Declaring residency for tax purposes in - US / Socail Security Totalization agreement - international non-resident cross border

My_question_is: Applicable to both US and Canada
Subject:        Declaring residency for tax purposes in Canda
Expert:         taxman@centa.com
Date:           Friday January 11, 2008
Time:           12:32 AM -0000

QUESTION:

I am employed by a US company. Revenue Canada has determined that this US company is now considered a Canadian company due to the nature and length of their bussiness affairs in Canada. This impacted how our pay and taxes were set up.

Currently the company is withholding canadian provincial and government taxes from my check as well as EI and CPP at a rate equal to that of any other canadian working in the province. They are also withholding Social Security and Medicade.

They set up up to obtain health cards from the Canadian Government and we are currently considered residents because of the length of the contract as well as time being spent here.

Shouldn't I be exempt from Social Security since I am contributing to CPP?
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david ingram replies:

I do not have enough information to decide what the answer is so will give a hint.

If you are an American and were transferred to Canada by the company, and are expected to be in Canada for less than 5 years, the 'company' can  write to the  Canada Pension Plan Administration and ask for permission to pay Social Security instead of CPP.  See Part III in the Agreement reproduced further on.

However, they should not pay both. 

If you are woking in Canada and are intending to stay here, then they should deduct CPP and NOT US Medicare and Social Security.

If you are just here temporarily, you should keep on paying US social security.

These older questions will show you an answer in reverse and also gives you a copy of the US/Canada Social Security Totalization Agreement
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QUESTION:

I am a Canadian citizen who left Canada to work in the USA for 5 years. I have since retuned to Canada where I plan to stay. I was wondering if the money I paid into Social Security while in the states is lost or is there a way to transfer the money back to Canada??
 
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david ingram replies:

This older Q & A might help


QUESTION:

Hi David,

I have been working in USA for last 10 years under TN visa and have been paying FICA etc in US but have not filed return to Canada until 2006.

Can I benefit from all the FICA payments later or should I find a way/if there is any way to transfer it to Canadian retirement?

Thanks
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david ingram replies:

Answered many times - just last week in fact, and reproduced here with a slight improvement suggested by Andrew Nelson
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QUESTION: My apologies if this questions have asked many times before.I could not find right and easy answer for this.

I am a Canadian citizen working in USA under TN visa for last 2 yrs. I wonder what will happen for social security tax i pay in USA.Does it goes to Canadian social security.Is it possible to get refund ?

Thanks in advance.
 
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david ingram replies;

The US Canada Social Security Totalization Agreement means that you will be able to collect Social Security from the US when you retire whether you have 1 year ( technically 6 quarters which can be earned from July to June which is one year but if you started working on Jan 1, you would need to work 1 year and another $2,000 or so in another year to qualify.    For 2007, you need just short of $1,000 of earnings to qualify for one qhuarter.)

The actual agreement in all its glory CAN BE FOUND AT:

 http://www.socialsecurity.gov/international/Agreement_Pamphlets/canada.html

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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

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