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I am a US citizen looking at accepting a job in Ontario. I will
rent/work in Ontario and my family will stay in Michigan in a
house we
will purchase.
What are the possible tax implications?
Thanks.
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david ingram replies:
You will pay tax in Canada on your income earned in Canada.
Because your family is in the USA, you do NOT have to report any
US income to Canada as you are a factual resident of the USA
under Article IV of the US / Canada Tax Treaty. If your Canadian
income is over 90% of your total income, you may also claim all
Canadian personal amount credits.
After paying your tax to Canada, you will convert the gross to US
dollars and report on your US return. At this point, you have
the choice of excluding up to $80,000 US by using a US Schedule
2555 OR claiming a foreign tax credit by using form 1116.
It is usually to your benefit to use the form 2555. However, to
benefit from the 2555 it is better to use the bone fide residence
of Jan 1 to Dec 31st than the 330 out of 365 days. a careful
read of the form will indicate that you can file a form 2350
which gives you an extra extension to file the tax return so that
you can qualify under the full calendar year provision.
For the record, your rent in Canada is NOT a deduction in either
country.
Hope this helps.
I have sent this to you directly as a blind copy.
I note that you asked to be removed from this list. That is a
mistake if you intend to come to Canada. The Q & A is free at
the moment (usually $125.00 per year) and is full of US / Canada
tax tips.
david ingram - [email protected] <mailto:[email protected]>
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
<http://www.centa.com>
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US/Canada Real Estate Taxation Specialists
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
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