The maximum RRSP a person can contribute for 2004 is CA $ 15500.

1. --> Does it mean both this guy and his wife can contribute CA $ 31000

2. --> These people work in US, so how can they make contributions to RRSP.

For argument sake

3. --> if 163K - 31K = 132K (In case both can make RRSP of 31000), what will be the tax break down

4. --> if 163K - 15.5K = 147.5K (In case both can make RRSP of 15500 only), what will be the tax break down

fedral tax - yes
Provincial tax - Yes

When you do not earn in canada , you do not need to pay this .Your US income is "foreign /other income" and not employment income

EI and CPP is for cdn employemnt income only
E.I (employment insurance) - No
C.P.P (Canada pension plan)- No

Health plan - OHIP was free till now but you have to pay seperately for
that

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

no seperate details but total appx can be found out by

http://www.ey.com/global/Content.nsf/Canada/Tax_-_Calculators_-_Personal_Tax


There is no MFJ for cdn tax , it is on individual basis only

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We will find a way or we will make one

you dont pay ei or cpp unless your employment is in canada... health plans have nothing to do with taxes... health plan premiums are something between you and the employer...

RRSP is 15500 or 18% of salary whichever is minimum for the
"last year".

They will start from the 2nd year as for the 1st year you have not filed so no eligibility.

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We will find a way or we will make one

Smiley, I just have a question regarding your suggestion.....

"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 . "

If they invest in RRSP will that amount be considered as tax deductible in United States? Like, 401k....

for cdn taxation the taxable salary is total gross and not reduced gross with 401 K . So you have to add back 401k amount to get the total gross .

You pay taxes to US first and then take it to canada and not the other way .

US does NOT recoganize RRSP .

So what you invest in 401K is still taxable in canada hence no point investing in 401K asn when you withdraw 401K , US will tax you again on it .So as a cdn resident you will be "double taxed" on your 401K amount

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We will find a way or we will make one

they actually end up paying 42k to the US and 3.7k to Canada, totaling 45.7k in US $.. right?

what do you think are the options inorder to reduce this amount?
1. RRSP - what is the procedure to invest in RRSP? is it similar to 401k(employer) or IRA(something like fixed bond).. since both husband and wife are not working in Canada, are they eligible for this?

2. Buying a home? how much do you think they can gain as tax deductible in canada?

??