Hi David, 1. If I work in Canada as well as in NY state, will I only pay income taxes in the country where I am a resident? 2. If I have the choice to live live either in NY state or in Quebec province and work in both places, it seems that it would be financally advantageous to live in NY state... is that correct? Thanks for your time, ----------------------------------------------------- davuid ingram replies: To make it simple, If you lived in Niagara Falls Ontatrio and worked in Niagara Falls, New York State, you would pay tax first to New York and the US federal Government and then report the income again in Canada and claim a foreign tax credit for the tax paid to the US. Just for the fun of it, I decided to take 2 hours and calculate the tax for a single self employed person in downtown New York City and a single Self-employed person in downtown Montreal, Toronto and Calgary. I used $100,000 and 2007 Income tax rates. I have not used any special deduction because any self employed Canadian (and most others as well) can make theuir Canadian Mortgage interest deductible and it is a better deduction in Canada when you do. (see my November 2001 Newsletter in the top left hand box at www.centa.com). If you were living in in NYC City self employed tax $ 3,400 State of New York 5,455 City of New York 735 US Federal Tax 17,288 - does not include a Medical premium - Min $3,600 for equivalent US Social Security 14,130 - this is analagous to our CPP For total US taxes of $ 41,000 In Montreal Quebec Income Tax $ 17,772 Quebec Pension Plan 3,979 Quebec Medical 1,237 - US equiv over $3,600 but not mandatory QPIP (parental) 434 Canada Federal Tax 18,167 For total Canadian taxes $ 41,589 but it includes medical AND prescription insurance. In Toronto Ontario Income Tax $ 10,194 Canada Pension Plan 3,979 - The Ontario Medical premium would be $900 Federal Income Tax 18,167 for total Canadian Taxes $ 32,340 In Calgary Alberta Income Tax $ 8,059 Canada Pension Plan 3,979 The Alberta medical Premium is $528 Federal Income Tax 18,167 for total Canadian Taxes $30,205 Note that there is no Provincial sales tax as well In Vancouver BC Income Tax $ 7,948 Canada Pension Plan 3,979 The BC Medical Premium is $648 Federal Income Tax 18,167 for total Canadian Taxes $30,094 In Seattle - Anchorage, Las Vegas, Dallas, Miami US Federal Tax 17,288 - does not include a Medical premium - Min $3,600 for equivalent US Social Security 14,130 - this is analagous to our CPP For total US taxes of $ 31,418 Note that Alberta along with Nevada and Oregon, has no sales Tax. Following are the answers to some other questions: 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 gerally 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. Vancovuer has a lot of those people out of work at the moment because of the 40% drop in the value of the US diollar. ------------------------------------------ -------------------------------------------------------------------------------- My_question_is: Applicable to both US and Canada Subject: US citizen working in Canada; what are my tax liabilities? Expert: taxman at centa.com Date: Friday January 04, 2008 Time: 12:54 AM -0000 QUESTION: I am planning to start working for a canadian company in toronto, ontario on Feburary 1st, 2008. I have a wife and 4 kids whose ages at the end of 2008 will be 18, 16,14 and 3. My wife is a homemaker and the children will provide no additional income. My estimated gross will be 195,000 with rental costs of approx. 30,000. My questions are the following: What is my estimated provincial and federal tax liabilities and what credits am I eligible for? I will also be maintaining a residence in knoxville, tn USA and will be reporting the month of January's income earned in the USA. Next Question is what are my liabilites/credits for the income earned in Ontario,CA? Thanks for your assistance in this matter. ----------------------------------------------------------------------------------------------------- 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 sponser 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 $405 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. -------------------------------------------------------- SUGGESTED PRICE GUIDLELINES 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) expert US Canada Canadian American Mexican Income Tax service help. email to taxman at centa.com www.centa.com www.david-ingram.com pert US Canada Canadian American Mexican Income Tax service and help. David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority. Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert US Canada Canadian American Mexican Income Tax service and help. This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return. $900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year. $1,200 would be the same with one rental $1,300 would be the same with one business no rental $1,300 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. $1,600 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 $1,700 would be for two people with income from two countries $3,000 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 two or three slips and no capital gains, etc. for $200.00 up. With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250. A Business for $400 - Rental and business likely $550 to $700 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 $900 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. Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has recieved as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. This is a guideline not etched in stone. If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully. -------------- next part -------------- An HTML attachment was scrubbed... URL: http://www.centa.com/CEN-TAPEDE/centapede-us/attachments/20080630/07ab5dec/attachment-0001.html
