Work in Canada, live in US, tax question -

Hi, there. My husband has worked in Winnipeg for just under three years as an engineer. He also does contract work in the US that accounts for roughly 33% of his income. We lived in a house in Winnipeg for the first 2 years of his employment there, but last winter (about 11 mos ago) we moved just across the border, so he has a 1 hour commute three times per week to work. The purpose of the move was to easily facilitate his pursuit of a US passport, as he is currently only a greencard holder. We do not plan on applying for permanent residence in Candada. Four days out of the week he in the US all day, and the rest of hte family is in the US nearly all the time. Our ties to Canada are as follows: work permits for both of us, mine open and unused, one bank account (not non-resident, although that can be changed), one investment property that is currently vacant, but which we hope to rent, and my husband's place of employment. Our Canadian-born son has a US passport. 

We have US driver's licenses, have registered for homestead in Minnesota, have our cars registered and insured in Minnesota, and have three US bank accounts, including one credit card, in the US. We have no Canadian credit cards. Our social ties in Canada are minimal, as we keep in loose contact with a few friends that result in us spending maybe a couple of days per month in Winnipeg, but always returning to our own home at nighttime. We do extensive traveling in the summer, and spend almost no time in Candada between April-September, as my husband can work from home when he's not teaching. Our son attends school and karate in Minnesota, and we only do occasional shopping in Winnipeg.
We have continued to pay taxes this past year as residents, and also to use Manitoba Health for health coverage. We also pay for benefits through the University - Blue Cross for dental, etc. Having coverage in Winnipeg is beginning to create a significant inconvenience, and we would like to switch to private health care in the States, but it would only be affordable if we can manage to pay fewer taxes in Canada, maybe as non-residents. What steps should we take (ties to break, changes to make) in order to be able to pay less tax in Canada? Would this result in any sort of significant increase in our net income? (Our current gross in Canada is $78k and in the US it's about $30k). 
I've been looking everywhere for this information, and you look like the best hope I have found for having my questions answered. 
Thanks so much! 

david ingram replies:

This is the third similar Manitoba - Minnesota question I have had in a week.  Usually, this type of question involves Detroit - Windsor or Vancouver - Bellingham.

The GOOD news is that although, your husband IS taxable in Canada on his earnings in Canada from that date, Canada has no right to tax him on his US earnings. You have not been a  worldwide income taxable resident of Canada since the day you moved to the US. 

The BAD news is that you are NOT covered by the Manitoba Medical System and the extended benefits plan issued by your Canadian employer even if you do have Manitoba Medical and Manitoba Blue Corss cards, nu,mbers and other identification.

To be covered by the Manitoba Medical system each covered member of your family must be physically sleeping in Manitoba MORE than 183 days a year.  None of you are doing that at this time. Everything you have said about vacations, schooling and commuting home each and every night absolutely - without any doubt - disqualifies you from Manitoba Medical.  Another way to look at is that you were absolutely disqualified the day you took out Minnesota driver's licences and registered your car in Minnesota.  Since your Blue  Cross extended benefits depwnd upon your being a primary ember of the Public Health plan first, your Blue Cross is also kaput.  I will compare it to your having a bunch of blank cheques with no money in your account. 

You can be billed retroactively by the Manitoba system for any medical expenses paid for you by the Manitoba system since 90 days after the day the family left Manitoba to live in Minnesota. And, this would be true whether you went to another Canadian province.  You might be covered by the other province's system, but you would lose Manitoba's coverage after 90 days. By the way, I have been there only a little more extreme.  I attended the University of Saskatchewan (Regina Campus) and St John's College at the University of Manitoba at the same time.

For the rental, you should be filling out Canadian form NR-6 BEFORE you collect the first month's rent.  YOu should notify the bank that you are a non-resident so that the bank deducts the required 10% under Article X o fthe US Canada treaty.

If you moved at the end of November last year, there is not much tax lost but you likely did not have to pay tax to Canada on the one month's consulting income earned in the US.

You should likely buy an hour of my time and you and your husband should be on the phone at the same time and you should record the conversation.

Consultation details can be found further on after the disclaimer.

These other older questions may help as well.

QUESTION: David, I am a Canadian citizen and just got my green card.   My wife is American and works and resides in the US.  I work in Canada during the week and go back to the US on weekends.  How does this affect my tax filing?  Am I filing as normal in Canada or do I have to file in the US also? 
Your help is apreciated.
Thanks, Vince
david ingram replies:

You will file in Canada first and then report the income again on your US 1040 (maybe a joint return with your wife). Any tax, CPP and EI paid to Canada will be a foreign tax credit on the US return if you fill out form 1116.


My husband is a US citizen, I am Canadian. Can we save on taxes by living in US and keeping our jobs in Canada.  Also understand that mtg int. is tax ded. in US. Thx.
david ingram replies:

Living in the US and working in Canada will cost you a lot more in expense although you may make up for it with a cheaper house, gas for your car and some groceries.

For instance, living in Washington State and working in BC will not save you any tax on your wages.  It may save you overall a little if you have large investment income but it would have to be over $10,000 a year to be meaningful. i.e., If you live in the US, you would not pay tax to Canada on the investment income if the investmentrs were in the USA.

The biggest problem is that you would no longer qualify for BC (or other province) medical and it would cost you anywhere from $300 to $1,500 a month to buy your own  equivalent US medical.

The US mortgage interest deduction is of no use to you  if you are working in Canada because you will still pay full Canadian taxes first.

And it is possible for most Canadians to arrange their affairs to make their Candian mortgage deductible.   Goto  and read the  November 2001 newsletter in the top left hand box.
david ingram wrote:
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Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 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.
$1,500 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

$1,600 would be for two people with income from two countries

$2,800 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 $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely $450
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 $800 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.
Just a guideline not etched in stone. 
This from "ask an income trusts tax and immigration expert" from or or 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

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