Filing taxes when working in Canada and living in the US. - COMMUTING -

QUESTION:

Hello.  My name is XXXXXXXXXXXXX and I am a Canadian citizen who moved to the U.S. in 2003.  For just a matter of a few weeks in 2005, I worked in Canada, commuting back and forth every day.  For 2005 income Canadian income, I had great trouble finding someone capable of doing Canadian taxes for a non-resident of Canada and I ended up using H$R Block.  They told me to ask for a T4 (NOT an NR. My gross income was only $3097.08 and I received a refund of $483.28.  Then from January of 2006 - June of 2007, I worked f/t in Canada, while still living in the States.  I used my parents' accountant when I received my NR for 2006 and he told me 'not to even file', claiming that I had already paid the amount I needed to pay for being a NR and the Canadian Government doesn't require that I file. I knew this to be a bizarre statement, but I took his advice and didn't file.  I also haven't filed for 2007 but just recently, I received a notice in the mail from the Canadian Government, ord
ering me to file for 2006.  I NEED an EXPERT to look at my Canadian income since 2005 and help me file/refile and get everything straight.  Is there anyone who can help me?

Thank you!

-----------------------------------------------
david ingram replies:

We always have some 200 clients in your position where they are working on one side of the border and living on the other.

Shoot the person who told you that you did not need to file for 2006.  (not really but you should).  With or without a T4 or a NR4 or a T4A or a T4ANR, anyone working in Canada needs to file a Canadian Income Tax return even if working here illegally,.

For 2006, you can file as a non-resident or even as a  'sort of' resident if all of your income was from Canada.  The reason for filing as a  'sort of' resident would be that you will get  full personal exemptions if 90% of your income came from Canada. 

As a resident of the US, you must also report your world income to the USA   You will then claim credit for the tax, EI and CPP that you paid to Canada on your US return.  I think you are in the Niagara Falls area of  New York so you  will also have to report the Canadian income on your New York 201 return.

Although busy, we can likely fit you in if the work arrives early enough. 

Please send copies of the US returns for 2005 and 2006 and a copy of your Canadian 2005 return as well if you would like us to proceed.  We also need the 2006 NR form and the NR or T4 or T4ANR you have received for 2007 and the US W2 you have received from the US School Board.
---------------------------------------------------------------
These older questions will give you some other ideas.


QUESTION:

I am a US citizen living in the US and I will start working for a Canadian company. I will continue to live in the US but will make frequent visits to Canada. I will not be in Canada for more than 100 days in any year.

To which country will I owe income taxes?

If I pay taxes to Canada and the rate is higher than my US rate, is there a way to recover the difference?


---------------------------------------------------------------------------

david ingram replies:

You will be taxable in Canada first on any earnings earned in Canada but if you are telecommuting the rest of the year, the US will have first claim for tax on the money earned in the US.  It would be handy if you could get your company to identify the split for you and issue a T-4 slip for the time worked in Canada and a second T-4 slip without Canadian income tax deducted for the time you are working in the US.

The tax, CPP and EI you are pay to Canada will be a foreign tax credit on form 1116 of your US return. However, if the company withholds full tax for a whole year when you only worked 40% of the time in Canada, you will have to wait fro your Canadian tax refund while having to pay to the US and have cash flow problem.

There is no provision to get a refund if the tax is higher in Canada.  However, depending on marital status, number of children, etc., the tax in the US for a single person without a mortgage is usually higher in the US.now unless you are living in a tax free state like Texas or Florida.  If you are a single wage earner in a US family with two or three children and a big mortgage, the tax is lower in the US.

However, we can average this out as well by rearranging affairs to make a Canadian mortgage tax deductible as well. See the November 2001 newsletter at www.centa.com (top left hand box)
-------------------------------
These older questions might help and others in the future will give you some ideas.

QUESTION:

I start working for a Canadian company next week.  I am living in Washington state and have legal resident status.  I am a Canadian citizen. Do I pay Canadian taxes only on the income earned?  Or do I pay both US and Canadian taxes?  

