US Citizen moving to Canada, working in US & Canada -

My_question_is: Applicable to both US and Canada
Subject:        US Citizen moving to Canada, working in US & Canada
Expert:         taxman@centa.com
Date:           Thursday January 10, 2008
Time:           03:11 AM -0000

QUESTION:

I am a U.S. citizen in a long-term, comitted relationship with a Canadian and am anticipating an upcoming move to Canada. I am curious as to what my options were for working in both countries at the same time? I will be able to work remotely and retain my current U.S. job, although this will take me from full-time work to part-time. I also have a job offer with a Canadian employer for a job in Canada that would compliment my part-time schedule with my U.S. employer (as well as the required approval to legally work in Canada). Is it possible to work for employers in two countries, and if so, how would I represent the dual incomes to the appropriate tax authorities?


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david ingram replies:

You are not alone.  Many people who can,  work on both sides of the border, some for years and years.

However, if you 'are' willing to do that, you should find yourself a job where your dual status is useful to one employer which should pay more for that ability.

That could be a company with customers on both sides of the border and you would be able to service those clients on either side without hindrance.

Or a company with offices or branches on both sides of the border and you could go back an forth and do anything at either location without hindrance,.

In your case, as described, you would be pay tax to the US first on the US sourced income and then report it again in Canad and claim a foreign tax credit for the tax, FICA and Medicare you paid to the US on line 431 of your Federal Income tax return and the appropriate line for the provincial credit on provincial schedule 428.

Then you would pay tax on the Canadian sourced income to Canada  first and then report it to the US as well.  At that point you would either exempt the  Canadian earnings (up to $82,400) on form 2555 or claim a US foreign tax credit on US Schedule  1116..

We, of course would be glad to look after these for you by fax, snail mail, email or in person.
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This is not intended to be definitive but in general I am quoting $900 to $2,900 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.
 
$1,100 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

$2,900 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 $150 to $500.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc.

Just a guideline not etched in stone.
 
 
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 .

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