For salaried people the following might
be of interest -
---
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:
[email protected]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.
-----------------------------------------------------------------------------------------------------
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 $400 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.
--
SUGGESTED PRICE GUIDELINES - Aug 5,
2008
david ingram's US / Canada Services
US /
Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada
Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N
3L7
Cell (604) 657-8451 -
(604)
980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week
Vancouver (LA) time - (please do not fax or phone
outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income
Tax service help.
pert US Canada Canadian American
Mexican Income Tax service and
help.
David Ingram gives expert income
tax service & 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 $450 for 15 minutes to 50 minutes (professional hour). Please
note that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada. ($472.50 with GST for in person or
if you are on the telephone in Canada) expert US Canada Canadian American Mexican Income
Tax service and help.
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.
However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms,
expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or
T5008 or T101 --- Income trusts with amounts in box 42 are an even larger
problem and will be more expensive. - i.e. 20
information slips will be at least $350.00
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.
Email and Faxed information is convenient for the
sender but very time consuming and hard to keep track of when they come in
multiple files. As of May 1, 2008, we will charge or be charging a
surcharge for information that comes in more than two files. It can take
us a valuable hour or more to try and put together the file when someone
sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and
emails for instance.
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.
--IRS Circular 230
Disclosure: To ensure
compliance with requirements imposed by the IRS, please be advised that any U.S.
tax advice contained in this communication (including any attachments) is not
intended or written to be used or relied upon, and cannot be used or relied
upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code,
or (ii) promoting, marketing or recommending to another party any transaction or
matter addressed herein.--
-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 or www.garygauvin.com. If you forward this
message, this disclaimer must be included." -