My_question_is: Applicable to both US and Canada
Subject: Thinking about a job in the US
Expert: taxman at centa.com
Date: Wednesday January 31, 2007
Time: 10:03 PM -0500
QUESTION:
I am a naturalised Canadian citizen, having moved to Canada 5 years ago from
Australia. I have the opportunity of a job in the US, and anticipate I would
be issued with a TN visa to allow this. The company I would be working for
have said they would take care of all that side of things (whatever that
actually entails). My wife and children intend to remain in Canada, and I
would make frequent trips home, but for the most part, I would be residing
in the US.
This is all very much in preliminary planning stages, and this is very new
to us. I do not know the taxation implications involved, but expect that I
would be filing a tax return in the US, even though the majority of my
earnings would be sent back to Canada. Am I still able to make RRSP
contributions, and also pay into the CPP? I will maintain Canadian bank
accounts, so deductions can be made automatically. I don't intend to live in
the US indefinately, and want to be sure that when I retire, I have adequate
funds available to me.
Thank you for your help.
----------------------------------------------------------
david ingram replies:
Under the situation you described, you will continue to be taxable in Canada
on your US Income because you are not intending to leave Canada and your
home and children are going to remain in Canada permanently or for the
forseeable future.
You may make payments to a Canadian RRSP. You should NOT make payments to a
US 401(K) or a US IRA because Canada will not recognize them as a deduction
and still tax them when you take the money out.
IF and I say IF you were being transferred to the USA to a branch, you could
elect to pay CPP instead of US Social Security but that would not be to your
advantage. As it is, the Federal and State taxes AND the US Social Security
you pay will just about wipe out any Canadian tax liability if you file as
MFS - Married filing separately. However, the overall tax bill will likely
be lower if you file a US Joint return with your wife (even though she is
not living there) and claim a smaller tax credit to Canada and pay some of
the tax to Canada.
You should likely get me or someone like me to run some pro-forma returns
for you so that you can really understand the tax ramifications.
Unfortunately, it will cost twice as much for Feb, Mar, April, May then it
would have in Sept or Dec.
Goto www.centa.com and read the " US/Canada Taxation" section in the second
box down on the right hand side. This is not "your' situation. It is aimed
at an American in Canada but the general taxation hints will give you an
idea of the forms that you have to fill out. You have to add forms T D F
90-22.1 and 8891 to the section you are reading.
If you can't find a form, look it up at www.irs.gov click on Forms and
Publications.
--------------------
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.
-----------------------------
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:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time -
(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 for expert help, assistance, preparation, or
consultation in connection with personal or business affairs such as at
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