Moving to canada

[cruedog85 0]

greetings all! and thanks for any help you can give. my question is this. i live and work in boston and im marrying a candian who lives in tornto this month. my job is such that i can work from home so i have asked my company can i work from home in canada. while they think about this they want to know if there are any issues (taxes or other issues) with me living in canada but still working in america.

thanks

mike

[Jersey Girl 2]

Welcome to the world of dual taxation. If you reside in Toronto, and are a landed immigrant, you'll be filing in Canada and the U.S., regardless of where you get your income. There are very few accountants in Canada who can do cross-border taxes. Here's a good place to start. http://www.serbinski.com

[cruedog85 0]

Welcome to the world of dual taxation. If you reside in Toronto, and are a landed immigrant, you'll be filing in Canada and the U.S., regardless of where you get your income. There are very few accountants in Canada who can do cross-border taxes. Here's a good place to start. http://www.serbinski.com

thank you for the site i will look into it! i was wondering if you happen to know if there are any changes my company will have to do with me living in canada? If everything stays as is tax wise i think they will be ok with it, but if they must do extra reporting or pay extra taxes it hink they will back out thanks

[Reba 2]

with the tax treaty between the countries, and depending on your tax bracket in MA, You may or may not have to pay extra taxes at reporting time.

You will also have to consider immigration laws and whatnot. I dunno, but Canada may be similar in that you cannot work in Canada without a work permit, even if you're "telecommuting" with a US company. That's how it is in the US at any rate from what I understand.

Check with a tax accountant as well as an immigration lawyer.

[cruedog85 0]

with the tax treaty between the countries, and depending on your tax bracket in MA, You may or may not have to pay extra taxes at reporting time.

You will also have to consider immigration laws and whatnot. I dunno, but Canada may be similar in that you cannot work in Canada without a work permit, even if you're "telecommuting" with a US company. That's how it is in the US at any rate from what I understand.

Check with a tax accountant as well as an immigration lawyer.

thank you both for the info!

[Jersey Girl 2]

if they must do extra reporting or pay extra taxes

It's you who'll have to do the extra reporting and pay more tax. If you live in Canada legally, you'll have to pay taxes in Canada first, which are higher. At the same time, you'll submit your U.S. return, claiming exemption because of the Tax Treaty. Your U.S. employer continues to give you a year-end form showing your income and the tax deducted. But those U.S. deductions probably won't be enough to satisfy your Canadian obligations, so expect to owe tax in Canada. It's very easy for a middle-class person in Ontario to be in the 46% tax bracket.

You could also be liable for double taxation if you make over a certain amount (around $75,000 USD, I believe). Then you'll owe Uncle Sam as well as Canada Revenue. What fun.

The responsibility to file and pay in both countries is entirely yours. A good cross-border accountant is expensive, so expect a bill for $750+ to do your returns. Also, if you move back to the States, you could still be liable for the killer Canadian tax even if you don't live there anymore.

Moving to Canada is not to be undertaken lightly if you're a USC sponsoring a Canadian immigrant, since you'll need current tax returns to show financial stability. If you've made a mess of it all because you didn't know what moving to Toronto would entail, you could jeopardize the visa.

I'm not qualified to give any kind of advice, but you might try a trial run in Canada before deciding to move permanently. You could simply be a telecommuter for a short while ... a visitor ... a tourist. Check out the job market while you're there, because it's skimpy compared to Boston. Don't gve up your U.S. home and address until you're sure. Like many in Canada, you might realize that it's better to live and work in the States. Canada is great for summer holidays but becoming a PR has many financial drawbacks.

[Cristy 4]

I am confused why he would need to pay extra taxes if he lives in Canada but works for an American company.

I live in Canada and work for an American company. I just collect my paycheck and that is it.

Why would this be different?

[zyggy 9]

I am confused why he would need to pay extra taxes if he lives in Canada but works for an American company.

I live in Canada and work for an American company. I just collect my paycheck and that is it.

Why would this be different?

It's easy for a US Company that has a presence in Canada and witholds and pays Canadian taxes..

It's hard for someone who works for a US company that has no presence in Canada, gets withheld US taxes, and then has to file in Canada...

