Taxes/Payroll - Working in US/ Living in Windsor

[Cecoct2017]

do We have any calculators? Even I am looking for similar answers ?

the big problem is what if person earns 150k in USA ? In this case Half of his salary would go in Tex as Canadian takes huge tax when your salary is more that 100 CAD

i said 80K USD as its around 100k CAD. i just need a rough idea how it works. i am planning to live in windsor and commute everyday. still looking for jobs

 

[harirajmohan]

do We have any calculators? Even I am looking for similar answers ?

the big problem is what if person earns 150k in USA ? In this case Half of his salary would go in Tex as Canadian takes huge tax when your salary is more that 100 CAD

People wont be moving to Canada if the direct tax is 50%. Also you are going to show the taxes paid in US and deduct them as well. And exemptions such as rrsp, tfsa etc are also available.
The below calculator wont show the exemptions such as 401k(the amount which can be exempted under rrsp in Canada), tfsa etc.
https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp

FYI - I havent paid additional taxes after using rrsp and tfsa route.

So we should not be assuming that its straight 50% cut.

 

[canuck78]

do We have any calculators? Even I am looking for similar answers ?

the big problem is what if person earns 150k in USA ? In this case Half of his salary would go in Tex as Canadian takes huge tax when your salary is more that 100 CAD

If you have been living in Canada for the past 2 years and your spouse is a PR they were also a tax resident and should have been filing Canadian tax returns for that period. If you are unaware of the tax rates it sounds like your spouse may not have realized they were also a Canadian tax resident. If they have not filed their taxes for the period where you were living in Canada they will need to go back and file for those years. Looks like are working in the US so they’ll need to file US taxes first and then pay their Canadian taxes based on the difference between Canadian and US taxes.

 

[BhargavDadhaniya]

Hi all- CRA has sent me notice of reassessment mid last year for 2020. CRA basically asked for US tax return proof has they had not received it. My accountant had sent the IRS transcripts to CRA after that. Just now, they sent notice of collection saying I still owe them the amount. Looks like CRA never received my US tax return. Anyone had similar issue before and knows the fix for this?

 

[mayple]

Hi all- CRA has sent me notice of reassessment mid last year for 2020. CRA basically asked for US tax return proof has they had not received it. My accountant had sent the IRS transcripts to CRA after that. Just now, they sent notice of collection saying I still owe them the amount. Looks like CRA never received my US tax return. Anyone had similar issue before and knows the fix for this?

What do you mean they've sent you a notice of reassessment? If they've already reassessed your tax liability then they must have either asked you to pay up more/difference, or issued a refund if you overpaid. Alternatively, they may be seeking a confirmation of your payment of US taxes if you sought credit for taxes paid in the US. And based on that confirmation (which is based on IRS transcripts), they may have reassessed your taxes and asked you to pay the difference. It appears you need help from your tax accountant on this. Only your tax accountant can tell you whether CRA's notice of collection is correct or not.

 

[BhargavDadhaniya]

What do you mean they've sent you a notice of reassessment? If they've already reassessed your tax liability then they must have either asked you to pay up more/difference, or issued a refund if you overpaid. Alternatively, they may be seeking a confirmation of your payment of US taxes if you sought credit for taxes paid in the US. And based on that confirmation (which is based on IRS transcripts), they may have reassessed your taxes and asked you to pay the difference. It appears you need help from your tax accountant on this. Only your tax accountant can tell you whether CRA's notice of collection is correct or not.

Yeah. I asked tax accountant already. They are looking into it. Basically, CRA reassessed it and ask me to pay the amount (let's say $30k) which was almost matching to the one in IRS transcript. So, I thought they never received the IRS transcript.

 

[mayple]

Unfortunately cannot comment on the amount or the reason why they're expecting you to pay up without knowing more details of your tax situation, so your accountant would be the best person to guide. Technically speaking, you should only be liable for "difference" in taxes. The difference in taxes typically comes in due to differences in deductions, credits and/or tax tables/rates between the US and Canada. Canada, from what I know, typically has a higher tax burden than the US overall, so more often than not you'd end up owing "some more tax" to Canada. Please update us back once you get this resolved so we know what happened and why

 

[BhargavDadhaniya]

Unfortunately cannot comment on the amount or the reason why they're expecting you to pay up without knowing more details of your tax situation, so your accountant would be the best person to guide. Technically speaking, you should only be liable for "difference" in taxes. The difference in taxes typically comes in due to differences in deductions, credits and/or tax tables/rates between the US and Canada. Canada, from what I know, typically has a higher tax burden than the US overall, so more often than not you'd end up owing "some more tax" to Canada. Please update us back once you get this resolved so we know what happened and why

Sounds good.

