My_question_is: Applicable to both US and Canada Subject: Income taxes... IRS or CRA? Expert: taxman at centa.com Date: Friday March 23, 2007 Time: 06:12 PM -0500 QUESTION: I'm a Canadian citizen living and working in Niagara Falls, ON. I married a US citizen in November and have applied for a K3 visa. If and when I move to Buffalo, NY to live with my wife (who won't relocate here), I'll still be working in Canada as I have a good job. Do I pay taxes as usual to CRA and do the AMT in the US or can I just pay the IRS..?? I can't receive health care, unemployment or pension from the Ontario government anymore if I live in New York, so I'd rather pay US taxes as they are lower. Any help you can provide would be appreciated. _____________________________________________________ david ingram replies: You will continue to pay Canada taxes just as if you lived in Canada. Then you will report the income on your US return and file form 1116 to claim the credit for the Income tax, CPP and EI that you paid to CANADA. The AMT does not apply anymore in your situation. However, you are incorrect about New York having lower taxes. If you were comparing Toronto and New York City, New York City is much higher. Calculated as Married filing separately. However I used $50,000 US as a Niagara falls New York salary and that works out to $2516.00 State tax, $6,951.00 Fed Tax, $3,100 FICA and $725.00 Medicare for a total of $13,292 US or $15,074.37 Cdn at 1.1340936 At the same exchange rate, $50,000 US is $56,704.68 which earns Ontario Tax of $4,044.59, Fed Tax of $8,231.00, CPP of $1,910.70 and EI of $729.70 for a total of $14,915.99 Canadian. With the exception of mortgage interest as a deduction, the other deductions in the US are NOT AS GOOD as Canadian deductions and since I can (with a little time and reorganization) make a Canadian mortgage deductible as well (Nov 2001 Newsletter in top left hand box at www.centa.com), I do not take that into consideration. ________ The following answer goes even further 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. david ingram wrote: --------------------------------------------------------------------------------------------------------------- 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 www.centa.com 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 www.centa.com. If you forward this message, this disclaimer must be included." Be ALERT, the world needs more "lerts" David Ingram gives expert income tax & 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 $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 $2,800 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 $1,600 would be for two people with income from two countries $2,800 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. This from "ask an income trusts tax 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 problems for the United States, Canada, Mexico, Great Britain, United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax Immigration Wizard Antarctica Rwanda Guru Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention David Ingram expert income tax 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 New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia, Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers, Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay, Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, Moncton, Truro, Atlanta, Charleston, San Francisco, Los Angeles, San Diego, Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, Tulsa, Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, Bellingham, Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, Lawrence, Houston, Albany, Framingham, Cambridge, London, Paris, Prince George, Prince Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague, Lisbon, Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers, Berlin, Hamburg, Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing, Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds, Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson, Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh, Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo, Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto, Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries, Squamish, Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton, Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia, Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears, Truro, Charlottetown, Summerside, Niagara Falls, income trust, Income Tax Treaty Convention international non-resident cross border income tax help estate family trust assistance expert preparation & immigration consultant david ingram, income trusts experts on rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer preparers consultants Income Tax Convention Treaty Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Garland, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Rockwall, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, Wyoming, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec City, New Brunswick, Prince Edward Island, Nova Scotia, Newfoundland, Yukon and Northwest and Nunavit Territories, Mount Vernon, Eumenclaw, Coos Bay and Dallas Houston Rockwall Garland, Texas Taxman and Tax Guru and wizzard wizard - consultant - expert - advisor -advisors consultants - gurus - Paris Prague Moscow Berlin Lima Rio de Janeiro, Santaigo Zimbabwe Income Tax Treaty Convention . -------------------------------------------------------------------------------- No virus found in this incoming message. 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