Taxes/Payroll - Working in US/ Living in Windsor

[Vamsi539]

Hello - I am trying to understand the impact of working in Detroit area while living in Windsor,Lasalle area. I am a new Canada PR holder with H1B visa in US.

1) Taxes - My employer will be paying me as an employee of US. Will I just pay Canada taxes end of the year? or should I ask my employer to deduct Canada taxes?

2) Housing - Since my employer will be paying as an US employee, I assume I have to have a residence in Detroit area as well?

3) Medicare/401k/ HSA - Will these continue to be deducted despite living in Canada? if yes, should we paying equivalent of these in Canada as well?

anyone commuting cross border or have such a setup please suggest.

 

[Binette]

I am in the same boat than you, i will be watching this thread. By the way do you have any suggestion for good apartments in windsor close to the border l have to go to work in Pontiac.

 

[APPNOV2014NY]

Hello - I am trying to understand the impact of working in Detroit area while living in Windsor,Lasalle area. I am a new Canada PR holder with H1B visa in US.

1) Taxes - My employer will be paying me as an employee of US. Will I just pay Canada taxes end of the year? or should I ask my employer to deduct Canada taxes?

2) Housing - Since my employer will be paying as an US employee, I assume I have to have a residence in Detroit area as well?

3) Medicare/401k/ HSA - Will these continue to be deducted despite living in Canada? if yes, should we paying equivalent of these in Canada as well?

anyone commuting cross border or have such a setup please suggest.

Since no-one replied, let me take first crack on this one. In 2015, I paid US taxes as non-resident and Canadian ones as resident. In 2016, I paid US taxes as resident and Canadian ones as non-resident.

1. Your US employer cannot deduct Canadian taxes if you are on US payroll. They will deduct US taxes. At the time of taxes filing, you will first file US returns as non-resident and once done you will file Canadian returns as resident. In Canadian taxes you will take credit for the taxes paid in USA, so you won't be double taxed.

Let's say you made 100k in US, your US taxes are 20k and Canadian taxes are 30k. You will pay 20k to US and then pay difference to Canada ( 30-20k = 10k).

2. No. You don't.

3. As a US non-resident, I don't think 401k and HSA would be available to you.

 

[DEEPCUR]

What does one fill in the employer section (if they work for a company not known in Canada) of citizenship application in such cases? Won't the officer grow suspicious that the person would move to US after citizenship and delay the citizenship file indefinitely? What to answer during citizenship interview on why one kept working for US company even after moving to Canada?

There is a thread in citizenship forum where someone was kept to wait for over six years before approving citizenship. Finally the person had go to mandamus route to get it approved. Although it got approved, it is quite clear that IRCC can delay someone's application indefinitely if they want to do so. The whole point of moving to Canada is peace of mind. It'd be so stressful if applications don't follow routine route and it kinda defeats the purpose of moving to Canada. Wish any experienced can provide insight on this

 

[harirajmohan]

Hello - I am trying to understand the impact of working in Detroit area while living in Windsor,Lasalle area. I am a new Canada PR holder with H1B visa in US.

1) Taxes - My employer will be paying me as an employee of US. (1.1)Will I just pay Canada taxes end of the year? or (1.2)should I ask my employer to deduct Canada taxes?

2) Housing - Since my employer will be paying as an US employee, I assume I have to have a residence in Detroit area as well?

3) Medicare/401k/ HSA - Will these continue to be deducted despite living in Canada? if yes, should we paying equivalent of these in Canada as well?

anyone commuting cross border or have such a setup please suggest.

1.1: No Canadian tax can be deducted for US payroll. You wont see any change on taxes while being in Detroit for you and after you move to Windsor.
1.2: No.
2. Dont assume things. Read on the rules first. No residence required in Detroit just because you get paid from Detroit area.
3. Medicare, federal and social security will be deducted. When was 401k compulsory? Its an option if you want to use it (irrelevant of your house location country). HSA - It depends if you still need US insurance for healthcare. Try using your healthcare in Canada side for all of your needs and dont opt for US based insurance.

