Big Daddy wrote:
- quote -

affiliate in Canada, you would be exempt from paying into the
Canadian system if you work their for five years or less. You
would pay into the US system. Otherwise, you pay into the
Canadian system and not the US system. If it turns out that you
pay into the Canadian system, then upon reaching retirement age,
the treaty allows each country to use credits earned in the other
country to determine your entitlement. You would have to read
the treaty to see how this works. Depending upon how long you
have paid into each country's system, you could be entitled to
payments from both countries.

Income tax: As a resident of Canada, you are subject to Canadian
tax on your worldwide income. Canada's system is based on
residency, not citizenship. As a US citizen, you are also subject
to the US tax system. Therefore, you must file a US tax return.
To avoid double taxation, the US will either allow you to exclude
your foreign earned income if you pass either a bona-fide
resident test or physical presence test. See IRS Pub 54 for how
you qualify and the amount to exclude. In lieu of excluding
income, you are allowed a foreign tax credit for taxes you pay to
Canada on income subject to US tax. The credit can not be larger
than the amount of tax owed to the US. In other words, you wind
up paying income tax at a rate equal to whichever country has the
higher rate. There are separate rules for how other types of
income other than wages get taxed and the rate of tax paid. There
are also rules relative to payments you make into a Canadian
pension plan other their social security system.
Therefore, it is in your best interest to higher a tax
professional for at least your first year. Have that person
explain to you how the tax returns for both countries were
prepared. It is possible that you would then be able to prepare
your own thereafter.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Dec 11, 9:56*pm, Big Daddy <johngil...[at]yahoo.com> wrote:
- quote -

Filing requirement will be different than paying requirement.

As a US Citizen, you are obligated to file a US tax return, no matter
were you live. As a Canadian Resident, you are obligated to file a
Canadian Tax Return. Both obligate you to report world-wide income.
Both will grant credit on their tax return for taxes payable (not
withheld from pay) on income earned in another country, to the extent
that you pay tax on that same income on their tax return.

For example, if you earn $15,000 USD in the states but are resident in
Canada, you will have both US and Canada returns to file. If your tax
withholdings are 15% from pay, your US tax rate is 11% and Canada is
13%, you will obtain a 4% refund from the US tax return (15% less 11%)
but will need to pay 2% to Canada (13% less 11%.) Exchange rates,
other sources of income, etc. notwithstanding. This is why most
international tax specialists say that you will pay the higher rate of
the two locations but which you pay is open for dispute.

Social Security is covered in a separate treaty. For the Canada-US
Treaty on Social Security, the basic principle is that you pay into
one Social Security system. Generally, that is the one where you work
if it is dependent personal services and the one where you reside if
it is independent personal services.

Your situation is confusing at best and experienced cross-border tax
assistance is highly recommended to prepare BOTH tax returns as well
as your spouse's. Don't attempt one and farm out the other as both
returns are linked together and can not be prepared in isolation. You
may expect to pay an absolute minimum of $500 for the returns and
generally the price will be in the order of $2,000. I would be
cautious of the low end of prices - like most things, lower does not
mean better, though higher also does not mean better either. (To put
this into perspective, I as a pro would likely charge the mid-range
for your situation given the liabilities involved.)

You mentioned that the governments would not know... The CRA is
currently running a number of programs to try to catch tax cheats as
well as the worries of terrorist activities. It is not unusual for
them to go through a neighbourhood and take down license numbers to
match to taxpayer records, or to verify against border records. Also
the CRA and IRS both exchange information. Once one knows, the other
will not be far behind. You are better off doing things correctly.
(Incidently, the IRS is considered a pussy cat compared to some tax
authorities here in Canada.)

Tim in Canada

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Dec 11, 9:56*pm, Big Daddy <johngil...[at]yahoo.com> wrote:
- quote -

Filing requirement will be different than paying requirement.

As a US Citizen, you are obligated to file a US tax return, no matter
were you live. As a Canadian Resident, you are obligated to file a
Canadian Tax Return. Both obligate you to report world-wide income.
Both will grant credit on their tax return for taxes payable (not
withheld from pay) on income earned in another country, to the extent
that you pay tax on that same income on their tax return.

For example, if you earn $15,000 USD in the states but are resident in
Canada, you will have both US and Canada returns to file. If your tax
withholdings are 15% from pay, your US tax rate is 11% and Canada is
13%, you will obtain a 4% refund from the US tax return (15% less 11%)
but will need to pay 2% to Canada (13% less 11%.) Exchange rates,
other sources of income, etc. notwithstanding. This is why most
international tax specialists say that you will pay the higher rate of
the two locations but which you pay is open for dispute.

Social Security is covered in a separate treaty. For the Canada-US
Treaty on Social Security, the basic principle is that you pay into
one Social Security system. Generally, that is the one where you work
if it is dependent personal services and the one where you reside if
it is independent personal services.

Your situation is confusing at best and experienced cross-border tax
assistance is highly recommended to prepare BOTH tax returns as well
as your spouse's. Don't attempt one and farm out the other as both
returns are linked together and can not be prepared in isolation. You
may expect to pay an absolute minimum of $500 for the returns and
generally the price will be in the order of $2,000. I would be
cautious of the low end of prices - like most things, lower does not
mean better, though higher also does not mean better either. (To put
this into perspective, I as a pro would likely charge the mid-range
for your situation given the liabilities involved.)

You mentioned that the governments would not know... The CRA is
currently running a number of programs to try to catch tax cheats as
well as the worries of terrorist activities. It is not unusual for
them to go through a neighbourhood and take down license numbers to
match to taxpayer records, or to verify against border records. Also
the CRA and IRS both exchange information. Once one knows, the other
will not be far behind. You are better off doing things correctly.
(Incidently, the IRS is considered a pussy cat compared to some tax
authorities here in Canada.)

Tim in Canada

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I am a US citizen with a US residence working for a US company that is
paying my salary into my US bank account. As far as the US government
knows, I still live at my address in Virginia. But I have recently
moved to Canada and will be living here for a couple years. I am
working long distance for my company back in Virginia. When I need
money, I can withdraw it here from my US bank account. I am married
to a Canadian. Should I pay taxes to the US government or the
Canadian government? Is the answer different for social security
taxes vs. income tax?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >