Canadian Permanent Resident working in US on L1 visa

[RT]

Hi,

I am a permanet resident of Canada. Lived and worked in Canada for 2 years.

This year after working in Canada in January for 2 weeks, my employer moved me to US on L1 Visa.

My family and house are in Canada

I live in US, renting appartment, but visiting my family in Canada once a month.

So how should I approach the filing of taxes.

1. Should I file US tax first and then Canadian, showing the Canadian income for January and also US income and to claim paid US tax as a credit?

2. How does the contributions to both 401(k) and RRSP reduce the taxes?

3. I have to support my family in Canada. Can I claim them as dependents while filing US taxes?

I would really appreciate if I can get any tips.

Thanks.

[nelsona]

You caan clim your family as dependanyts regardless of whther you support them or not, since they live in canada.

You will need to file in both countries, balancing out the credits for what is 'foreign' on each return.

[RT]

Hi Nelsona,

Thanks for the reply.

If I contribute to 401(k), is it tax deductible in Canada and similarly, is RRSP tax deductible in US for the year 2008?

How to balance between 401(k) and RRSP?

Thanks.

[nelsona]

Your 401(K) IS deductible in Canada starting in 2008 only.

Your RRSP, since it would not be an employer-sponsored plan would not be deductible, and even if it was, would still need to be included in your 15,500 401(k) limit.

So stick to the 401(k) only.