QUESTION:
I'm a US citizen who moved to Montreal a few months ago as a Permanent
Resident of Canada. I telecommute to my office in New York, and my paycheck
is issued in New York, which is deposited to my USA bank account. I know I'm
going to have to pay lots of money to Canada at the end of the year. My
questions are: 1) How can I estimate how much I'll have to pay to Canada at
year-end?, and 2) What do my company and I need to do to avoid this problem
next year? Do I need to set myself up as a business?
Thanks so much for this valuable service you provide.
Regards,
---------------------------------
david ingram replies:
First, get them to stop deducting US income tax, US FICA and NY state tax
and Medicare.
If they will not set up a Canadian Payroll account, have them pay you as a
contractor now.
When they do this, they should pay you their half of the FICA and the
Medicare that they are paying now plus a holiday pay differential.
To estimate the tax, do a pro-forma Canadian Tax return. Use a 2005 and the
figures will be pretty close.
If you need help, we can do that for you.
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 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.
$1,500 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
$2,000 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 a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
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 $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 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.
Just a guideline not etched in stone.
------------------
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Disclaimer: This question has been answered without detailed information or
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and all non-contractual duties are expressly denied. All readers should
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Answers to this and other similar questions can be obtained free on Air by
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Interest deductible.
I will be at the seminar following the last Sunday of the month.
------------------------------
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