Live in Blaine US, Work in Vancouver Canada -

My_question_is: Applicable to both US and Canada
Subject:        Live in US, Work in Canada
Expert:        
taxman@centa.com
Date:           Saturday January 06, 2007
Time:           02:34 PM -0500

QUESTION:

I am a Canadian citizen currently living and working in New York since 1996.  I am 50% North American Indian, and my Status Card allows me to roam the borders freely without the need for a Visa, Green Card or Working Permit.  I am classified as a "legal immigrant allowed to live and work in the US".

I am considering a move to the Vancouver, BC area but was shocked to see the current price of houses on the Mainland. I am considering if I should purchase a home in Blaine, Washington and commute to Vancouver to work.  I will not be self-employed and will probably work for a company.  I anticipate my salary will be around $60-80K.

What are the tax consequences of doing this?  Will I be required to pay income tax in Canada and then be required to file another return in the US?

Is it a better idea to perhaps rent a small apartment so that I have a permanent Canadian address and the US residence will serve a a vacation home?

Thanks for your help.
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david ingram replies:

If you live in Blaine and work in Canada, you will pay Canadian Income Tax first and then report the income in the US again and claim a foreign tax credit for the tax paid to Canada on US form 1116.  There will not likely be any US tax liability.

However, you will not qualify for BC Medical or extended benefits from a Canadian employer because you have to live in BC which means sleeping in BC more than 183 days a year to qualify.

Having an apartment in BC, and a house in Blaine could leave you with BC medical coverage but you would have to PROVE (cell phone bills are good) that you slept IN BC more than 183 days.  So if you stayed in Vancouver Monday, Tuesday, Wednesday and Thursday nights and the States on Friday, Saturday and Sunday nights, you would qualify for BC medical. 

The income tax does not change if you live in the US or Canada.

By the way, the Jay Treaty of 1794 which is the Treaty that gives you the right to live and work in the US is a one sided Treaty which was signed by the US and Great Britain BEFORE Canada came into being.

The US still allows First Nations from Canada to move freely as you have done, but Canada in its wisdom does not afford the same courtesy to American First Nations.  When you come back, you should work on the Harper government to correct this situation.
 
Hope this helps. 
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