Tax Advisor Needed - Gary Gauvin, Steve peters, Len Vandenberg et al -

QUESTION:

My home-based software consulting business will be earning over $180K this year. I haven't kept any employees, and divide the current income between myself and my spouse on a partnership basis. We currently live in XXXXXXXXXX, BC and plan to move to XXXXXXXX, AB sometime this year when we sell our house. I know that you don't like incorporations, but at my newly achieved income level, I am guessing that it's advisable to incorporate. 

Do you have any recommendations for good tax advisors/accountants/estate planners/lawyers in XXXXXXXX whom I can get in touch with? 

If you could advise me instead of recommending someone else then will it be a problem to deal with you in case I am in Alberta, and you are here in North Van?

We do own a rental property in the US, and file 1040NR every year. We have 2 daughters - one of them is a US citizen. The rest of us are Indian Citizens who are permanent residents in Canada for last 4 years, and are waiting for our Canadian citizenship. So, our taxes/business and estate will span 3 countries (US, Canada, and India). Currently, my business is only limited to BC, so even if I move to Alberta, my clients will still be in BC, so I need advice on across-province tax advise.

Thanks, in advance.
XXXXXXX.

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

Before you incorporate, make sure that your house mortgage is deductible.  If it is not, don't incorporate.

I am quite happy to deal with you in Alberta or BC.  Half of our clients do not even live in Canada. 

I have no recommendations in Calgary or Edmonton or Red Deer..

There must be someone but they have not come across my desk.  There are a couple who are really bad.

No, I will not name them because I do not need to get involved in a libel suit and have better things to do.

I do not see why you would move to Alberta if your clients are in BC.  any perceived tax savings is not worth the move in my opinion.  If your intention is to keep your clients in BC and develop a new market by being there, that is a different matter.

And if you desire to deal with someone else other than our operation,  it is not that I do not name any others. 

The following former answer mentions some tax differences and lists people who are more than qualified to help you out

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

QUESTION: I am an American who married a Canadian. I was granted residency in Canada in Nov. 2007. I took my financial papers to an accountant, as I knew there would be some problems. He is now telling me that in addition to the $12,000+ that I have already paid in the US, that I must pay $9,000 in Canada. He said I might get a $1.000 refund from the US. This feels like double taxation!

I maintained an apartment in the States until the end of 2007, but spent most of my time in Canada.  I have been told that this means that I must pay Canadian tax for the entire year for services I received.  I did not go on BC medical until this month.  Help!

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

It is certainly possible that you owe more if you moved from a no-tax state like Nevada, Washington, Alaska, Texas or Florida. 

It would be unlikely if you moved from a high tax state like California or New York.

In a recent situation where a client did the same thing from Nevada to Vancouver, his tax was $4,000 higher in Vancouver but was still lower than if he had moved to California or New York city.

Ideally, you would have the same person do both returns.  If you do not want to deal with us, I recommend several others at the end of this older Q & A which will give you some idea of how it works.  In the meantime, you should read the October 1995 newsletter in the top left hand box at www.centa.com and the US Canada Taxation section in the second box down on the right had side at www.centa.com
 .

QUESTION:

Hello,
My wife and I (both US citizens) are considering moving to 
Vancouver.  I'm a xxxxxxxx, telecommuting for a start-up company (Delaware company with 
its office in New York City).  And I'm trying to start a new career as a screenwriter/cameraman/director.

I'm trying to make a general comparison of the taxes we'd 
pay as residents of Seattle, or Portland, OR, or Vancouver.  
We believe Vancouver would be the best fit, but we're 
concerned about Canadian taxes.

Current salary through the company is $62,500 (US).  
Other interest income from U.S. accounts totals about 
$23,000 per year (US).

Can you give me a basic summary of what I might expect 
as U.S. versus Canadian (federal/provincial/city) taxes to 
expect?

Also, if the start-up is successful, it may mean a buy-out 
in two or more years.  Through annual stock options, my 
portion could mean value of seven figures.  Any obvious 
considerations in that regard.

Great website! I'm subscribing to the newsletter, and have 
no doubt where I'm coming for my tax help if we end up 
in Vancouver.

Thanks very much,

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

david ingram replies:

It is tax season and I am too busy to do this what-if.  Maybe if you send it back in July, it might get into the free list.

in the meantime, this older question might help.  BC has slightly lower taxes than Ontario.

Washington State has no State income tax and is generally lower than BC.

Oregon has a state income tax and but no state sales tax.  Washington and Oregon both cheaper overall tax than Michigan.


On my opinion, the career of screenwriter cameraman director is a tough one in Vancouver at the moment.  Vancouver has a lot of those people out of work at the moment because of the 40% drop in the value of the US dollar.

---

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

You really require someone to do the calculations for you and your family.

We would charge in the $400 range to do that for you.

In he meantime, the following which I did answer in November might give you an idea.

In your case, because all the income is in your name, tax will be significantly higher in Canada because you will be paying on one income and you will be paying Ontario Tax while coming from essentially tax free Tennessee

On the other hand, medical insurance will be significantly lower.


