Question on US Social Security and Canadian Residency -

 

Mr. David

I’ve seen your reply posts on centipede.centa.com and impressed with your knowledge. I have a question and hope you can respond.

I’ve been working on H1B in the USA for 6 years and almost made 24 Social Security points along with retirement fund up to $50K. I’m Canadian Immigrant too and kept coming back and forth to USA and Canada. I’ve passed the Canadian citizenship test but they asked me to prove the residency that I’m going to do soon. I don’t know if they will award me citizenship or not. I’m originally from Pakistan. Lets say if Canada didn’t give me Citizenship and I don’t get a GC in USA, how would I recover the money I contributed in the Social Security in the US?

Thanks for answer in advance.

xxxxxxxxx

Brooklyn

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david ingram replies:

This is a problem.  although the US has now signed Social Security Totalization Agreements with 20 countries, Pakistan is NOT one of them.

Therefore, if you end up back in Pakistan with less than 40 credits, you will  not qualify for Social Security unless you stay away for a year and then return on another H1-B.

On the other hand, Canada does have a treaty.  If you are going to leave the USA anyway, I would  advise you to get back to Canada and get your citizenship by living an working here.  Once you have your Canadian Citizenship, you can work in the USA under TN (Treaty NAFTA) status.

In spite of postings on some sites, you can NOT get your Social Security Tax Payments back If working on an H1 or H2 basis.  It is possible to exempt Social Security Payments if you are from a Tax Treaty Country on an L visa and expected to be in the US for less than five years.

And a TN visa holder who continues to live in Canada and commutes to work in the USA on a 1099 contract basis without a fixed base of operations in the USA can be exempt from paying Social Security AND Federal Income Tax under the US/Canada Tax Convention and the US Canada Social Security Totalization Agreement.  This is a rare occurrence but does happen.

If you have been living and working in the USA for the last six or seven years, you have likely abandoned your Canadian status because you have to have been in Canada for 24 out of any past 60 month period to maintain your PR status UNLESS you are married to and living with a Canadian citizen spouse in the USA OR you were transferred to the USA by / and are working for a Canadian company.

Canadian Citizenship requires you to have been resident in Canada for 1,095 days out of the last 1,460 (3 out of 4 years).

Of course, you can leave the US for a year and qualify for another round of H1 visas in the future. 

I know you are from Pakistan but I am always reminded of one of my favourite client's opinions. 

He said that the best life was:
1.   An Indian wife
2.   A British house
3.   Chinese Food
4.   An American salary

He and his family have taken a year off and returned to India for a year to requalify for another round of H1's.

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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."
 
David Ingram gives expert income tax & 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 $400 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.
 
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 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.
 
$1,500 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

$1,600 would be for two people with income from two countries

$2,800 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 $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
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 $800 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.
 
Just a guideline not etched in stone. 
 
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