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: [email protected]
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.
-----------------------------------------------------------------------------------------------------Subject: US citizen working in Canada; what are my tax liabilities?
Expert: [email protected]
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 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.
------------------------
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 $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.
------------------------
On December 25, 2007, David
Ingram wrote:
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
However, I regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I write this on
Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread
messages, my deleted box has 16645 I have actually looked at and
deleted and I have actually answered 1234 email questions for clients
and strangers without sending a bill. I have also put aside 847
messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
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$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
David Ingram expert income tax service and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty advice on bankruptcy
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to
36 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', you will have to phone to make an appointment.
Gillian Bryan generally accepts appointment requests for me between
10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los
Angeles) time at (604) 980-0321. david ingram expert
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Disclaimer:
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This is not intended to be definitive
but in general I am quoting $900 to $2,900 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.
$1,100 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
$2,900 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 $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.
Just a guideline not etched in stone.
This from "ask an income trusts tax service and
immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax
returns with multi jurisdictional cross and trans border expatriate
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