live in USA, work in Montreal - Live in Quebec, work in US -


Hi David,

I am glad to see that your listserv is going on...  I was in touch with you a few years back when you started on-line...  We moved back to the Canada a couple of years ago... and  

I will need to make a decision in the next year or two:  I now work for a companie in Montreal (I am Canadian), but eventually I will also do some work in NY state (a new job).  I was wondering if I should primarily live in NY State even though most of my work will be in Canada so that I can have the tax benefits of living in the US.  You see, I have the choice of living in Canada or in the US and do the same job. 

In other words, where are you better off living if you work in both countries???

Thanks

xxxxxx
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david ingram replies:

The only way to tell is to do a proforma tax return for Quebec and a proforma tax return for the state of New York.  When you do it, remember to consider what happens with your medical premiums because if you are living in New York, you will not qualify for Quebec Medical And be paying anywhere from $300 to $600 a month to replace it unless your company covers you in  New York state.

If you are the only working spouse in a married relationship, then the joint tax provisions in New York state may tilt the factors in New York state's favour.


I have done several of these over the last well and you might want to read the following.  I have a sneaky idea that it might even be a reply to you originally:


Hi David,
 
1. If I work in Canada as well as in NY state, will I only pay income taxes in the country where I am a resident? 
2. If I have the choice to live live either in NY state or in Quebec province and work in both places, it seems that it would be financially advantageous to live in NY state... is that correct?
 
Thanks for your time,
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david ingram replies:
 
To make it simple, If you lived in Niagara Falls Ontario and worked in Niagara Falls, New York State, you would pay tax first to New York and the US federal Government and then report the income again in Canada and claim a foreign tax credit  for the tax paid to the US.
 
Just for the fun of it, I decided to take 2 hours and calculate the tax for a single self employed person in downtown New York City and a single Self-employed person in downtown Montreal, Toronto and Calgary.
 
I used $100,000 and 2007 Income tax rates.
 
I have not used any special deduction because any self employed Canadian (and most others as well) can make their Canadian Mortgage interest deductible and it is a better deduction in Canada when you do. (see my November 2001 Newsletter in the top left hand box at www.centa.com).
 
If you were living in in NYC
 
City self employed tax     $  3,400
State of New York              5,455
City of New York                  735
US Federal Tax                 17,288 - does not include a Medical premium - Min $3,600 for equivalent
US Social Security             14,130  - this is analogous to our CPP
For total US taxes of       $ 41,000
 
In Montreal
 
Quebec Income Tax        $  17,772
Quebec Pension Plan            3,979
Quebec Medical                    1,237 - US equiv over $3,600 but not mandatory
QPIP (parental)                       434
Canada Federal Tax             18,167                   
For total Canadian taxes    $ 41,589  but it includes medical AND prescription insurance.
 
 
In Toronto
 
Ontario Income Tax           $ 10,194
Canada Pension Plan              3,979 - The Ontario Medical premium would be $900
Federal Income Tax              18,167
for total Canadian Taxes     $ 32,340
 
In Calgary
 
Alberta Income Tax           $  8,059
Canada Pension Plan             3,979 The Alberta medical Premium is $528
Federal Income Tax             18,167
for total Canadian Taxes     $30,205  Note that there is no Provincial sales tax as well
 
In Vancouver
 
BC  Income Tax               $  7,948
Canada Pension Plan             3,979 The BC Medical  Premium is $648
Federal Income Tax             18,167
for total Canadian Taxes     $30,094 
 
 
 
In Seattle - Anchorage, Las Vegas, Dallas, Miami
 
US Federal Tax                 17,288 - does not include a Medical premium - Min $3,600 for equivalent
US Social Security             14,130  - this is analogous to our CPP
For total US taxes of       $ 31,418
 
Note that Alberta along with Nevada and Oregon, has no sales Tax.
 
 
Following are the answers to some other questions:
 
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,

---------------------
david ingram replies:

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

in the meantime, this older question might help.  BC has slightly lower taxes 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.  Washington and Oregon both cheaper overall tax than Michigan.


On my opinion, the career of screenwriter cameraman director is a tough one in Vancouver at the moment.  Vancouver has a lot of those people out of work at the moment because of the 40% drop in the value of the US dollar.
------------------------------------------



My_question_is: Applicable to both US and Canada
Subject:        US citizen working in Canada; what are my tax liabilities?
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 at the end of 2008 will be 18, 16,14 and 3. My wife is a homemaker and the children will provide no additional income. My estimated gross will be 195,000 with rental costs of approx. 30,000. My questions are the following: What is my estimated provincial and federal tax liabilities and what credits am I eligible for? I will also be maintaining a residence in Knoxville, tn USA and will be reporting the month of January's income earned in the USA. Next Question is what are my liabilities/credits for the income earned in Ontario,CA? Thanks for your assistance in this matter.


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david ingram replies:

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

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

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

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

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


--------------------------------------------------------------------

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

As an esoteric exercise, I decided to see what the difference actually was 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 when one 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 did not 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 Canadian funds
If you had lived in Detroit, the city tax would be $1,470 changing the figures 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 move from 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 Canadian funds
and $1,470 Detroit tax 'IF'  There is no change

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

I converted the $60,000 to $68,045.62 Canadian but split it into 2 returns 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  or less 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 $405 Cdn for this 'what if' calculation and your question was rejected originally along with another 100 or so.  However, it caught my eye and I decided to use it as a major answer. 

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

Hope this helps a bit.
 
--------------------------------------------------------
 
 
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This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing 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 one rental
 
$1,300 would be the same with one business no rental
 
$1,300 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.
 
$1,600 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

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

$3,000 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 $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
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 $900 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.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 

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