Posted on: 12-01-10 15:27:41
Hi,
I will be moving to Calgary sometime in Mid-March 2010. I am trying to keep my current job for atleast few months, if not end of the year.
Facts of the scenario are:
A. I will be Canadian resident,
B. I will receive salary in USD via payroll run by my US company, and
C. I will occassionaly travel to USA for client visits.
What are the tax implications? Do I end up paying twice, first time a direct deduction from my pay check and second time when I file tax in Canada.
Since medical is free in Calgary, can I ask my HR to stop deducting any medical insurance premiums or as a matter of fact any other benefits like Medicare, Social security, etc. Also, can I start contributing to RRSP in Canada, child education, etc?
Financial Gurus, please help me understand tax implications based on the above scenario.
Thanks for reading my post.
Taps
A. I will be Canadian resident, - You will need to start filing cdn returns . you can file them prorated starting from mar . also yoir std deduction will become pro-rated
B. I will receive salary in USD via payroll run by my US company, - of course and it will be convrted to cdn $
C. I will occassionaly travel to USA for client visits.- not relevant for taxes except you should keep US medical as cdn medcial will not help you in case you have any health issue in states
What are the tax implications? Do I end up paying twice, first time a direct deduction from my pay check and second time when I file tax in Canada.
Your US taxes could be MFJ or MFS depending upon whether your spouse is earning in Canada or not . See whatever works for you. Then you take all US tax paid and deduct it from cdn taxes . Do you pay twice no but there is lot more headache in filing cdn and US taxes ...
Since medical is free in Calgary, can I ask my HR to stop deducting any medical insurance premiums --No
can I start contributing to RRSP in Canada, child education, etc? - Yes
Financial Gurus, please help me understand tax implications based on the above scenario.
look at http://www.centa.com" rel="nofollow">LINK for more details ...
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We will find a way or we will make one
Quote:
Originally posted by Smiley
A. I will be Canadian resident, - You will need to start filing cdn returns . you can file them prorated starting from mar . also yoir std deduction will become pro-rated
B. I will receive salary in USD via payroll run by my US company, - of course and it will be convrted to cdn $
C. I will occassionaly travel to USA for client visits.- not relevant for taxes except you should keep US medical as cdn medcial will not help you in case you have any health issue in states
What are the tax implications? Do I end up paying twice, first time a direct deduction from my pay check and second time when I file tax in Canada.
Your US taxes could be MFJ or MFS depending upon whether your spouse is earning in Canada or not . See whatever works for you. Then you take all US tax paid and deduct it from cdn taxes . Do you pay twice no but there is lot more headache in filing cdn and US taxes ...
Since medical is free in Calgary, can I ask my HR to stop deducting any medical insurance premiums --No
can I start contributing to RRSP in Canada, child education, etc? - Yes
Financial Gurus, please help me understand tax implications based on the above scenario.
look at http://www.centa.com" rel="nofollow">LINK for more details ...
Thanks a lot Smiley for your response. Initially, having some job, though resulting in some extra tax dollars is better than having no income. I am sure something will work out locally once I arrive there in person.
Cheers!
Taps
Quote:
Originally posted by Tapak
Hi,
I will be moving to Calgary sometime in Mid-March 2010. I am trying to keep my current job for atleast few months, if not end of the year.
Facts of the scenario are:
A. I will be Canadian resident,
B. I will receive salary in USD via payroll run by my US company, and
C. I will occassionaly travel to USA for client visits.
What are the tax implications? Do I end up paying twice, first time a direct deduction from my pay check and second time when I file tax in Canada.
-- For cdn taxes, you need to file prorated tax return (write your arrival date on your tax return and then everything becomes pro-rated). For US taxes though, you might have to file as a full year resident, depending on how you fulfill or not fulfill the substantial presence test. See this:
http://www.irs.gov/businesses/article/0,,id=203094,00.html
If this link is not clickable, google "Taxation of Nonresident Aliens" - you will get the required page.
In order to avoid double taxes, you need to get foreign tax credit on your US tax return (if you file as a resident).
Quote:
Since medical is free in Calgary, can I ask my HR to stop deducting any medical insurance premiums or as a matter of fact any other benefits like Medicare, Social security, etc. Also, can I start contributing to RRSP in Canada, child education, etc?
Financial Gurus, please help me understand tax implications based on the above scenario.
-- Yes, you can ask them to stop deducting medical premiums. I am not sure if they will stop deducting SS taxes, if you are a W-2 employee.
Thanks cdn_dude.
Today, I verified exact details with my HR. Unfortunately, There will be no change to my current pay structure, not even medical, since I will need US travel occasionally and it's company policy to have medical for all employees unless covered by spouse.
Dang it!
This hurts
Taps
In the USA you are taxed by four different levels of Governments.
Federal, State, municipal and county.
There is a physical presence test, which will determine if you have to pay taxes and to whom.
There is also a bonafide residence test. You will be deemed to be a Canadian Resident. This one takes the cake.
In the US the taxation system is based on the Citizenship, irrespective of residency. You decide what Passport you are carrying.
US Law (Taxation that is) allows, for unilaterally granting exemptions and credits for Foreign earned income. Here it gets muddled.
Then there is source rule. Which means where it is earned by work. this one gets it befuddled.
And when you invoke any one of these, the tax rates immediately change. Which is Salary, interest income, investment income and dividends et all.
First and foremost, one thing that you ought to remember, you are on a public forum and you are discussing personal tax matters, which is a no no.
Once again you are also dragging your spouse into it, without her knowledge, by way of MFJ and MFS. That is a double doo doo.
With all of this up for discussion and scrutiny, I will safely say, spend a few hard earned bucks and meet with a consultant and square off. The fees you will be paying will be well worth the situation you are in and the savings generated by your payment to him/her will be immense and you will find out how much when you file your tax return, because they do this thing every day, for a living.
It is past my bedtime. so, Off we go. hope you do too.
Freddie.
Consult a good CPA in the Calgary area. he can guide you according to your situation e.g. if you have children he can explain you various tax benefits available. If you are contracting/planning to contract he can advise accordingly. you get better govt benefits based on above situation whereas may have to pay more taxex compared to US.
