QUESTION:
I'm currently living in New Jersey and approaching retirement. My wife is a
Canadian Citizen with her family being from Newfoundland. We're considering
moving up there, but are unsure of what this would do to us financially tax
wise. My pension would be approximately $41,000 US annually. Will I be
taxed by both Canada and the US, and if so what are the rates?
=====================================
david ingram replies:
I am answering this by sending you a copy of a question at the start of
September.
Your going to Newfoundland means you can get a very nice house for much less
than you will sell your New Jersey house for. You will have lots left over
to spend you winters in Florida or Texas if you desire.
You are a little younger but a little known (outside of Newfoundland) fact
is that some 25,000 young Newfoundland women (before Newfoundland became
part of Canada on April 30 1949 (or was it 48)) married American Servicemen
and moved to the US during and just after the second World War.
In the following answer or reply to a previous email, the income figure is
within $5,000 of your figure and it is either send this answer or not answer
because it is midnight and I am going to bed.
The old question and a pretty detailed answer follows:
========================
David
I am an American citizen and my wife is a Dual American/Canadian Citizen.
She wants us to retire to Vancouver Island and I would like to know what our
tax position will be.
Our income will be (in US dollars)
My US Social Security will be about
$14,000
My Wife's US social Security will be about
$7,000
My wife's Canadian CPP and OAS will be about
$3,000 US
I have a company pension which will be about
$10,000
we should have close to $12,000 US a year from Interest and Dividends
$12,000
There is rarely any capital gains
We will therefore have a combined income of about $46,000 US
$46,000 US
We live in Mendocino, California now - I am 64 and my wife is 63.
========================================================
david ingram replies:
My Canadian readers will not like this answer but here goes:
1. From the figures you have given me, by filing a joint return and
taking a standard deduction for you as if you were both 65, your US federal
tx would be a mere $553.00 US dollars
2. Your California tax would be Nil, Zero, Nothing
===========
Canada does not have a joint tax return and the incomes have to be split as
follows.
Your income (in Canadian Dollars at the 2003 exchange rate of 1.401462 rate
is as follows:
Husband Company pension $10,000 US $14,014.62 Cdn
Social security $14,000 $19620.46
Cdn
less 15% exempt - 2943.07
taxable social secutiry
$16677.39 Cdn
Interest $3,000 $
4204.39
Dividends $3,000
4204.39 Cdn
Total taxable income for Canada equals $39,100.
Total Tax payable in Canada equals $6,934.39 Cdn or
about $4,947 US
Wife Canadian Pension plans about 4,204.39
US social Security 85% taxable 8,338.69
Interest $3,000 $
4,204.39
Dividends $3,000
4,204.39 Cdn
Total Taxable in Canada equals $20,951.87
Total Tax payable in Canada equals about $ 1,824.87 or about
$1,302.12 US
In addition, you would have to pay about $1380 BC medical or
$984.69 US
For a total of about
$7,234.77 US
less the $553 which was owing to the
- 553.01
Extra Tax and Medicare paid to Canada equals about
$6,681.77
Of course, quality of life and cost of living also enter the picture.
You are in one of my favourite areas. I would love to retire to Mendicino
County and Mendocino itself in particular.
However, the cost of living in Mendicino is likely 25% higher than the cost
of living in Vancouver, 50% higher than the cost of living in Sooke, BC and
75% higher (just my guess) than it would be in Port Alberni.
Good luck
david ingram
===========
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Disclaimer: This question has been answered without detailed information or
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this message is or should be construed as advice in any particular
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and all non-contractual duties are expressly denied. All readers should
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