American working in Canada and the US while living in

QUESTION:
I am a US citizen working in Canada.  My postition is responsible for
Manufacturing in both Canada and the US.  I moved to Canada mid 04, and had
my pay changed to our Canadian office.  Am I responsible for paying Canadian
Gov Pention, Employment insurance, etc?
I will be moving back to the US mid 05.  Would I be better off being paid
out of our US office, and have US taxes withheld, or do I need to continue
to be paid out of our Canadian office?
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david ingram replies:
Your employer can write to the Canada Pension board and ask to have you
exempted from Canada Pension Plan contributions and keep your US Social
Security up if your employment in Canada is expected to be for less than 5
years AND you were transferred to Canada as you seem to have been.  If you
had just taken a job in Canada, this option is not available.
That means that your Canadian employer will still deduct Canadian Income Tax
and Canadian Employment Insurance.
It would be worse accounting if you were being paid out of the US office.
The big question is: "Are you being guaranteed tax equalization for your one
year transfer?"  Most employees in your position would get tax equalization
which means that the company would make up for any extra tax you had to pay
to Canada.
I would be happy to look after your US / State / Canada tax returns this
year by fax, snail mail, email or courier.
A typical fee would be in the $700 to $1,400 range with $1,000 Canadian more
likely than $700.
Your position is further complicated by the fact that you are still working
in the USA as I read your email. That means that we need the number of days
worked in both countries to pro-rate the income between the two countries.
You will still pay tax to the US first for the days you worked in the US and
then report it again in Canada and claim a foreign tax credit for the tax
paid the US and any state you worked in.
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