David, My question concerns what tax and immigration rules will/might apply to an individual in the following situation. I am a US Citizen and immigrated (landed) in Canada in Jun of 2006. During 2006 I worked 4 mths in the US, and had no CA income. In 2007, I have worked in Canada doing various odd jobs but not enough to provide for many comforts. My work is fairly specialized and I have been having trouble finding my type of work here in BC.
I have recently gotten several requests to go back to the US to work and I’m considering doing this for 6mths to 1yr.
My employer says they’ll let me work 1-2 days a week off site (aka home in Canada). Btw, I’m in BC, Job is in Seattle.
(I believe all my us income will all be in the for of W2 income)
I have read a lot of info on your site and thru your mailings about this situation and still have a few questions on taxes and on the affect that working in the states will have on my Canadian Residency which I’d like to keep up so I can get my citizenship.
If I start working in the States 4 days a week should I register and insure my car there ?
Should I get a US drivers License? Will I be able to drive a US Car with my Canadian License?
How about any problem registering my Car (that was imported into Canada) back in the states?
(I’m considering just buying another car down there)
I see you have a specific charge for Cross border move in/outs, the US job definitely pays well enough to afford this.
Are there any other expensive issues that I might run into with this work situation?
What type of records do I need to keep if I’m going to be doing some work in Canada some in the US ?
When I immigrated into Canada, I had to fill out forms that listed my belongings that will be brought into the country.
I listed my furniture, appliances, car, RV and stuff like that. What should I have done about Canadian assets ?
Should I have listed my Canadian property that I bought in the 92 on this immigration form ?
(If I should have and didn’t is there anything I can do to remedy this?)
I read from one of your mailing about capital gains on departure that brought some questions to mind.
“The exception is out of country property you owned before you came to Canada or out of country property you inherited while you were a resident if you were a resident of Canada for less than 60 months in the ten year period BEFORE you emigrated.”
I bought property in 91, immigrated in 2006, so I owned this property 14yrs before I moved into Canada. I don’t want to give up my Canadian Residency; it was hard enough to get in the first place.
Will I need to fill in a departure form (T1161) at all as I’m trying to keep my CA residency? If I do, what do I do with my CA Property ?
Fyi, I don’t own any stocks or US properties, just a bit in an IRA down in the states.
You’re a great source of info and I appreciate your advise on this complicated matter.
david ingram replies:
You are not alone. At any time, I wil have 30 to 60 people doing what you are doing to varying degrees.
You will still be a resident of Canada commuting to work in the USA.
You will keep your BC driver's licence, your BC Licence on the car, and your BC Medical.
However, if you expect to be sleeping in the US more than 183 days during the Calender year, you should write to BC medical and ask them for permission.
However, if you are going down Monday morning and coming back Wednesday night and working in Canada Thursday and Friday, BC medical will not be a problem.
The mnumber of days in Canda will be a problem for Canadian citizenship. For citizenship purposes, you have to be able to prove physical prescence in Canada 3 out of 4 years which translates into 1095 days (nights) out of 1,461 nights. Therefore if you leave Canada on Monday morning and come back Wednesday night, that is only 'TWO' nights out of the week that you are not in Canada.
If you go on Monday and return on Thurday, it is only three nights out of the country and will still not affect BC medical. If you only do it for a up to two years, year, it will not affect your citizenship residency. If you do it more than two years, you will be getting close.
For taxes, ideally, you will pay tax to the US first on the income earned in the USA and to Canada first on the money earned in Canada. Not particularly complicated if you keep good track of the days. Cell phone records and credit card records are a good method. If you buy gas as you cross the borders into the other country, the credit card record is an excellent record.
There is no departure tax because you are not departing.
One more thing. I thought you had come to Canada in January or February 2004. As long as you were here legally, you can use 2 days to make one towards your citiszenship requirements before you got your PR card. If you were just visiting, that does not work.
You are not leaving the country as described and there is no need to fill out form T1161.
However, since Washington is a no inocme tax state, you CAN expect to pay another 4 to 8% or so taxes on your income when you fill in your Canadian return.
If you were in California, that would not be true. For a single person, California and New York taxes are now more than BC taxes for the same person if there are no large special deductions in the states like mortgage interest and property and sales taxes. However, since it is relatively easy to make Caandian mortgage interest deductible as well that advantage does not really exist with proper planning. GOTO www.centa.com and read the November 2001 newsletter for information on how to make Canadian mortgage (or any other) interest deductible.
And if things get hectic and you find yourself there for 24 to 36 months, the rules are that for any 60 month period, you have to be physically in Canada for 24 months to keep your PR status alive. As described, you will find it very easy to live with that. �
CEN-TA Cross Border Services - Tax, Visas, Immigration