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. �
CEN-TA Cross Border Services - Tax, Visas, Immigration