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

David,

 

I am a U.S. citizen and resident, married to a (non-working) dual U.S.-Canadian citizen. I recently learned that the company where I've worked for the last 20+ years is closing its doors near the end of this year. I'm 55 and can't get my pension for at least 5 years...10 years if I want a full pension. We've been thinking of the idea of moving across the border to Canada (wife would sponsor me), and I have a question. Would it make any sense tax-wise for me to live and work in Canada, pay into CPP for 5 or 10 years? I understand that Canadian taxes are higher than in Michigan, and I have mutual funds and other savings that are generating about $10,000 in yearly interest/dividends/capital gains that I would be leaving in the U.S.

 

Thanks,

 

________________________________________________________________
david ingram replies:

As an esoteric exercise, I decided to see what the difference actually was because Canadian taxes are NOT always higher than the US, particularly where two spouses have equal earnings. 

The big difference is that the US has a joint tax return rate and when one spouse works an the other does not, a discrepancy does arise.

I used a US salary of $60,000 and a joint 1040 and MI 1040.

I did not use any deductions other than the standard deduction and did not claim for any children.

The results were

US fed tax of    5.714
MI tax of          2,083
FICA                3,720
Medicare             870           
For a total of   12,387      which converts to $14,048.02 in Canadian funds
If you had lived in Detroit, the city tax would be $1,470 changing the figures to
a total of  $13,857.00 US or $15,715.14 Canadian

I converted the $60,000 to $68,045.62 Canadian

The results were
Cdn Fed tax of   9,581.69
ON tax of          4,659.14
CPP of              1,910.70
EI of                    729.30
for a total of     16,880.83 which converts to $14,884.86 in US funds

The difference is $2,497.86 or about $200 a month. if you did not move from a Michigan city with a tax return or a difference of (14,884.86 - 13,857) $1,027.86 if you moved from Detroit

Then - (I was intrigued) I tried it with you both receiving $30,000 US


The results were

US fed tax of    5.714
MI tax of          2,083
FICA                3,720
Medicare             870           
For a total of   12,387      which converts to $14,048.02 in Canadian funds
and $1,470 Detroit tax 'IF'  There is no change

Then I decided to show what would happen to a couple who moved to Canada and both worked equally.

I converted the $60,000 to $68,045.62 Canadian but split it into 2 returns of $34,022.81

The results were
Cdn Fed tax of   3,474.97 x's 2 or   6,949.94
ON tax of          1,721.67  x's 2 or  3,443.34
CPP of              1,510.88 x's 2  or  3,021.76
EI of                    636.23 x's 2 or   1,272 .45
for a total of     14,687.49 which converts to $12,950.86 in US funds

and is only a difference of  12,950.86 - 12,387 or  $563.86  or less than $50.00 a month AND  qualifies your wife for her own CPP.

Of course, if you moved from Detroit to Windsor, you would be paying ($13,857 - 12,950.86)  $906.14 LESS living in Canada.

For the record, I would normally charge a minimum of $400 Cdn for this 'what if' calculation and your question was rejected originally along with another 100 or so.  However, it caught my eye and I decided to use it as a major answer. 

The investment part of your income will also cause some differences because Canada will tax the dividends and capital gains differently, likely a little more.  However, if you switched your accounts to Canadian securities, the tax may be a little less because of Canada's dividend tax credit.

Hope this helps a bit.

------------------------
The following people are skilled at US Canadian tax returns

Some hints to get them done. Who could look after you?

Gary Gauvin is absolutely qualified to deal with you.  He is an old business partner of mine from Ottawa.  He now practices outside of Dallas Texas as a one or 1 1/2 person office.  If you deal with Gary, you will deal with Gary.  He is a US enrolled agent.  You can find his website easily.  Type - income Tax Expert -  into
google.  Gary will come up as number one or two.  Why, because he is.  If I am looking for a first or second opinion, I call Gary. Disadvantage -

Gary is a one and a half  person office.  Advantage - You will always get to talk to Gary.

Gary likes corporations.  I  and my four associates do not like them. I like dealing with individuals who deal cross-border withOUT corporations.

OR   KPMG in Vancouver. The last time  I checked they had 22 people in their US/Canada department.  call (604) 691-3025.  Advantage - Lots of Backup.  Disadvantage - It will be hard to get the same person to deal with you three times in a row.

OR   Steve Peters with KPMG in Halifax (902) 492-6011

OR    Kevin Nightingale in Toronto (416) 733-9595

OR     Len Vandenberg with BDO Dunwoody in Kelowna, BC.  (250) 763-7600

OR     Steve Katz in Vancouver at (604) 732-1515

OR    Brad Howland in Victoria at (250) 598-6258

Whoever you choose, you would likely do well to consult with me for one or two hours a year.  If I have a suggestion, it will be worth it.  If I can't come up with anything, you will know that what you are doing is likely the best track.  I will compare it to my dentist.  When I went in the fall of 2005, I ended  up with $16,000 to $18,000 of dental bills, a root canal, a bunch of pain, and a lot of nice new caps, etc. 

When I went for an inspection on Jan 29th, he could not find anything wrong except that I was not flossing.  Which one did i appreciate more?

Well both - the first time was expensive but dealt with years of neglect.  The second said I am on the right track.

Good luck.

Looking at the California Non-resident Adjustment Form CA(NR) will give you an idea of how this leaving the country stuff works.  http://www.ftb.ca.gov/forms/07_forms/07_540nrca.pdf

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