To: taxman at centa.com; centapede at lists.centa.com
Subject: Re: us-ca taxation Article IV of Tax Treaty -
Factual Resident - Ask a cross-border International real estate rental
mutual funds immigration non-resident income tax expert - David Ingram
's CE-NTA Services in North Vancouver BC Canada on It'
Hello Mr Ingram,
I have been working on and off in the USA on a TN over
the last 5 years. I am single with no real estate
properties.
The last time I filed and paid taxes in the USA, while
working in Washington State, was for the 2001 tax
year. After all was said and done, on a monthly gross
income of U$35,500 over 7-months, my total payments
including social security, income tax, etc was only
24.6%. Granted, I did have a U$5k/month tax free
allowance (perdiem) to cover my expenses.
Is it actually cheaper to pay taxes in Canada?
Thanks in advance,
Bill
=========================
david ingram replies:
Washington is an income tax free state.
A single man earning $100,000 as a self employed person in California would
pay
$30,608.00 for Federal, State and Social Security taxes.
A single man earning $100,000 as a self employed person in British Columbia
would pay
$31,994 for CPP, Federal and British Columbia Taxes.
A single man earning $75,000 in California would pay $20,125 US Federal,
California and Social Security Taxes.
A single man earning $75,000 in BC would owe $21,986 to Canada for CPP BC
and Federal taxes.
However, since I can make a mortgage payment in Canada a better tax
deduction than a mortgage payment in the US, the tax actually ends up pretty
close at normal income levels for the Canadian.
In Canada, professional or union dues, child care, mortgage interest,
charity and medical are deductible on top of the standard deductions.
In the US you give up the standard to claim the itemized deductions and the
deductibles are higher. For instance Canada allows medical expenses over 3%
of your net income with a max of $1,700, the US makes you pay 7.5% of your
income before you get a deduction.
Canada lets you deduct every cent of professional or union dues with no
penalty. The US makes you deduct 2% of your income before you get to deduct
your union or professional dues.
The great US leveller is the Joint tax return. Being able to level one high
income between the two partners in a marriage is a big plus and makes the
average couple pay materially less in the US.
And, in retirement, seniors pay more tax in Canada than they do in the USA.
Now, if I had added in the cost of medical insurance, the US costs for that
single self employed guy are much higher in the USA.
Property taxes (on a new purchase - not a proposition 13 holdover) and user
fees for garbage, library, etc are all higher in California.
The general consensus among my clients is that if you earn $100,000 in
Vancouver, you need a low of $110,000 in rural California to $150,000 in San
Diego or San Francisco in US dollars to stay even with the same life style.
--- centapede at lists.centa.com wrote:
> Hi: Mr. David Ingram:
> I was recommended by my friend to seek you advise.
> My
> name is XXXXXXX XXXX, a Canadian citizen currently
> residing in Vancouver, and working in California for
> US
> Federal Government. Due to the fact that this is my
> first time to work in the U.S., I don't know how to
> file my tax. My question is:
>
> Should I file my 2004 tax first in USA, then in
> Canada?
> Or, should I file my tax only in Canada with your
> help?
>
> I will be in Vancouver from Dec.22, 04 until Jan.2,
> 05.
> May I make an appointment to meet with you during
> that
> time? Thank you for your consideration.
>
> I will be very grateful if you can reply this mail.
>
> Sincerely yours,
>
> XXXX
>
>
=======================================================
> ======
>
> david ingram replies:
>
> You will file your USA tax return first because you
> are
> earning the money in the USA and will be paying US
> Federal Income tax, US federal Social Security and
> US
> federal Medicare. In addition. you will be paying
> California tax.
>
>
>
> If you are still considered a resident of Canada,
> you
> will then report the same income to Canada and
> calculate your tax to Canada and BC. You will then
> claim a foreign tax credit against your Canadian and
> BC
> tax on (usually) a dollar for dollar basis.
>
>
>
> If you are a single man, you will not likely owe any
> more tax to Canada because the US taxes will likely
> be
> higher than the Canadian tax (most people do not
> believe this but it is true). If you are a married
> man
> (even if your wife remains in Canada), you can file
> a
> US joint return and your US tax will be lower than
> the
> Canadian tax and you will owe some to Canada but
> will
> have received a refund of some dollars from the US.
>
> It is also possible that you may be treated as a
> factual resident of Canada where you have to report
> the
> income to Canada and then exempt it on line 256
> under
> Article IV of the US / Canada Income Tax Convention
> (treaty). This method can save many thousands of
> dollars if you are married.
>
> I can be available between Xmas and New Year's.
> Your
> appointment would be at my very messy Home Office
> and I
> would charge you $350.00 Cdn for the appointment.
>
> Contact Numbers are below.
>
> David Ingram's US/Canada Services
> US / Canada / Mexico tax, Immigration and working
> Visa
> Specialists
> US / Canada Real Estate Specialists
> 4466 Prospect Road
> North Vancouver, BC, CANADA, V7N 3L7
> Res (604) 980-3578 Cell (604) 657-8451
> (604) 980-0321 Fax (604) 980-0325
> Email to taxman at centa.com
> www.centa.com www.david-ingram.com
>
> 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 in connection with personal or business
> affairs such as at www.centa.com. If you forward
> this
> message, this disclaimer must be included."
>
>
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> This from "ask an income 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:
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