Taxation Question (Wife in Canada & Husband in USA)

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neowinxp
Member since: Jul 04

Posts: 5
Location:
Post ID: #PID

Posted on: 06-07-04 11:34:09

Me and my wife recently got PR status under Family class (Software Worker category)
I was the primary applicant of PR and wife was added later to the process
We both applied for SIN numbers recently
We both have jobs in U.S.A
Both of us have not applied for Canada driver's license till now
My wife took a house on rent in canada and commutes from Canada to USA
I visit once in a month to canada to be with my family.
I am not part of this house rental lease and I do not have bank accounts or clubs or driver's license

Question is
A. Do we have to file taxes as jointly or single
B. If we are forced to file taxes as joint, do I need to report my world wide income along with my wife earnings. as I do not stay in canada even though I am PR.
C. Can my wife take canada driver license as she lives in canada, does it has anything to do with tax
D. If I want to take canada driver license as I do not live in canada, will it effect in anyway the tax.

Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 06-07-04 12:03:31

Having a spouse in canada makes you both taxable on your world wide income in canada . You can file MFJ in USA and then have to file taxes in canada and take the foreign tax credit for US taxes on your canadian return .

If your wife is living in canada , having a DL or a bank account does not matter . you might as well get those too. you are not a resident of canada but are a "deemed resident of canada " because of your spouse and are taxable in canada on your world income .

Yes ! you do have to pay taxes on your world income to canada.

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We will find a way or we will make one

neowinxp
Member since: Jul 04

Posts: 5
Location:
Post ID: #PID

Posted on: 06-07-04 14:00:21

If I were treated as "deemed resident of canada ", Will it also mean that 183 days (24 hour periods) rule is automatically satisfied.

Will my paying of taxes add any value to retain the PR status even if I am not physically present in canada.

will they get counted towards eligibility of citizineship

What percentage of US tax will be considered for tax credit by Canada, does canada has an agreement to credit only federal alone or does it have agreement to credit state taxes also.

Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 06-07-04 14:19:07

Taxation and Immigration are 2 different things

You are "deemed resident of canada" for taxation purposes not for immigration

You still have to do 2 out of 5 for PR and 3 out of 4 for citizenship . That has no connection to this . These days that you are not "physically" in canada will count towards nothing .

It is better you move your residency and connections to canada rather than keeping it in US .Your GC can still go on if it is being processed and your PR will also be maintained.

You could still be tax resident of USA and can file your 1040 here even though you will maintain your residency in canada by moving your car, DL , OHIP etc

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We will find a way or we will make one

neowinxp
Member since: Jul 04

Posts: 5
Location:
Post ID: #PID

Posted on: 06-07-04 15:41:03

Let us analyze this please

I make around US $ 70K and my wife makes US $ 56K a combined total of 126K in US dollars as we work in USA.

We pay state tax of 6% on top of Federal taxes.
Let us assume that we will fall under 25% federal tax category after opting for 401K and IRA.

My wife moved to Windsor, CA (ON) and works in US on H1, and I haven't moved, I just landed.

Now the question is how much more we will end up paying towards canada taxes apart from what we paid US FED 25%+US State 6% to USA

Do we need to pay taxes on actual earned income of USA or on the income we have after IRA and 401K deductions.

Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 06-07-04 16:15:40

US 126 K = 163K cdn at 1.3 conversion

total taxation is US - .33*126 = 42K (appx)
cdn taxes on 163 K in Ontario - 59K

42K * 1.3= 54K canadian
diff - 5K cdn = 3.7K US

If you invest in RRSP in canada , you do not have to pay that also .

Do not invest in 401K as 401 K money is not tax deductible in canada , Invest in RRSP's

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We will find a way or we will make one

neowinxp
Member since: Jul 04

Posts: 5
Location:
Post ID: #PID

Posted on: 06-07-04 16:34:57

Does this 59K of Canada Taxes you calculated include

Provincial tax
E.I (employment insurance)
C.P.P (Canada pension plan)
Health plan

Can you please tell us the break down of the taxes for 59K.

Is there a option where Wife and Husband can file as "Married and filing single"

Contributors: Smiley(17) Mohanjeet(5) neowinxp(5) bighead(4) chandresh(3) dp_jain(3) raajen(3) CAONPR(3) CanadianResident(2) shyboy(1) Joyhk(1)

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