 

[marako1201]

Unfortunately cannot comment on the amount or the reason why they're expecting you to pay up without knowing more details of your tax situation, so your accountant would be the best person to guide. Technically speaking, you should only be liable for "difference" in taxes. The difference in taxes typically comes in due to differences in deductions, credits and/or tax tables/rates between the US and Canada. Canada, from what I know, typically has a higher tax burden than the US overall, so more often than not you'd end up owing "some more tax" to Canada. Please update us back once you get this resolved so we know what happened and why

People wont be moving to Canada if the direct tax is 50%. Also you are going to show the taxes paid in US and deduct them as well. And exemptions such as rrsp, tfsa etc are also available.
The below calculator wont show the exemptions such as 401k(the amount which can be exempted under rrsp in Canada), tfsa etc.
https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp

FYI - I havent paid additional taxes after using rrsp and tfsa route.

So we should not be assuming that its straight 50% cut.

I have a Canadian PR, live in BC, work (by commute and remote sometimes) full-time in the U.S. on an H-1B and filed my returns with the IRS and the CRA for the past 3 years. I have no Canadian source of income. All of my taxes are withheld by my employer and I get a W-2 every year. I report my income to the CRA. I haven't made any contributions to RRSP or TFSA yet. CRA sent me reassessments for 2019 last year and asked me to pay over 30K in taxes and did the same for 2020. I'm now getting collection notices from them asking me to pay over 55K for 2019 and 2020 combined. I have submitted all the evidence of taxes paid and filed in the U.S. My accountant's understanding of the tax treaty between U.S. and Canada is that you pay taxes where you work not in both countries. We are going back and forth with the CRA for the past 8 months and trying to understand tax residency, deemed residency and factual residency statuses.

55K on top of all the federal, medicare, social security taxes paid to the U.S. seems like a lot of money going in taxes. Isn't it double taxation if I'm paying taxes in both countries? If I do owe the difference in taxes to Canada, are RRSP and TFSA useful to offset the balance owed? Thanks

 

[BhargavDadhaniya]

I have a Canadian PR, live in BC, work (by commute and remote sometimes) full-time in the U.S. on an H-1B and filed my returns with the IRS and the CRA for the past 3 years. I have no Canadian source of income. All of my taxes are withheld by my employer and I get a W-2 every year. I report my income to the CRA. I haven't made any contributions to RRSP or TFSA yet. CRA sent me reassessments for 2019 last year and asked me to pay over 30K in taxes and did the same for 2020. I'm now getting collection notices from them asking me to pay over 55K for 2019 and 2020 combined. I have submitted all the evidence of taxes paid and filed in the U.S. My accountant's understanding of the tax treaty between U.S. and Canada is that you pay taxes where you work not in both countries. We are going back and forth with the CRA for the past 8 months and trying to understand tax residency, deemed residency and factual residency statuses.

55K on top of all the federal, medicare, social security taxes paid to the U.S. seems like a lot of money going in taxes. Isn't it double taxation if I'm paying taxes in both countries? If I do owe the difference in taxes to Canada, are RRSP and TFSA useful to offset the balance owed? Thanks

I called CRA today. The agent said just go online, upload W2 and IRS account transcript. Then they will review it. My accountant also mentioned this is common practice from CRA. Accountant is still fighting some cases from 2019.

 

[marako1201]

I called CRA today. The agent said just go online, upload W2 and IRS account transcript. Then they will review it. My accountant also mentioned this is common practice from CRA. Accountant is still fighting some cases from 2019.

All the best, keep us posted on how it goes. I'll do the same. My accountant and I spent over 50 hours preparing responses, submitting evidence, supporting documents, W-2s, IRS tax transcripts for the last 4 years, retirement savings account statements. Heck we even got our local Member of Parliament contact the CRA on my behalf several times and were successful in bringing the total amount due from 75K for the 2019 year down to 22K. Feels like we're running around in circles with the CRA. Each time we submit documents to answer their questions, they come back with entirely new logic and questions and request for documents. Don't think they're operating in good faith at all.