Taxes: When you are in US on H1 and moving to Windsor and you will be still working in Detroit, there is no change in anything except that you can avoid subscribing for health insurance (if your company allows). i dont see any other change. All taxes will be deducted as usual.

Tax filing: First file your US taxes as usual how you did last year. Second, file your Canadian tax return in which deduct these (net federal tax, net state tax, Social Security Tax and Medicare Tax) and pay if you owe anything to Canadian side.

 

[harirajmohan]

What does one fill in the employer section (if they work for a company not known in Canada) of citizenship application in such cases? Won't the officer grow suspicious that the person would move to US after citizenship and delay the citizenship file indefinitely? What to answer during citizenship interview on why one kept working for US company even after moving to Canada?

There is a thread in citizenship forum where someone was kept to wait for over six years before approving citizenship. Finally the person had go to mandamus route to get it approved. Although it got approved, it is quite clear that IRCC can delay someone's application indefinitely if they want to do so. The whole point of moving to Canada is peace of mind. It'd be so stressful if applications don't follow routine route and it kinda defeats the purpose of moving to Canada. Wish any experienced can provide insight on this

This kind of delay might be there rarely for few applicants. Majority will get through with slight delay due to extensive travel which is expected. Might be few weeks/months delay wont be the major problem.
It all depends on the person if one wants to move to Canada completely or hang on to the job he/she has while accumulating residency. As its not easy to find job in other country in which one is not familiar and type of job, salary etc comes into picture.
Anyway, one should be willing to accept delay for continuing his/her job in US during citizenship application stage. One cant get everything smooth in life.

 

[DEEPCUR]

1.1: No Canadian tax can be deducted for US payroll. You wont see any change on taxes while being in Detroit for you and after you move to Windsor.
1.2: No.
2. Dont assume things. Read on the rules first. No residence required in Detroit just because you get paid from Detroit area.
3. Medicare, federal and social security will be deducted. When was 401k compulsory? Its an option if you want to use it (irrelevant of your house location country). HSA - It depends if you still need US insurance for healthcare. Try using your healthcare in Canada side for all of your needs and dont opt for US based insurance.

Taxes: When you are in US on H1 and moving to Windsor and you will be still working in Detroit, there is no change in anything except that you can avoid subscribing for health insurance (if your company allows). i dont see any other change. All taxes will be deducted as usual.

Tax filing: First file your US taxes as usual how you did last year. Second, file your Canadian tax return in which deduct these (net federal tax, net state tax, Social Security Tax and Medicare Tax) and pay if you owe anything to Canadian side.

I am curious to know this.. if most of the taxes on someone's income goes to US coffers, what is the benefit for Canada then? Since the residence is in Canada, people who do this are entitled to use free Canadian healthcare and other resources/benefits too. How can Canada up make for the lost taxes and provide resources as well?

 

[Vamsi539]

Since no-one replied, let me take first crack on this one. In 2015, I paid US taxes as non-resident and Canadian ones as resident. In 2016, I paid US taxes as resident and Canadian ones as non-resident.

1. Your US employer cannot deduct Canadian taxes if you are on US payroll. They will deduct US taxes. At the time of taxes filing, you will first file US returns as non-resident and once done you will file Canadian returns as resident. In Canadian taxes you will take credit for the taxes paid in USA, so you won't be double taxed.

Let's say you made 100k in US, your US taxes are 20k and Canadian taxes are 30k. You will pay 20k to US and then pay difference to Canada ( 30-20k = 10k).

2. No. You don't.

3. As a US non-resident, I don't think 401k and HSA would be available to you.

Thanks for the information. This helps.

 

[harirajmohan]

I am curious to know this.. if most of the taxes on someone's income goes to US coffers, what is the benefit for Canada then? Since the residence is in Canada, people who do this are entitled to use free Canadian healthcare and other resources/benefits too. How can Canada up make for the lost taxes and provide resources as well?

