tax diff. US/Canada

sympatico1 · Post by **sympatico1** » Wed Jan 25, 2006 1:10 pm

Hello,

I am doing my taxes for the 1st yr in US (TN1)

Please tell me if the senario below is correct?

If my income in USD = 50,000 and Paid US tax = 10,000 USD (only income, no ties)

It means that I eraned 50,000x1.25= 62.500 CND and paid 12,500 in CND

But accoding to CRA, if I earned this much in Canada I would have paid 18,000 CND tax.

So, now I have to pay the difference of 5,500 CND to Canada

2nd question:

If I owe US 1000 more, how can I proof it to CRA? CRA just asked me to send them my W2 as the proof of income.

Thanks

nelsona · Post by **nelsona** » Wed Jan 25, 2006 2:30 pm

Your taxes that you would get 'credit' for in Canada are NOT the taxes that you PAID on your W-2, they are the final value calculated on your 1040.

Also, your wages would include your SS and Medicare payments, but then these too would qualify for credit, as would state tax you calculate on your state return.

The CRA instructions are clear that you will submit both your w-2 and your 1040 when you submit your Cdn paper return.

But, may I ask, if you live in the US, why would you be reporting this US income in Canada?

sympatico1 · Post by **sympatico1** » Wed Jan 25, 2006 2:50 pm

I had few ties (wife and children) in Canada till end of June 2005. When I said I have no tie, I ment no ties right now, sorry if I was not clear.

You still did not tell me that my simplified way of tax diffrence calculation is correct? (approximatly)

Thanks for your reply

nelsona · Post by **nelsona** » Wed Jan 25, 2006 3:03 pm

I think you can do your own math. i've pointed out what to include in your calculations.