Resident Alien living in Washington State but working in British Columbia - Medical and Green Card rules.

QUESTION:
I start working for a Canadian company next week.  I am living in Washington state and have legal resident status.  I am a Canadian citizen. Do I pay Canadian taxes only on the income earned?  Or do I pay both US and Canadian taxes?  

Any advice would be greatly appreciated.
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david ingram replies:

You will file your Canadian return first and pay taxes to Canada.  Then, as a US resident, you will report the money again and claim a foreign tax credit on form 1116 or your US 1040.  the foreign tax credit will consist of the Federal and Provincial taxes plus the CPP and EI you paid.

You should not continue with BC Medical or have a BC driver's licence anymore if you are moving to the US or already living there.

You must buy Washington State Blue Cross or its equivalent.  For BC medical to be valid (even if you pay premiums or are working in the daytime in BC and it is being paid by your BC employer), you must sleep in Canada. It is not good enough to be working full time in Canada and paying full  taxes to Canada; you MUST live in Canada.  You can NOT keep your green card AND BC Medical at the same time unless you file US form I-131 with US Immigration and move back to Canada to keep the Canadian medical alive and keep your green card.
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This might help as well.

My_question_is: Applicable to both US and Canada
Subject:        Canadian, US Perm Res, working in Canada
Expert:         taxman@centa.com
Date:           Monday January 14, 2008
Time:           05:48 PM -0000

QUESTION:

hello
I am a Canadian citizen with US resident status, working full time in Canada.

1.  Will my only tax paid, to both countries be paid to Canada through payroll tax?
2.  Do I have to file a US tax return?
3.  Am I eligable to pay a reduced tax rate to Canada?
4.  Investment company in Canada is refusing to allow me to set up a payroll RRSP deduction in which I am matched by the company I work for.  Can they do this?
5.  If I am required to cancel my OHIP health coverage in Canada, am I entitled to a tax reduction that would normally be designated to that coverage?

Thanks

-----------------------------------------------------
david ingram replies;

I assume that you are living in Detroit and working in Windsor or Living in Bellingham and working in Vancouver or something to that effect.

If  that is so, you can participate in a company pension plan but matched RRSP contributions are difficult because the financial company handling it for your employer is not licenced to sell to or deal with a  non-resident of Canada .

1.   You will pay Canadian Income Tax, CPP and EI.  You will then report the same income to the USA on a 1040 and claim credit for the taxes paid to Canada on US form 1116.  It is unlikely that you will owe the US more on the wages but you might if you have other investments in the USA.

2.   YES

3.   NO

4.   As explained, the company is not licenced to deal with you as a non-resident.  I will give the names of two people who can work with your company to set it up for you.

5.   NO  - You have to sleep in Ontario more than 153 days a year to qualify for OHIP.  You could live in Ontario for 155 days and the US for 210 days and keep OHIP AND your US resident alien (green) card alive. (Ontario is the only province with 153 days - all other provinces and all three territories require you to be there 183 nights.) Therefore, Ontario is the only province that you can legally arrange yiuor affairs to have both a valid Green card AND a valid Provincial OHIP card).

This gives you the names of two people who can solve your RRSP problem.

Two ethical people who specialize in selling securities, RRSPs, etc., to US citizens or green card holders in Canada or Canadians in the US  are:

Mr Darrell Thompson
Blackmont Securities
Toronto
Local    (416) 874-8007
LD        (866) 775-7704
www.blackmont.com

AND

Dan Walkow
Seabank Financial
White Rock
Local     (604) 541-9952
L D        (866) 541-9952
www.seabankcapital.com
__
These two individuals and their companies have gone to the effort to get themselves registered just about everywhere so they can deal with a Canadian in Florida or California or Nevada, or an American in Ontario or BC., etc.
____________________________________

Note that because of their specialty, they tend to deal with accounts in excess of $200,000

However, I am sure that both parties would welcome an exploratory call.

---------------------
  
On February 11, 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
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However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
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Phone consultations are $450 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. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 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.
 
$1,200 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

$3,000 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 from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has recieved as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 
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