Working in US vs Canada for CA PR with US Citizenship

[shwuying]

My goal is to figure out the benefit for working in US vs Canada.

My situation: US citizenship with CA PR living in CA, corssing border each day to work in US.

My question: Would it be benifitial to work in CA with the similar or slighly less amount of salary? What could be the advantage or disadvantage?

Your input is kindly appreciated.

[nelsona]

Let's see:

You don't say if you are working in MI or WA, which makes a big diff in terms of state tax. You also don't say if you are a contractor or employee.

So, as it is now, you pay, IRS, state, FICA, Cdn and prov tax on all your wages, as well as Fed and Prov tax on all other income. This should work out with tax credits to be only Fed/Prov taxL: no cpp and no Ei.

On your Cdn return you get credit for IRS, state, FICA taxes for your wages, and on your US return you get credit for your Cdn/Prov taxes on your other income.

If you were to work in canada, you would pay only Fed/Prov and CPP and EI. You would exclude your Cdn wages on your US return.

so, on the same exact wage, you will pay exactly the same totat tax, but with the US job, you are contributing to your future SS at no cost to you, with the job in canada you are contributing to smaller CPP out of your own pocket.

With the job in US, you lose out on the benefit of 401(k) matches.

You can contribute to RRSP regardless of job location.

My take is that, the commute costs plus the loss of 401(k) match probably even out the SS advantage.

[shwuying]

Hi Nelson,

Thanks for the reply.

I am employeed with the same company for 10 years in MI. My company offers 401k match 1:.25 up to 6%. I will have a job interview for an university in Windsor this summer. My commute cost is about less than 1000 per year. Does that make any differences?

Some more questions.

1. What is cpp and Ei?
2. Is RSP also qualified as RRSP? ING has some good rates but they only have RSP but not RRSP. Is there any good RRSP that I can startup? My CA tax kills me due to the first year of immigration.

Thanks again.

[nelsona]

$1000: are you including tolls? gas is expensive.

CPP and EI and Canada pension plan and Ei is employment insurance. these are like your SS/Fica except a lot less 9awith a lot less benefit in the end, too).

RSP is the same as RRSP. Every bank inc anada offers the same thing, don't be fooled by over-advertizing, althoogh ING is fine. self-directed brokerage are probably better in long run.

Your 6% 401(k) contribution must be added to your Cdn tax return right now, (if you did not add it, expect a call from CRA).and it will also be taxed in US when you withdraw it, so it is of little benefit to you since you moved to Canada. focus on RRSPs. You could not contribute the first year you moved, but now you should be maxxing these out (or close too it) to pay NO Cdn tax at all.

[shwuying]

$1000 is for tolls only for a whole year. It is based on $2.00 per trip. My resident is less than 10 minutes to the tunnel and work is right by the tunnel. Gas is expensive but manageable since I only drive less than 6 km per day compare to 40 miles before the move to CA.

I only contribute 6% to 401K now since I get some 'free' money from company. How do I add the 6% contribution to the Cdn Tax return? Wouldn't it be included in my W2?? I had a tax accountant do my tax return this year but he did not mention anything about that - I already send in the return on 15th. Anything I should do to correct this?

I will try to max out RRSP if I can afford it. Any better self directed brokerage firm?

Back to the first question for the job location - it looks like it would be all even out eventually? I am currently on 24x7 rotating shift. The job I am interviewing is 8:30-4:30. That will give me a better quality of life. I suppose.

[nelsona]

You take the value in your wage box on W-2, and add the value in your 401(k) box. this also appears on your W-2.

The instructions from CRA are pretty clear on this. Some 'expert' you found.


This is for your Cdn return only.