Taxation Question (Wife in Canada & Husband in USA)

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Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 06-07-04 19:36:43

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

Yes !!

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?

Yes ! only in the second year. It is liked a Fixed deposit and that money is deducted from the taxable salary..

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

Mortgage interest is not tax deductible in canada

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We will find a way or we will make one

bighead
Member since: Jun 04

Posts: 285
Location:
Post ID: #PID

Posted on: 06-07-04 19:41:52

Quote:
Orginally posted by Smiley
Mortgage interest is not tax deductible in canada

not entirely accurate in ALL cases, but for most people this is true... there are some very specific cases in which a portion of mortgage interest can be written off... but most of these have to do with running a business out of your principal residence...

bighead
Member since: Jun 04

Posts: 285
Location:
Post ID: #PID

Posted on: 06-07-04 19:42:26

oh, and you can contribute to an rrsp from day one... you just cant make deductions against those contributions till year two... the contributions get carried over to the next year but do not increase your deduction limit... what that means is, if you contribute $7k in year one with $0 deduction limit, you cant deduct the $7k in year one against your income, but if your limit in year two is $15.5k then the $7k you carried over from the previous year can be used against this deduction limit to reduce your income... the only down side to this is, you can only contribute an additional $8.5 in year two...

Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 06-07-04 19:50:52

If you make contributions to an RRSP without having respective deductions you will have to pay a penalty and also the lifetime max is 2000 over . So don't think so , anybody would do it besides they can invest this money somewhere else outside RRSP

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We will find a way or we will make one

bighead
Member since: Jun 04

Posts: 285
Location:
Post ID: #PID

Posted on: 06-07-04 20:01:21

true...

CAONPR
Member since: Jul 04

Posts: 4
Location:
Post ID: #PID

Posted on: 07-07-04 06:46:55

There seems to be a confusion here.

Smiley stated earlier that the tax for a combined income of US $126K will be US$ 42K

In another message he also states that MFJ is not possible.

Then the Tax will differ for this couple earning US $ 70K and US $ 56K repectively, right????

What will be the amount each person will pay as taxes.

Smiley
Member since: Mar 03

Posts: 1185
Location: USA
Post ID: #PID

Posted on: 07-07-04 11:19:55

HI Canopr

For that they have to file taxes , These is just approximate amounts .

There is no MFJ in canada but their total taxes are about 3.7K US . In simple terms , you could divide the total tax in the same ratio as their salaries of 70 and 56 so it is about 2055 $ for 70 K salary and 1644 $ for 56 K .

Cannot give you more precise numbers than this and besides if they are a couple it does not matter who pays what as long as their total remains tax same ..

hope this helps

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We will find a way or we will make one

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

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