Paying New York Taxes despite Canadian Resident

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BruceP
Posts: 7
Joined: Sun Nov 19, 2006 6:16 pm

Paying New York Taxes despite Canadian Resident

Post by BruceP »

I am currently a US citizen in new york state. I am considering taking a position in Toronto. I would plan to commute back to NY on weekends.

Apparently NY State places hands deep in your pockets trying to keep you paying NY State taxes. In my case, I would plan to be in Toronto well over 200 nights a here, working fulltime in Toronto, with nearly all my income in Canadian dollars, from a Canadian company. I would not sell my house in NY and my wife and kids would live there about half time, and in Toronto about half time.
% or
I have been told I am liable for the full shot of NY State Income taxes given this situation. When I look at the various writings about this, it is all about declared domicile, etc and so forth. My wife is staying home with our kids at the moment and will not have any income in 2007. This is not a transfer to a Canadian branch, rather a complete new career change for me. I will have an apartment in Toronto, a house in NY. So, all of my work/business ties will be in Toronto, my time by far in Toronto (all work time). But, I have the house in NY, my wife and family will be there about half time, so the "sentimental value" is more US I suspect.

What is the best thing to do in this situation? Do I have to pay the full 5% for NY taxes? What if I change the address on all my bills and whatnot to Toronto?
BruceP
Posts: 7
Joined: Sun Nov 19, 2006 6:16 pm

Post by BruceP »

One more thing....Is there a tax credit to NY State for taxes paid to Ontario? It seems like there is, via form IT-112-C, but I believe the tax consultant I spoke with told me there was no credit to NY State, and estimated I pay some 5% to NY, on top of everything in Canada.

Is this credit some percentage of taxes paid to Ontario? Anyone know what percentage?

And I see mention of exchange rates used when the tax was paid...does this require me to keep track of exchange rates when I get paid? Each paycheck?

Thanks!
nelsona
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Post by nelsona »

I already said that you would be on the hook for NY tax with no possibility of credit-. That is because NY doesn't give credit for foreign taxes, and does NOT adhere to the tax treaty -- most states do not.



Exchange rates, for income that is periodic, can be based on a yearly average, which CRA and IRS are familiar with
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

Correction - yes the newform does giveyou credit for your ON tax paid. This will effectively reduce your NY ta, but not likely wipeit out complete;y. Figure 10% of you NY tax will still be owed.
You've caught break from Albany. :P
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
BruceP
Posts: 7
Joined: Sun Nov 19, 2006 6:16 pm

Post by BruceP »

Nelson.....Thank you for the info. I called the tax consultant this morning and he too told me that indeed, there was no credit. When I pointed out the form, which is new for 2005, he said it is something he missed.

And paying 10% is WAY better.

One more question....from my searching online, it seems the IT-112-R form allowed for tax credit in NY to other states, as well as to Provinces. So, do you know if this is truly something different in NY Tax Law, or just a missed item with the -R form? I called the NYS Tax Hotline, and after 50 minutes of being on hold, they said that one could always claim this credit on the -R, and now the -C is just a separate form.

Any ideas?

Thanks,
Bruce
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

All states allow credit for staqte taxes paid in the other states.

There are only a handful of states which allow any foreign tax credit. NY has joined that handful, I don't know how long ago. Very few have explicit forms like the NY one.

Of course, if one were to take foreign taxes as a DEDUCTION on Schedule A of Fed 1040 (this is sometimes more beneficial), it would pass down to most states as well.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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