Working in the US and Living Canada

My_question_is: Applicable to both US and Canada
Subject: Working in the US and Living Canada
Expert: [email protected]
Date: Thursday February 15, 2007
Time: 12:22 PM -0500

QUESTION:

I am married to a Canadian woman and we reside together in Canada. During
transition of converting my citizenship to Canada I am still employed by a
US company. I work from home (in Canada) and draw a salary from a US
company. I am required to travel there and work from the local office
Seattle office every other week for a couple of days.

My concern of course is taxation. What do I need to do? I make less than
$65,ooo.oo US per year. My wife is employed here in Canada and I live here
with she and our son.

The company I work is small and does not know how to tax me in any other way
than if I lived in the US.

An you help?

Thanks,

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david ingram replies:

1. If you are a member of a 401(K) and putting money into it, stop now.
Canada will not allow the deduction now and tax you on the money when it
come out. OUCH!!


2. You could be paid as a contractor on a 1099. If so, the company should
pay you everything you are getting now PLUS their half of Social Security
and Medicare, whatever they pay for unemployment insurance and whatever they
put into a 401 plan if you have one.

3. Either way, you are a US citizen and being paid in the US. You will file
your US return but should be figuring out how much was actually earned in
Canada. You would then owe tax to Canada first on the money earned in
Canada (even if paid for Seattle) and the US first on the money earned in
Seattle.

You would then claim foreign tax credits on form 1116 to claim credit for
the tax paid to Canada first and put the US tax, Medicare and Social
Security you paid and the net US income on lines 431 and 433 of your
Canadian return.

Glad to look after them for you if necessary.