essentially tax free Tennessee
On the other hand, medical insurance will be significantly lower.
--------------------------------------------------------------------
________________________________________________________________
david ingram replies:
As an esoteric exercise, I decided to see what the difference actually was because Canadian taxes are NOT always higher than the US, particularly where two spouses have equal earnings.
The big difference is that the US has a joint tax return rate and when one spouse works an the other does not, a discrepancy does arise.
I used a US salary of $60,000 and a joint 1040 and MI 1040.
I did not use any deductions other than the standard deduction and did not claim for any children.
The results were
US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
If you had lived in Detroit, the city tax would be $1,470 changing the figures to
a total of $13,857.00 US or $15,715.14 Canadian
I converted the $60,000 to $68,045.62 Canadian
The results were
Cdn Fed tax of 9,581.69
ON tax of 4,659.14
CPP of 1,910.70
EI of 729.30
for a total of 16,880.83 which converts to $14,884.86 in US funds
The difference is $2,497.86 or about $200 a month. if you did not move from a Michigan city with a tax return or a difference of (14,884.86 - 13,857) $1,027.86 if you moved from Detroit
Then - (I was intrigued) I tried it with you both receiving $30,000 US
The results were
US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
and $1,470 Detroit tax 'IF' There is no change
Then I decided to show what would happen to a couple who moved to Canada and both worked equally.
I converted the $60,000 to $68,045.62 Canadian but split it into 2 returns of $34,022.81
The results were
Cdn Fed tax of 3,474.97 x's 2 or 6,949.94
ON tax of 1,721.67 x's 2 or 3,443.34
CPP of 1,510.88 x's 2 or 3,021.76
EI of 636.23 x's 2 or 1,272 .45
for a total of 14,687.49 which converts to $12,950.86 in US funds
and is only a difference of 12,950.86 - 12,387 or $563.86 or less than $50.00 a month AND qualifies your wife for her own CPP.
Of course, if you moved from Detroit to Windsor, you would be paying ($13,857 - 12,950.86) $906.14 LESS living in Canada.
For the record, I would normally charge a minimum of $405 Cdn for this 'what if' calculation and your question was rejected originally along with another 100 or so. However, it caught my eye and I decided to use it as a major answer.
The investment part of your income will also cause some differences because Canada will tax the dividends and capital gains differently, likely a little more. However, if you switched your accounts to Canadian securities, the tax may be a little less because of Canada's dividend tax credit.
Hope this helps a bit.
David,
I am a U.S. citizen and resident, married to a (non-working) dual
U.S.-Canadian citizen. I recently learned that the company where I've worked for
the last 20+ years is closing its doors near the end of this year. I'm 55 and
can't get my pension for at least 5 years...10 years if I want a full pension.
We've been thinking of the idea of moving across the border to Canada (wife
would sponsor me), and I have a question. Would it make any sense tax-wise for
me to live and work in Canada, pay into CPP for 5 or 10 years? I understand that
Canadian taxes are higher than in Michigan, and I have mutual funds and other
savings that are generating about $10,000 in yearly interest/dividends/capital
gains that I would be leaving in the U.S.
Thanks,
david ingram replies:
As an esoteric exercise, I decided to see what the difference actually was because Canadian taxes are NOT always higher than the US, particularly where two spouses have equal earnings.
The big difference is that the US has a joint tax return rate and when one spouse works an the other does not, a discrepancy does arise.
I used a US salary of $60,000 and a joint 1040 and MI 1040.
I did not use any deductions other than the standard deduction and did not claim for any children.
The results were
US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
If you had lived in Detroit, the city tax would be $1,470 changing the figures to
a total of $13,857.00 US or $15,715.14 Canadian
I converted the $60,000 to $68,045.62 Canadian
The results were
Cdn Fed tax of 9,581.69
ON tax of 4,659.14
CPP of 1,910.70
EI of 729.30
for a total of 16,880.83 which converts to $14,884.86 in US funds
The difference is $2,497.86 or about $200 a month. if you did not move from a Michigan city with a tax return or a difference of (14,884.86 - 13,857) $1,027.86 if you moved from Detroit
Then - (I was intrigued) I tried it with you both receiving $30,000 US
The results were
US fed tax of 5.714
MI tax of 2,083
FICA 3,720
Medicare 870
For a total of 12,387 which converts to $14,048.02 in Canadian funds
and $1,470 Detroit tax 'IF' There is no change
Then I decided to show what would happen to a couple who moved to Canada and both worked equally.
I converted the $60,000 to $68,045.62 Canadian but split it into 2 returns of $34,022.81
The results were
Cdn Fed tax of 3,474.97 x's 2 or 6,949.94
ON tax of 1,721.67 x's 2 or 3,443.34
CPP of 1,510.88 x's 2 or 3,021.76
EI of 636.23 x's 2 or 1,272 .45
for a total of 14,687.49 which converts to $12,950.86 in US funds
and is only a difference of 12,950.86 - 12,387 or $563.86 or less than $50.00 a month AND qualifies your wife for her own CPP.
Of course, if you moved from Detroit to Windsor, you would be paying ($13,857 - 12,950.86) $906.14 LESS living in Canada.
For the record, I would normally charge a minimum of $405 Cdn for this 'what if' calculation and your question was rejected originally along with another 100 or so. However, it caught my eye and I decided to use it as a major answer.
The investment part of your income will also cause some differences because Canada will tax the dividends and capital gains differently, likely a little more. However, if you switched your accounts to Canadian securities, the tax may be a little less because of Canada's dividend tax credit.
Hope this helps a bit.
--------------------------------------------------------
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$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
david ingram's US / Canada Services
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My Home office is at:
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Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.
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Income Tax service and
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service & immigration help to non-resident Americans &
Canadians from New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
authority.
Phone consultations
are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST
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help.
This is not intended to be definitive but in general I am
quoting $900 to $3,000 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest
slips and you lived in one country only (but were filing both countries) - no
self employment or rentals or capital gains - you did not move into or out of
the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 would be the minimum with a move in or out of the
country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
minutes.
$1,600 would be the minimum with a rental or two in the
country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above and you moved in and out
of the country.
This is just a guideline for US / Canadian
returns
We will still prepare Canadian only (lives in Canada,
no US connection period) with two or three slips and no capital gains, etc.
for $200.00 up.
With a Rental for $400, two or three rentals for $550 to
$700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to
$700
And an American only (lives in the US with no Canadian
income or filing period) with about the same things in the same range with a
little bit more if there is a state return.
Moving in or out of the country or part year earnings in
the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
each.
18 RRSPs would be $900.00 - (maybe amalgamate a
couple)
Capital gains *sales) are likely $50.00 for the
first and $20.00 each after that.
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
This is a guideline not etched in
stone. If you do your own TDF-90 forms, it is
to your advantage. However, if we put them in the first year, the computer
carries them forward beautifully.
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