 

[BhargavDadhaniya]

All the best, keep us posted on how it goes. I'll do the same. My accountant and I spent over 50 hours preparing responses, submitting evidence, supporting documents, W-2s, IRS tax transcripts for the last 4 years, retirement savings account statements. Heck we even got our local Member of Parliament contact the CRA on my behalf several times and were successful in bringing the total amount due from 75K for the 2019 year down to 22K. Feels like we're running around in circles with the CRA. Each time we submit documents to answer their questions, they come back with entirely new logic and questions and request for documents. Don't think they're operating in good faith at all.

Yeah I can feel that. My accountant had already sent them transcripts 3 months ago. Not sure where it all went.
I just hope they don't do any drama at the time of applying for citizenship.

 

[swan0206]

I have a Canadian PR, live in BC, work (by commute and remote sometimes) full-time in the U.S. on an H-1B and filed my returns with the IRS and the CRA for the past 3 years. I have no Canadian source of income. All of my taxes are withheld by my employer and I get a W-2 every year. I report my income to the CRA. I haven't made any contributions to RRSP or TFSA yet. CRA sent me reassessments for 2019 last year and asked me to pay over 30K in taxes and did the same for 2020. I'm now getting collection notices from them asking me to pay over 55K for 2019 and 2020 combined. I have submitted all the evidence of taxes paid and filed in the U.S. My accountant's understanding of the tax treaty between U.S. and Canada is that you pay taxes where you work not in both countries. We are going back and forth with the CRA for the past 8 months and trying to understand tax residency, deemed residency and factual residency statuses.

55K on top of all the federal, medicare, social security taxes paid to the U.S. seems like a lot of money going in taxes. Isn't it double taxation if I'm paying taxes in both countries? If I do owe the difference in taxes to Canada, are RRSP and TFSA useful to offset the balance owed? Thanks

Sorry to hear that. Seems like this is all messed up. Not sure if they are picking random applications or doing this for everyone as there are many of us on W-2's and this is going to duck us bigtime ! This is so much of effort you have been putting in trying to explain them. They need to be properly trained and one officer designated for that particular applicant till its resolved or else a new officer taking up every single time we respond gonna screw our efforts. Anyways good luck to you and keep us posted.

 

[marako1201]

Sorry to hear that. Seems like this is all messed up. Not sure if they are picking random applications or doing this for everyone as there are many of us on W-2's and this is going to duck us bigtime ! This is so much of effort you have been putting in trying to explain them. They need to be properly trained and one officer designated for that particular applicant till its resolved or else a new officer taking up every single time we respond gonna screw our efforts. Anyways good luck to you and keep us posted.

Thank you. It's very frustrating. The people at the CRA who deal with cross border taxpayers are severely under-trained and don't even understand that Canada and U.S. share a land border and I could actually drive to work across the border in under 40 minutes from where I live. One CRA agent kept asking how is it even possible for someone who lives in Canada to work in the U.S. How can we explain tax treaties etc. to them

 

[neil_user]

I have a Canadian PR, live in BC, work (by commute and remote sometimes) full-time in the U.S. on an H-1B and filed my returns with the IRS and the CRA for the past 3 years. I have no Canadian source of income. All of my taxes are withheld by my employer and I get a W-2 every year. I report my income to the CRA. I haven't made any contributions to RRSP or TFSA yet. CRA sent me reassessments for 2019 last year and asked me to pay over 30K in taxes and did the same for 2020. I'm now getting collection notices from them asking me to pay over 55K for 2019 and 2020 combined. I have submitted all the evidence of taxes paid and filed in the U.S. My accountant's understanding of the tax treaty between U.S. and Canada is that you pay taxes where you work not in both countries. We are going back and forth with the CRA for the past 8 months and trying to understand tax residency, deemed residency and factual residency statuses.

55K on top of all the federal, medicare, social security taxes paid to the U.S. seems like a lot of money going in taxes. Isn't it double taxation if I'm paying taxes in both countries? If I do owe the difference in taxes to Canada, are RRSP and TFSA useful to offset the balance owed? Thanks

Wait did you not pay any tax to Canada? You do need to pay the difference in tax rates b/w US and Canada to Canada since you would be a resident here. Yes RRSP would save you some taxes, TFSA is after tax contribution.

For ex, you paid 30k taxes to USA and your Canadian liability is 40K, then you would pay the difference of 10K to Canada after claiming 30K of Foreign tax credit.

If your US and Canadian tax rates are the same, then only you wouldn't owe anything to Canada. Since you mentioned BC, this scenario is impossible unless you commute to NYC. I could probably do a better job with your taxes, you should get a decent accountant.