Tax Strategy Validation TN - CDN living in CDN, working USA

[spocket]

Hi
I've been a TN worker for 6 years and I have applied a financial strategy
regarding 401K and RRSP's mostly based on a very basic understanding. I would like to make sure that it does makes sense. I read/search the forums here and there but no luck in clarifying once for all the following topics.

Therefore I would really appreciate if some of you could fill the void and let me know if I am making a big mistake in my 'strategy'...

I am Canadian, living in Canada, working in USA on a TN (Daily commuter).


401K Strategy
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I know that contribution s to a 401K are not really interesting for Canadian Tax purposes due to the fact that we can't deduct them. I still contribute 5% of my

salary due to the fact that my employer match my contribution up to this amount. I assumed that the 100% immediate benefit surely would make the disadvantage of CDN tax.

If I ever stop working in USA, I would simply leave my 401K alone till retirement, or moving it to an IRA if I need to take it out of the 401K upon leaving the company.

At retirement, the 401K/IRA will be composed of the following:

A) my contributions
B) my employer contributions
c) Investment earnings on both

Q1. Please, correct me I am wrong, but I assume that when making withdrawal during retirement, I would pay taxes in Canada only on B) and C) since I already paid canadian taxes on A) ?

Q2. I guess I would pay tax on the whole withdrawal on US tax report?

Q3. Will the amount paid in US TAX be applied as tax credit for filing in Canada?


RRSP Strategy
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I take the minimum amount of RRSP so I do not pay additional taxes on CDN Tax report. Found out before that increasing RRSP contributions yields no tax benefits. I susually need only about $1000 RRSP to not pay add. taxes in CDN.

Of course, I still have to pay the $750 OHIP since 2 yrs since it is not avoided by increasing RRSP contributions.

Therefore, if there is any money left at the end of the year, there is no point in my situation to put it in RRSP, so I tend to use it to repay things like Mortgage or Car loans, to reduce interest paid.

Q4. Anything I am missing? At that rate, RRSP fund doesn't grow fast...

I am getting married to a canadian this year, so next year I consider taking
RRSP's under her name to get the CDN tax benefit.



CPP/SS
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Q5. I worked only one yr in Canada, 6 now in USA. I am 33 so I've got several more years to work, I guess mostly in USA. Upon retirement, can I expect to be able to get money from both CPP and SS?


EI
-----------

Q6. Something I always wondered, living in Canada working in USA, if I ever loose my job (lay off) in USA, I am entitled to any compensation such as 'employment insurance' we usually have in Canada?

Thanks for "validating" (or not) my strategy and letting me know if there something very wrong about it. I can foresee that this tax situation will only get worse (complex), especially at time of retirement.

Any further advices welcome.


Q7. Any good book available that would include discussions/recommendations of all those topics for commuters like me???

Spocket

[nelsona]

Let us know when you have reviewed the information already available on this site.

You do not say whether or not you are filing a 1040NR or 1040 (which you are allowed to do), or whether (once you are married) using the Article XXV provisions for married non-residents.

the reason you aren't having to add much RRSP is probably because you are not aggressively reducing your US tax. You might consider looking into this.

[spocket]

I am trying to search the forum, but as mentionned, I have a hard time to find answers to some of those questions. I guess that's also why I was asking if there was a book or an "organised" source of information you would recommend.

I always filed a 1040NR.

My fiancee is CDN citizen, living & workingin Canada (about 50K $CAD/yr). Will the article XXV benefit me in this case once married? Where could I read more about this article in simple terms?

Really wondering how I could "aggressively" reduce my US taxes since my current 1040NR is really straightforward (currently no wife, no kids, no residence in USA, etc): very small room for deductions.

[nelsona]

Keats has a "Border Guide" available commercially, its quite good.

This forum (and its predecessor at grasmick.com) are the best sources.


A 1040 will amost ALWAYS yield a lower taxrate than 1040NR. You yourself just said you have no deductions: 1040 gives you an automatic $10K deduction.

Once you marry the article xxv 1040 will lower your US taxes even more. At a certain point there is no need to lower it any further, because you can't lower your Cdn tax any lower, but in your case if you are not using up your RRSP room, and you would like to, there are ways to lower your US tax.

Nothing is 'simple' in cross-border terms, so don't look for simplicity.