Anyone defering move to Canada due to US tax reforms

[APPNOV2014NY]

I make decent salary in US but to my surprise my effective tax rate was 10% after 401k, HSA, IRA and Roth IRA. I am wondering if I should stay in US for 1-2 more years and not move to Canada. Anyone in similar situation?

 

[mike2236]

That is a pretty low effective tax rate you’re implying there. Are you living in a state with no income taxes? Are you factoring in the cost of healthcare?

Taxes are much higher in Canada for sure after factoring in the provincial taxes as well. I am currently paying about 40% in total taxes in Canada.

What you have to keep in mind is that the rules in Canada can change at anytime. Therefore do you want to risk it for a few dollars more? That is a question you need to answer by yourself.

 

[APPNOV2014NY]

That is a pretty low effective tax rate you’re implying there. Are you living in a state with no income taxes? Are you factoring in the cost of healthcare?

Taxes are much higher in Canada for sure after factoring in the provincial taxes as well. I am currently paying about 40% in total taxes in Canada.

What you have to keep in mind is that the rules in Canada can change at anytime. Therefore do you want to risk it for a few dollars more? That is a question you need to answer by yourself.

I work in NY and live in CT. Both states are known for high taxes.

No. I did not factor in cost of healthcare. It would be around 12k ( tax free) for me.

 

[mike2236]

I’m familiar with both states tax system as I used to live in both at one time or another.

While you may have elected your healthcare cost in the US to be pretax and hence tax free, you will have to consider the total healthcare cost to you as a tax for true comparison.

However, you have to be the only one to answer the question you posed because if the rules in Canada changes which causes you to not be able to move there then is this something you want to risk.

I have taken a position in our company Canadian office. I am a US citizen. I’m also making a very good salary which has not changed with the position in Canada. I am now paying $5,000 USD more every month which sucks. However, in my case I’m viewing this as a cost to get my family somewhere peacefully.

 

[northern sunshine]

Is that including state/other tax? I also work in NY and live in CT. I think my effective federal tax rate is something like 11% this year, but that doesn't include state tax, medicare, SS, or NY family leave. I ran the numbers with my SO a few days ago, converting my salary to CAD-- the taxes are still very close, percentage-wise (like 25% ON/Canada vs 23.5% NY/US-- something silly close). That also includes healthcare in Canada, but not in the US.

If you really want to live in Canada, I don't think there's a huge benefit to postponing your move.

 

[DEEPCUR]

That sounds quite low. Plus lower wages, increased cost of living.. huh.. I'm going to have tough time moving my family to Canada for sure!

What number have you kept on your W4?

 

[APPNOV2014NY]

Is that including state/other tax? I also work in NY and live in CT. I think my effective federal tax rate is something like 11% this year, but that doesn't include state tax, medicare, SS, or NY family leave. I ran the numbers with my SO a few days ago, converting my salary to CAD-- the taxes are still very close, percentage-wise (like 25% ON/Canada vs 23.5% NY/US-- something silly close). That also includes healthcare in Canada, but not in the US.

If you really want to live in Canada, I don't think there's a huge benefit to postponing your move.

Lol. Yeah I made mistakes. I did pay $5283 to NY which is outside of 11.53% I paid to Federal govt. Plus Health expenses ( Premium + Bills) of around 12k. So around 16% in taxes and 9% in Health care expenses.

 

[keesio]

You need to decide what is your priority. If it is clearly economics, then stay in the US. If lifestyle and other non economic factors comes first, then think about moving to Canada.

There is no question you can make and save more money in the US over the long haul (my wife reminds me everyday lol).

The other "X" factor is how US taxes American expats living abroad. If you move to Canada, you are still stuck filing (and perhaps paying) taxes to the IRS, on top of your Canadian taxes. And your taxes get much more complicated due to the "foreign" nature of your income and accounts. A crossborder accountant is often recommended and they are quite expensive.

 

[mike2236]

You need to decide what is your priority. If it is clearly economics, then stay in the US. If lifestyle and other non economic factors comes first, then think about moving to Canada.

There is no question you can make and save more money in the US over the long haul (my wife reminds me everyday lol).

The other "X" factor is how US taxes American expats living abroad. If you move to Canada, you are still stuck filing (and perhaps paying) taxes to the IRS, on top of your Canadian taxes. And your taxes get much more complicated due to the "foreign" nature of your income and accounts. A crossborder accountant is often recommended and they are quite expensive.

I agree with this post completely. To each their own.

I think that for the majority of folks living and working in Canada would only require that you file a tax return with the IRS. Most people would not owe any US taxes since Canadian taxes are generally higher than that in the US. As of current citizens/PR would not be taxed double due to the treaties that exist between these countries. It just the hassle in my opinion.

 

[keesio]

I think that for the majority of folks living and working in Canada would only require that you file a tax return with the IRS.

Don't forget the FBAR with the US Treasury Dept.

But yes, overall with the FEIE and FTC, the tax owed to the IRS is usually minimal for *most* cases.

 

[bimmerm3m5]

Kinda interesting at the number of CT based folks here. Do you guys have an accountant yet? I've been a PR for about 5 years now and I've had nothing but pain with accountants and their exorbitant fees. I've always gone with larger firms, but looking for essentially one-person businesses. I'm also debating about buying "professional" tax software and doing it myself from now on.