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My husband is being transferred to his company's Canadian work site. Will he be required to pay additional taxes to Canada? Will he get a break on his US taxes since he works out of the country? Can he claim the tunnel fee on his income tax?
TXXXXXXXXXX
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david ingram replies:
I assume from your question that you live in the Detroit area and he will be commuting to Windsor because of the tunnel question.
The answer is that he will be taxable in Canada on his earnings in Canada. If he commutes, he will not be taxable on other US income in Canada.
After he pays his tax to Canada, he will convert the income to US dollars and report it again on your 1040. He will claim credit for CPP, Employment insurance and income taxes paid to Canada on US form 1116.
Tunnel fees are only deductible if it is for a short transfer.
The biggest problem you will have is if you are a single income family and file a joint tax return. The combined Michigan/US federal taxes are not that much lower for a single person than the rates for Ontario and the Federal Canada return.
However, if you are not working and file a joint tax return, your US rate falls considerably and the Canadian tax will be several thousands more. In these cases, it is common for the employer toi make up the differnce under a tax equalization plan. Talk to the payroll people.
Hope this helps.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
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Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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