Yes, its actually a net loss on the people (who just cross the border to stay here and not working for them) but its a tiny % of Canadian workforce comes to US for working hence it affects less (i think).

 

[pr131985]

I am curious to know this.. if most of the taxes on someone's income goes to US coffers, what is the benefit for Canada then? Since the residence is in Canada, people who do this are entitled to use free Canadian healthcare and other resources/benefits too. How can Canada up make for the lost taxes and provide resources as well?

What about the inflow of USD into Canada? Besides taxes you are bringing in foreign money into the country. That money will be saved in Canadian banks, will be used to pay bills and essentially generate value in the economy.

 

[backupoption123]

Hello - I am trying to understand the impact of working in Detroit area while living in Windsor,Lasalle area. I am a new Canada PR holder with H1B visa in US.

1) Taxes - My employer will be paying me as an employee of US. Will I just pay Canada taxes end of the year? or should I ask my employer to deduct Canada taxes?

2) Housing - Since my employer will be paying as an US employee, I assume I have to have a residence in Detroit area as well?

3) Medicare/401k/ HSA - Will these continue to be deducted despite living in Canada? if yes, should we paying equivalent of these in Canada as well?

anyone commuting cross border or have such a setup please suggest.

1) Yup. If your US state has a mandatory withholding requirement irrespective you are a Non-resident (like mine) you will deduct US state tax on your payroll. If not, you can opt out and directly pay everything to CAN province.[ Not recommended. You will loose more money in conversion plus CRA has a higher conversion rate than what I send money].
For US Federal, it will be deducted as normal.

2) No, you will file as Non-resident for US purpose and resident for Canada.

3) I opted out of my 401k. Medicare - Yes, you still pay. HSA- upto you. I have it.
Canadian equivalent you can do RRSP contributions tax free and claim it.

****from my calculations
On net at 100K ( assuming no 401, RRSP or deductions ) you will loose 3000-4000 CAD every year as you pay the difference b/w USA and Canadian tax to Canada. ( Canadian taxes are higher)

 

[DEEPCUR]

What about the inflow of USD into Canada? Besides taxes you are bringing in foreign money into the country. That money will be saved in Canadian banks, will be used to pay bills and essentially generate value in the economy.

It is nothing compared to 35-45% taxes from income. Plus people use free healthcare. In way it could be pure overhead for Canada.

 

[Rawhide]

1) Yup. If your US state has a mandatory withholding requirement irrespective you are a Non-resident (like mine) you will deduct US state tax on your payroll. If not, you can opt out and directly pay everything to CAN province.[ Not recommended. You will loose more money in conversion plus CRA has a higher conversion rate than what I send money].
For US Federal, it will be deducted as normal.

2) No, you will file as Non-resident for US purpose and resident for Canada.

3) I opted out of my 401k. Medicare - Yes, you still pay. HSA- upto you. I have it.
Canadian equivalent you can do RRSP contributions tax free and claim it.

****from my calculations
On net at 100K ( assuming no 401, RRSP or deductions ) you will loose 3000-4000 CAD every year as you pay the difference b/w USA and Canadian tax to Canada. ( Canadian taxes are higher)

Are tax rates different for Resident and Non Resident in USA ? If yes, how much any information there ?

 

[sukhimicrobio]

Hi,

I am living in Windsor and working in Detroit, and as discussed earlier Canadian tax are higher, is there any way to save tax deduction besides contributing to RRSP...Can we contribute to Canadian pension plan? or is there any other plan is there?

 

[harirajmohan]

Hi,

I am living in Windsor and working in Detroit, and as discussed earlier Canadian tax are higher, is there any way to save tax deduction besides contributing to RRSP...Can we contribute to Canadian pension plan? or is there any other plan is there?

I think that rrsp contribution should be enough if one has at least total 2 dependents - at least this is the case for me though.
Check if you missed to include any taxes. I include taxes paid in US as the sum of federal, social security, medicare and state tax.
Also the income i report in Canada is the Adjusted Gross Income.