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Hi! I am a pharmacist working in US on a TN visa. I just moved and didn't
declare non-residency yet. I have an opportunity to work in Canada
occasionally.
Am I able to do it? How would I be taxed?
Would I be taxed on
my combined income in the US and Canada?
Thank you,
XXXXX.
_________________________________________________________________
david ingram replies:
If you give up your home in Canda and move tot he USA under a TN visa you have left Canada for tax purposes. You will simply check off that you have left and put the date on page 1 of your next Canadian Income Tax return.
If you keep a home and family in Canada it is a different situation.
If you are now living in the US in Detroit (as an example) and come across to Canada two days a month to work, you will pay Canad tax on the Canadian earnings and then report the earnings again on your US tax return and "calculate but not 'pay' tax again" to the US. The reason you will not likely owe tax to the US on the money is that you will claim a foreign tax credit on form 1116 for the tax paid to Canada.
However, you might have to pay tax to the US only if you file a Canadian tax return and claim the benefits of The US / Canada Income Tax Convention. Article XV exempts earnings of up to $10,000. So! If you only earned $8,000 in Canada, you would NOT pay tax to Canada but would only pay tax to the US. And if you earned $10,001 in Canda, you would pay tax to Canada and claim the credit in the US.
But there is one more wrinkle (this is sort of like drug interactions). If you earned that $8,000 mentioned above, your employer would also have deducted EI and CPP. Those are considered federal taxes for the purposes of the US tax credit. So, even though you did not pay "income tax" to Canada you did pay federal taxes and these are a foreign tax credit you can claim on your US form 1040 schedule 1116.
I, of course, would be pleased to look after this first US / Canada tax return for you. In general, the fee is $700 to $1,400 Cdn for the first year.
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