American in Canada -

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,

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david ingram replies:

That is what I/we do.  I charge $450 an hour for that sort ofconsulting.

However, you will get an idea of what you have to do by reading myOctober, 1995 newsletter at www.centa.com in the top left box.  Youwill learn even more by reading the US/Canada Taxation section in thesecond box down on the right hand side.

If you feel you need an appointment or want specific calculations, Iwould be glad to help.

The following will give you an idea of some of the comparisons. 
You may be surprised to see that Canada has a favourable rate today. If the Bush tax cuts are turned back, we will look even better.


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,--------------------------------------


On Mar 14, 2008, DavidIngram wrote:

It is very unlikely that blind or unexpected email to me will beanswered.  I receive anywhere from 100 to 700  unsolicited emails a dayand usually answer anywhere from 2 to 20 if they are not from existingclients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject lineand get answered first.  I also refuse to be a slave to email and donot look at it every day and have never ever looked at it when I am outof town. 
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However, I regularly search for the words"PAYINGCUSTOMER" 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 notesto myself have been spammed out and as an example, as I wrote this onDec 25, 2007 since June 16th, my 'spammed out' box has47,941 unread messages, my deleted box has 16645 I have actually lookedat and deleted and I have actually answered 1234 email questions forclients and strangers without sending a bill.  I have also put aside847 messages that I am maybe going to try and answer because they lookinteresting. -e bankruptcy expert  US Canada Canadian American Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to48 hours, it is likely lost in space. You can try and resend it but if important AND YOU TRULY WANT OR NEEDAN ANSWER from 'me', you will have to phone to make an appointment. Gillian Bryan generally accepts appointment requests for me between10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, LosAngeles) time at (604) 980-0321.  david ingram expert US Canada Canadian American  Mexican Income Tax  service and help.
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Disclaimer: This question has been answered without detailed information orconsultation and is to be regarded only as general comment.   Nothingin this message is or should be construed as advice in any particularcircumstances. No contract exists between the reader and the author andany and all non-contractual duties are expressly denied. All readersshould obtain formal advice from a competent andappropriately qualified legal practitioner or tax specialist for experthelp, assistance, preparation, or consultation  in connection withpersonal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must beincluded." e bankruptcy expert  US Canada Canadian American Mexican Income Tax  service and help.
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Phone consultationsare $450 for 15 minutes to 50 minutes (professional hour). Please notethat GST is added if product remains in Canada or is to be returned toCanada or a phone consultation is in Canada. ($472.50 with GST if inCanada) expert  US Canada Canadian American MexicanIncome Tax  service and help.
This is not intended to be definitivebut in general I am quoting $900 to $3,000 for a dual country taxreturn.
$900 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only (but werefiling both countries) - no self employment or rentals or capital gains- you did not move into or out of the country in this year.
 
$1,200 would be the same with onerental
 
$1,300 would be the same with onebusiness no rental
 
$1,300 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
 
$1,600 would be the minimum with arental or two in the country you do not live in or a rental and abusiness and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above andyou 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 andno capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or threerentals for $550 to $700 (i.e. $150 per rental) First year Rental -plus $250.
 
A Business for $400 - Rental andbusiness likely $550 to $700
 
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
 
Moving in or out of the country orpart year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for thefirst 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 - (maybeamalgamate 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 theCanadian return as a guide for seven years at a time will be from $150to$600.00 per year depending upon numbers of bank accounts, RRSP's,existence of rental houses, self employment, etc. Note that thesereturns tend to be informational rather than taxable.  In fact, ifthere are children involved, we usually get refunds of $1,000 per childper year for 3 years.  We have done several catch-ups where the clienthas received as much as $6,000 back for an $1,800 bill and one recentlywith 6 children is resulting in over $12,000 refund. 

This is aguideline not etched in stone.  If you doyour own TDF-90 forms, it is to your advantage. However, if we put themin the first year, the computer carries them forward beautifully.
 
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david ingram replies:

It is tax season and I am too busy to do this what-if.  Maybe if yousend it back in July, it might get into the free list.

in the meantime, this older question might help.  BC has slightly lowertaxes than Ontario.

Washington State has no State income tax and is generally lower than BC.

Oregon has a state income tax and but no state sales tax.  Washingtonand Oregon both cheaper overall tax than Michigan.


On my opinion, the career of screenwriter cameraman director is a toughone in Vancouver at the moment.  Vancouver has a lot of those peopleout of work at the moment because of the 40% drop in the value of theUS dollar.
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My_question_is: Applicable to both US and Canada
Subject:        US citizen working in Canada; what are my taxliabilities?
Expert:         taxman@centa.com
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 February 1st, 2008. I have a wife and 4 kids whose ages atthe end of 2008 will be 18, 16,14 and 3. My wife is a homemaker and thechildren will provide no additional income. My estimated gross will be195,000 with rental costs of approx. 30,000. My questions are thefollowing: What is my estimated provincial and federal tax liabilitiesand what credits am I eligible for? I will also be maintaining aresidence in Knoxville, tn USA and will be reporting the month ofJanuary's income earned in the USA. Next Question is what are myliabilities/credits for the income earned in Ontario,CA? Thanks foryourassistance in this matter.


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david ingram replies:

You really require someone to do the calculations for you and yourfamily.

We would charge in the $400 range to do that for you.

In he meantime, the following which I did answer in November might giveyou an idea.

In your case, because all the income is in your name, tax will besignificantly higher in Canada because you will be paying on one incomeand you will be paying Ontario Tax while coming from essentially taxfree Tennessee

On the other hand, medical insurance will be significantly lower.


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David,
 
I am a U.S. citizen and resident, married to a(non-working) dual U.S.-Canadian citizen. I recently learned that thecompany where I've worked for the last 20+ years is closing its doorsnear the end of this year. I'm 55 and can't get my pension for at least5 years...10 years if I want a full pension. We've been thinking of theidea of moving across the border to Canada (wife would sponsor me), andI have a question. Would it make any sense tax-wise for me to live andwork in Canada, pay into CPP for 5 or 10 years? I understand thatCanadian taxes are higher than in Michigan, and I have mutual funds andother savings that are generating about $10,000 in yearlyinterest/dividends/capital gains that I would be leaving in the U.S.
 
Thanks,
 
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david ingram replies:

As an esoteric exercise, I decided to see what the difference actuallywas 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 whenone 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 didnot 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 Canadianfunds
If you had lived in Detroit, the city tax would be $1,470 changing thefigures 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 movefrom 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 Canadianfunds
and $1,470 Detroit tax 'IF'  There is no change

Then I decided to show what would happen to a couple who moved toCanada and both worked equally.

I converted the $60,000 to $68,045.62 Canadian but split it into 2returns 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  orless 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 alongwith another 100 or so.  However, it caught my eye and I decided to useit as a major answer. 

The investment part of your income will also cause some differencesbecause Canada will tax the dividends and capital gains differently,likely a little more.  However, if you switched your accounts toCanadian securities, the tax may be a little less because of Canada'sdividend tax credit.

Hope this helps a bit.

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