> Subject: Tax obligations in the USA and Canada
> Expert: taxman at centa.com
> Date: Monday August 14, 2006
> Time: 05:04 AM -0700
>
> QUESTION:
>
> I have the opportunity to relocate from Mississauga, Ontario Canada to
> either Edmonton, Alberta Canada or Milwaukee, Wisconsin USA. If I decide
> to work in the USA, I will be working there for three years under an H1-B
> visa. Do I have to pay income tax in both countries and what happens to
> my Canadian pension plan, RRSP's and L.I.R.A in Canada? If the slary
> offered in both places is the same, would it be more favourable in terms
> of income tax, for me to stay in Canada or to move to the USA?
>
> Thank you
> -------------------------------------------------
> david ingram replies:
>
> You have not given me enough information for anything specific but I would
> charge for that and the following was an interesting exercise. As I said
> in an email a month ago, a single person making $3,500,000 US (sports
> figure obviously) was $29,000 US better off income tax wise living in
> Vancouver than San Francisco.
>
> If I assume that you are making $100,000 Canadian which is about $89,280
> US, your Federal Taxes would be (excuse the formatting please):
>
>
> Canadian US Canadian
>
> Conversion
> Federal Tax 18,970
> 17,208
> CPP / social Security 1,861 5,535
> EI / Medicare 761
> 1,295
>
> 21,592 24,038 26,993
>
> Alberta 8,285
> Wisconsin
> 5,557
> Total 29,877
> 29,595 33,146
>
> Ontario 10,792
>
> Missouri
> 4,406
> St Louis City Tax
> 893
>
> 32,384 29,337 32,857
>
> =======================================================
>
> As you can see, the tax in Alberta is $29,877 Canadian compared to $33,146
> Canadian in Wisconsin
>
> Also, Milwaukee has a city and school district tax which i did not
> calculate for lack of information but assume another $500 to $1,000 US
>
> Even the Ontario Tax is $800 less than Wisconsin before City and school
> tax.
>
> Alberta also has no sales tax and cheaper gas than the rest of the
> country.
>
> But, the cost of living is likely higher in Edmonton than Milwaukee
> ==============
> This was done as a single person. If you are married and your spouse will
> have no income in the US, the US Federal Tax would drop to $11,549 US
> (plus Social Security and Medicare) and the Wisconsin tax would drop to
> $5446 US plus Milwaukee and school taxes.
> -------------------------------------
> You would not have to pay tax in both countries. However, if you own a
> house in Ontario and rent it out while gone, the tax situation is much
> better if you go to Alberta rather than Milwaukee because any capital
> gains can remain tax free as a transferred resident of Canada and are
> taxable as a non-resident. If you go to the US, you will gave to file a
> Section 216(4) rental return for Canada.
>
> Your RRSP and LIRA will just stay there and have to be reported to the IRS
> and Treasury on forms 8891 and TDF-90. If you are being transferred, the
> proper visa is an L visa not an H visa as you suggest. If you are being
> transferred, the company can elect to pay CPP to Canada instead of FICA to
> the US and that would lower your US tax significantly. However, that does
> not apply with an H visa.
> -------------------------------
> David Ingram's US / Canada Services
> US / Canada / Mexico tax, Immigration and working Visa Specialists
> US / Canada Real Estate Specialists
> My Home office is at:
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> North Vancouver, BC, CANADA, V7N 3L7
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>
> Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time -
> (please do not fax or phone outside of those hours as this is a home
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>
> email to taxman at centa.com <mailto:taxman at centa.com>
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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
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>
>
> Be ALERT, the world needs more "lerts"
>
>
> David Ingram gives expert income tax & immigration help to non-resident
> Americans & Canadians from New York to California to Saudi Arabia to
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> investments are all handled with competence & authority.
>
> 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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>
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