IRA for Canadian resident -


XXXX XXXX wrote:

 

Hello David,

I found your website, as I was searching for an answer to my question about Canadian/US taxes.  I hope you can help me out.  My question is:

If I contribute to my U.S. IRA, that is not taxable by the U.S. government until I retire…. But… I recently moved to Canada, and am now a canadian resident.  Can Canada tax my U.S. IRA contributions?

Thanks,

XXXX XXXX


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


The preparation of a US Canadian Tax return is something I have been involved in since 1966.  In that 43 years, I  doubt that I have come across 20 people who have been any good at it.  There are certainly more but they have not come to my attention.


If you are living in Canada, you can not usually buy an IRA because 999 out of 1,000 IRA sales people are not licenced to deal with a Canadian Resident.


Dan Walkow of Seabank Capital (www.seabankcapital.com) at 866-541-9952 is one of the few.  Darrel Thompson of BlackMont Securities in Toronto is another.  You can see several interviews of Dan Walkow talking about the subject at www.david-ingram.com and he will be my guest tomorrow night at 7PM Vancouver time at www.david-ingram.com.  If you wish to phone him about IRA, RRSP, Keogh and 401(K) plans for cross border people, Wednesday night at 7 PM is the time -- You can call the program at 1-866-09-0499 from anywhere in North America.


Canada does NOT tax the internal earnings of conventional tax deductible IRA accounts.  A bulletin said that they would tax the internal earning of a ROTH IRA.- 


But it makes no sense to buy one anyway.  Canada will not allow the contribution to be a deduction. 

Now if you are talking about coming to Canada in July after working int eh USA and you are doing a dual status or full blown 1040 and want to use the IRA as a deduction against your US income, it likely does make sense to buy a deductible IRA.  It does not make any sense at that time (in my opinion) to buy a ROTH.  However, you would not buy another one after that first year if you stay in Canada.

-------------------------
These older items might help.


Mr. Ingram....start your meter....I am in the initial stages of inquiry as to whether I can, as an American citizen, move to the Vancouver area without incurring a huge tax liability. We hope to move in order to be near private schools for our 2 children. I have a more than adequate income but am oblivious as to the consequences of moving across the border for the 4-6 years necessary to educate our kids.

Can you help?

Thank you/ xxxxxxxx xxxxxxxx
 
-----------------------------------------------------------
david ingram replies:

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

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

If you feel you need an appointment or want specific calculations, I would 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,
-------------------------------------
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.


-----------------------------------------------------------------------------------------------------
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.


On Mar 14, 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help
However, I regularly search for the words"PAYING CUSTOMER" 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 notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
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.
 
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." e bankruptcy expert  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 if 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.
 
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.
 
This from "ask an income trusts tax service 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. Advice on bankruptcy  e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and help .

David Ingram expert income tax service and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts
income tax convention treaty advice on bankruptcy

New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia, Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers, Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay, Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, Moncton, Truro, Atlanta, Charleston, San Francisco, Los Angeles, San Diego, Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, Tulsa, Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, Bellingham, Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, Lawrence, Houston, Albany, Framingham, Cambridge, London, Paris, Prince George, Prince Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague, Lisbon, Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers,   Berlin, Hamburg,  Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing, Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds, Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson, Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh, Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo, Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto, Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries, Squamish, Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton, Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia, Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears, Truro, Charlottetown, Summerside, Niagara Falls, income trust, Income Tax Treaty Convention. - e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help.
david ingram International non-resident cross border expert income tax service & immigration help estate family trust assistance expert preparation & immigration consultant, income trusts experts on rentals mutual funds RRSP RESP IRA 401(K) & divorce preparer preparers consultants Income Tax Convention Treaty.  advice on bankruptcy expert  US Canada Canadian American  Mexican Income Tax help.
  
Be ALERT,  the world needs more "lerts".   bankruptcy expert  US Canada Canadian American  Mexican Income Tax service help.  - expert us Canada Canadian Mexico income tax service and help  help




No virus found in this incoming message.
Checked by AVG - www.avg.com
Version: 8.5.325 / Virus Database: 270.12.27/2112 - Release Date: 05/13/09 07:04:00

Trackback

Trackback URL for this entry: http://www.centa.com/trackback.php/CanWeekofMon20090511001004.html

No trackback comments for this entry.

0 comments