QUESTION:
Sir,
I am permanent resident of Canada. I am working on h1b in USA and commuting 4 days a week to USA from Canada. My work palce is 51 miles away one side. I travel 102 miles back and forth.
Question: Am I eligible for "per diem"
If yes how I will handle income taxes.
Will this have any effect on my future Canadian Citizenship.
Thanks and Regards
-----------------------------------Sir,
I am permanent resident of Canada. I am working on h1b in USA and commuting 4 days a week to USA from Canada. My work palce is 51 miles away one side. I travel 102 miles back and forth.
Question: Am I eligible for "per diem"
If yes how I will handle income taxes.
Will this have any effect on my future Canadian Citizenship.
Thanks and Regards
david ingram replies:
You are not eligible for a per diem or back and forth expenses any more than if you commuted from Portage la Prairie to Winnipeg, Olds to Calgary or Red Deer, Abbotsford to Vancouver (or Vancouver to Bellingham) or Trois Riviere to Quebec City ( okay okay, Amherst to Moncton, Peggy's Cove to Halifax, Davidson to Saskatoon, Summerside to Charlottown, Stephensville to Corner Brook, Behchoko to Yellowknife or Jakes Corner to Whitehorse) and yes, I have been to all those places.
Back and forth expenses are not deductible in Canada or the US.
The good news is that you are sleeping in Canada and therefore qualify for full provincial medical and you will qualify for Canadian citizenship after three years. If you were here on a working visa before getting your PR cards, you can use half of the time (up to 1 year credit) towards the three years of residence necesary to qualify. Therefore two years on a worker's visa qualifies for one year and two years after the issuance of your PR card, you qualify for Canadian Citizenship.
You will pay tax to the US (and maybe the State of New York or Michigan, etc.) and then report the same income in Canada on your T1 on line 104.
You will report the same income again on line 433 of your Schedule 1 and put the Fed and State tax plus FICA (social security) and Medicare payments on line 431 after filling out T2209.
You should get credit for every cent of tax paid to the US by filling out form T2209 for the feds and T2036 if you have an excess which you need to claim against the provincial tax.
One more thing. If you are telecomuiting on a fifth day so that 20% of your income is actually earned in Canada, that income is taxable in Canada first.
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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
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