And there is no double taxation. The tax treaty doesn't allow that.... If you make more than the foreign exclusion and if Canada taxes you on that, then you can get credit for that tax as a foreign tax credit... or vice versa..

Edited June 8, 2006 by zyggy

[Jersey Girl 2]

Canada taxes people based on residency. If you live in Canada legally, you must file in Canada, based on your worldwide income. (cristy, I'm assuming you're a Canadian and only liable for Canadian tax. The location of your employer is irrelevant.)

The U.S. taxes people based on citizenship. If you're a USC, living legally in Canada, you must, in addition to your Canadian return, file a U.S. return, on your worldwide income.

Income tax in Canada is higher, and once a USC living there has paid it, Uncle Sam will let you off the hook, up to a certain amount of income. That's your exemption under the US-Canada Tax Treaty. zyggy is technially correct in that there's no "double taxation." However, there's extra taxation, paid to Uncle Sam, if you make over the threshold amount while living in Canada. Ask me, I've paid it.

The crucial point is that every USC must file every year regardless of where in the world they live. That's the law, and no one wants to be on the wrong side of the IRS if they're sponsoring an immigrant and showing tax returns as evidence of support.

[clloyd 0]

However, there's extra taxation, paid to Uncle Sam, if you make over the threshold amount while living in Canada. Ask me, I've paid it.

Don't you get a credit for paying this tax on your Canadian return, which does eliminate the situation of double taxation.

[zyggy 9]

However, there's extra taxation, paid to Uncle Sam, if you make over the threshold amount while living in Canada. Ask me, I've paid it.

Don't you get a credit for paying this tax on your Canadian return, which does eliminate the situation of double taxation.

If one sides taxes are more, you have to pay the difference...

For example, I make $100,000 US per year...

I would have to pay taxes on $20,000 since the US exclude the first $80k. Let's say that that amounts to $2,000 for argument...

Your taxes in Canada would be based on $110,000CAD per year. Let's say that that amount would be $41,800 assumeing a 38% tax rate.

Since you are resident in Canada, Canada has first crack at your money...

In this case, you would probably file a foreign tax credit on the $2,000 US based on the amount that you have paid in Canada, or you can pay the US, and take a $2,200 foreign tax credit on your Canadian return. But more than likely you'd take the credit on the US return. In no way should you be paying double on the same amount of money. The tax treaty does not allow for that. You should only be paying whatever the the higher tax burden amount is in either jurisdiction. The total tax burden may be split between the US in Canada in some ratio, but you should still be paying only that amount and no more.

If you did pay more, then you got screwed and you should get another accountant...

[Cristy 4]

Ok I get it now

[Reba 2]

The crucial point is that every USC must file every year regardless of where in the world they live. That's the law, and no one wants to be on the wrong side of the IRS if they're sponsoring an immigrant and showing tax returns as evidence of support.

he's not sponsoring an immigrant tho. He's becoming an immigrant to Canada.

And if they chose at a later date to move to the US, as long as he has filed his taxes to the IRS anually, there's no problem in him then sponsoring his wife for a green card.

After they leave Canada, they won't even have to file tax returns to Canada if they have no financial obligations in Canada. ie: cash in any RRSP, have no property, and have no income in/from Canada. Just file an "exit" tax return your last year there, and that's it.

He also may not have to pay "extra" taxes while he's living in Canada, if his employer takes enough taxes off his cheques. I dunno about MA, but here in NC I'm paying about the same tax rates as I was back home in Ontario.

[cmartyn 0]

Why not work on contract. My wife works on Contract for her old company she left in Canada. That way the company just writes out a check and writes it off as a business expense.. no further tax reporting required. If you want to keep your old benefits and whatnot.. fawgett about it.

[clloyd 0]

Why not work on contract. My wife works on Contract for her old company she left in Canada. That way the company just writes out a check and writes it off as a business expense.. no further tax reporting required. If you want to keep your old benefits and whatnot.. fawgett about it.

No further tax reporting? That sounds to me like that is (in the US at least) self-employment/income, and must be reported (if required to file) on a schedule C and a schedule SE (if over $400). Not sure about the Canadian tax laws.