Any advice would be greatly appreciated.

-------------------
david ingram replies:

You will file your Canadian return first and pay taxes to Canada.  Then, as a US resident, you will report the money again and claim a foreign tax credit on form 1116 or your US 1040.  the foreign tax credit will consist of the Federal and Provincial taxes plus the CPP and EI you paid.

You should not continue with BC Medical or have a BC driver's licence anymore if you are moving to the US or already living there.

You must buy Washington State Blue Cross or its equivalent.  For BC medical to be valid (even if you pay premiums or are working in the daytime in BC and it is being paid by your BC employer), you must sleep in Canada. It is not good enough to be working full time in Canada and paying full  taxes to Canada; you MUST live in Canada.  You can NOT keep your green card AND BC Medical at the same time unless you file US form I-131 with US Immigration and move back to Canada to keep the Canadian medical alive and keep your green card.
-----------------------
This might help as well.

david ingram replies;

I assume that you are living in Detroit and working in Windsor or Living in Bellingham and working in Vancouver or something to that effect.

If  that is so, you can participate in a company pension plan but matched RRSP contributions are difficult because the financial company handling it for your employer is not licenced to sell to or deal with a  non-resident of Canada .

1.   You will pay Canadian Income Tax, CPP and EI.  You will then report the same income to the USA on a 1040 and claim credit for the taxes paid to Canada on US form 1116.  It is unlikely that you will owe the US more on the wages but you might if you have other investments in the USA.

2.   YES

3.   NO

4.   As explained, the company is not licenced to deal with you as a non-resident.  I will give the names of two people who can work with your company to set it up for you.

5.   NO  - You have to sleep in Ontario more than 153 days a year to qualify for OHIP.  You could live in Ontario for 155 days and the US for 210 days and keep OHIP AND your US resident alien (green) card alive. (Ontario is the only province with 153 days - all other provinces and all three territories require you to be there 183 nights.) Therefore, Ontario is the only province that you can legally arrange your affairs to have both a valid Green card AND a valid Provincial OHIP card).

This gives you the names of two people who can solve your RRSP problem.

Two ethical people who specialize in selling securities, RRSPs, etc., to US citizens or green card holders in Canada or Canadians in the US  are:

Mr Darrell Thompson
Blackmont Securities
Toronto
Local    (416) 874-8007
LD        (866) 775-7704
www.blackmont.com

AND

Dan Walkow
Seabank Financial
White Rock
Local     (604) 541-9952
L D        (866) 541-9952
www.seabankcapital.com
__
These two individuals and their companies have gone to the effort to get themselves registered just about everywhere so they can deal with a Canadian in Florida or California or Nevada, or an American in Ontario or BC., etc.
____________________________________

Note that because of their specialty, they tend to deal with accounts in excess of $200,000

However, I am sure that both parties would welcome an exploratory call.
-----------------------------

-I am currently living in Illinois.  I am about to come off of maternity leave from my Toronto company and I david ingram replies:

You can telecommute. You will owe tax to the US NOT Canada.

You might want to send the returns here.

 This older question should help as well

---

QUESTION:

Hi David,

I am a TN visa holder working in Seattle, and my wife is on a TD visa and she is citizen of China. We are determined as non-resident to Canada.

Can she telecommute from the US, and providing software consulting service to Canadian company? Is she allowed to work remotely while being a TD visa holder?

Does she need to file taxes to CRA?

Thank you very much.

--------------------------------------------------------------------------
david ingram replies:

She is not supposed to take a job away from a legal US resident.

Telecommuting to Canada does not take a US job away and should not be a problem. 

The Canadian Employer should not withhold any Canadian tax either.

She does NOT owe tax to Canada if she provides all her services from the USA.

She will / does owe tax to the US on the earnings and it should be reported on a schedule C on your joint 1040 US tax return.

She will also owe FICA (Social security tax) and should. send in form SE as well.
---