taxes for dual citizen working for Canadians in USA -
Sent: Friday, January 12, 2007 12:29
PM
To: [email protected]
Subject: taxes for dual citizen working for Canadians in USA
To: [email protected]
Subject: taxes for dual citizen working for Canadians in USA
Dear David,
I have recently been hired to work at
the xxxxxxxxxxxxxxxxxx Canada in New York. I
am a resident of New York an American citizen since birth, though I am also a
Canadian citizen as I was born in Victoria, BC. I lived in BC
from xxxxx to
xxxx- I moved back to New York in 2005 ..
The xxxxxxxxxxxx Canada pays its employees
through the Canadian Consulate office in New
York. American employees are treated as freelance foreign workers, they
must pay their own Social Security payment as well as what would
normally be the employer's contribution.
What I am told is that as a dual citizen I will
both have to report to Revenue Canada and possibly pay Canadian taxes as well as
paying this increased Social Security quarterly to the American
government.
I do not make enough money to get caught in a
double bind with taxes so I need help to sort this out.
Thank you for any input you may have!
Best regards,
---------------------------------------------
david
ingram replies:
Under
your circumstances, Canada has the right to ask for a tax return but you are not
taxable in Canada on your US income.
If you
have Canadian RRSP or other financial accounts they must be dealt with with US
forms 8891 and TDF 90-22.1
If
there is any Canadian interest or dividends being paid to you in a non RRSP
account, make sure that the holders of the accounts know that you are a
non-resident of Canada and that they deduct 10% tax on interest and 15% tax on
Canadian dividends.
Then
Simply fill in the Canadian T1 and report all the US income on line
104.
Next, exempt it all on line 256 under Article IV of the US / Canada
Income Tax Treaty.
Article XIX of the Treaty does NOT apply to you because you are a US
citizen.
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Phone consultations are $400 for 15 minutes to 50
minutes (professional hour). Please note that GST is added if product remains in
Canada or a phone consultation is in Canada.
This is not intended to be definitive but in
general I am quoting $800 to $2,400 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
$2,400 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 two or three slips and no capital
gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
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 $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
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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