David:
I have a tax question and it appears that you are just the expert I need to
get me informed! I also recognize that you are a business professional and
certainly are entitled to make money as a result of your expertise, so it
might be that you can't answer me in this email, or you might require me to
attend a fee-for-service consultation? In any case, I genuinely would
appreciate your assistance in whatever form/format you might be able to
offer me.
I am a US citizen married to a Canadian. I was recently approved for
permanent residence in Canada and I just "landed." We are setting up home in
Vancouver, BC.
I have an excellent, well paying job in the US (Seattle area) that allows me
to continue working through a combination of telecommuting and traveling
across the border (Canada to US) for maybe two or three days a week, which
is what I am planning to do.
So now I consider myself to be a US Citizen, living in Canada, but working
in the US.
My salary is roughly about $85,000 US so I will exceed the $72,000 exemption
that I keep reading about.
What I can't figure out is do I pay US taxes, get that back (or most of it)
when I file my return and then pay Canadian taxes? Or do I need to be paying
Canadian taxes now, and not paying US taxes? Or --- as a most unsavory
alternative --- I should be paying taxes to both countries (in which case,
you can contact me as the homeless man, sleeping on the steps of the Second
Cup coffee stand, corner of Georgia and Seymour)?
And, I would really like for you to support me with my US (can do?) and
Canadian tax returns!
I am genuinely trying as hard as I can to understand all of the rules,
regulations, and processes and honoring everything very carefully, but it
seems inevitable that I will get regularly whalloped or spanked occasionally
by some 'official' as part of the immigration and transition process
(importing/exporting my car - another whole story).
Thanks for whatever help you can offer this new immigrant to Canada.
JXXXXXXX
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david ingram replies;
You are a fairly typical client for us. At any one time, I will have fifty
or sixty people doing exactly what you are doing.
As a US citizen, you are taxable on your world income no matter where you
live. If you are earning your income outside of the US AND are living
outside of the US, you may earn up to $80,000 US and exempt it form US tax.
To qualify for the %80,000, you have to be a bone fide resident of another
country (Canada) from Jan 1 to Dec 31 of a calendar year, OR alternatively,
have been physically out of the USA for 330 days out of a 365 day period.
Obviously, you do not and will not qualify for the 330/365 period but after
you have been here from Jan 1 2006 to Dec 31 2006, you will have qualified
and can use the 2006 time to qualify retroactively for 2005. It is a "hard
to understand" concept and I have never seen another office in North America
use it but it can be done by filing form 2350 when your 2005 return is due.
So, we will be filing a 2350 to delay your 2005 return until Jan 15, 2007.
At the same time, we will be calculating the tax owing to the US first based
upon your number of days working in the USA and the tax payable to Canada
first based upon the number of days you have worked in Canada. This means
that in 2006 when it comes time to pay your Canadian tax, you will not have
any credit and will be waiting until 2007 to get your refund which you would
/ could pay Canada with.
It would be better if your US employer would reduce your withholding and if
you had been transferred to Vancouver, they would be working at doing this
for you. However, when it is a voluntary move, their payroll department
will not have any good reason to do this so you will likely have to be
prepared to fund the difference out of your own funds for a year.
Glad to look after your returns when they come due but you would likely
benefit from a personal visit and a couple of pro-forma tax returns so that
you know what to expect. You would be looking at about a $535.00 bill I
reckon but it would likely be worth it to you in the long run.
In general, we charge $750 to $1,500 Cdn to prepare the kind of returns you
describe when the time comes.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered. BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone
outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
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 <http://www.centa.com> . If you forward
this message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from www.centa.com
<http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or
www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a
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