Pointers -starting a perm role in the US, base in Canada
Moderator: Mark T Serbinski CA CPA
Pointers -starting a perm role in the US, base in Canada
I am starting a perm role in the US but will keep my base in Canada and travel Mon-Fri returning home for the weekends. I will be on my company's US payroll. My wife and children will stay in Canada and we have no plans to change our residence , it will always remain in Canada. Could someone please guide me on the tax filing process? This year I will have a combination of Canadian and US incomes. But next year will be a different situation with me on US payroll alone. Any pointers on how to proceed will be greatly appreciated. Stu
Your wages will be taxed fully in US (and the state of residence) and also in canada.
You will probably benefit from using a non-descimination tax return for US, where you report only your US wages on a 1040NR, but use a 1040 MFJ to determine your tax rate.
Any US, state and FICA you end up paying will be used as a tax credit on your Cdn return.
Not much strategy for your Cdn return. You will reprot the income as if it was earned in canada.
One thing to watch for though, is that until the new treaty is ratified, any 401(k) cntributions you make are NOT deductible in Canada, so you may want to hold off on starting that until this treaty is cleared up.
You will probably benefit from using a non-descimination tax return for US, where you report only your US wages on a 1040NR, but use a 1040 MFJ to determine your tax rate.
Any US, state and FICA you end up paying will be used as a tax credit on your Cdn return.
Not much strategy for your Cdn return. You will reprot the income as if it was earned in canada.
One thing to watch for though, is that until the new treaty is ratified, any 401(k) cntributions you make are NOT deductible in Canada, so you may want to hold off on starting that until this treaty is cleared up.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks Nelsona
Truly appreciate your thoughts and advice. One clarification however please; I thought we only get the credit for all the contributions we make for Fed and State taxes on USA income but somehow not for the deductions made towards FICA? Does this mean every cent paid in the USA (401k contribution not included) in payroll deductions can be claimed as a credit here at homw in Canada? Thanks, Stu
Nelsona: You mentioned that claiming a credit for FICA payments involves a treaty over-ride of CRA regulations. Is it necessary to make any special statement or indication on your return that you are using the treaty or claiming FICA payments? (In my case, the US wages I have to declare in CAN are only part of my overall US wages on W-2, since I was a US res/Can non-res at the time I received most of my wages. So I don't think it'll be automatically clear that I'm claiming FICA in addition to federal and state taxes.)