Tax Break For Expat.

[OLD_Astar]

Hello everybody,

 

I was just been offered a job to work with a canadian company in the US. I can go there with a L-1B visa or something like that.

Anybody know if there is any tax break or tax free agreement between Canada and US??

 

Any tips would be greatly appreciated.

 

Cheers,OLD_Astar.

[maxtorc]

If you are Canadian, and you meet the requirements of the OETC you would be better off staying Canadian.

If you are American, nothing changes. US tax laws require all international incomes declared and taxed.

[Over-Talk]

If you have an L1-B, I suspect you are actually working for the American subsidiary of the Canadian parent company, under the NAFTA Specialty Service Regulations.

Remember that if you work in the US under NAFTA, you are not really an expat.......

you still live in Canada in the eyes of Revenue Canada.

 

If this is so, your American company should be paying your wages, deducting US Federal and State taxes etc. (NOTE, not all companies comply with this because of the hassle, but I've heard it is what is actually required).

 

Then you will file a US tax return next year, (and probably get a big refund).

Then you declare the US wages as 'foreign income' on your Canadian tax return next April (quite easy to do)....and pay Canadian taxes on that income.

The US refund will probably cover this amount.

 

Does this all sound like a hassle ????? Yes, it is a little.

Working in the US under NAFTA is not as easy as many people think.....especially if you follow ALL the rules.

Make sure your company pays any and all legal and accounting expenses involved with you working in the US !!!!!!!!!!!!

 

However, if you were to get a job for a Canadian company flying and LIVING in SE Asia, (i.e. not under NAFTA) you would have to jump through some different hoops to get you recognized as an expat and thereby qualify for some much better tax breaks.

 

I'm not a tax lawyer, just a pilot that once worked under NAFTA. I hope this helps.

Ignore this post if this is not applicable to your employment, sorry.

 

[OLD_Astar]

Thank you Over-Talk,

 

Yes it does help me but you are right it looks really complicated. And the name "expat" was not really for that kind of visa. My bad!! I would be living in Canada and working tours in U.S.

 

So, bottom line is, any advantage ( with taxes !) of working in the U.S. and living in Canada.

 

Anybody with input on that feel free to share with me and us!!

 

Thanks,OLD_Astar. :punk:

 

[maxtorc]

Only advantage if you are working in the exporation of energy (Gulf of Mexico or offshore), then you will be able to take advantage of the OETC. Otherwise with the tax treaty that is in place all is the revenue information is shared.

Obviously if you live in Canada why would you pay tax in the USA?

However if you were to maintain a home in both countries there may be a reason to pay US taxes, as you can right off the mortgage intrest on the home in the USA.

[MMike]

I lived in Seattle for 6 years. I orignally went down on a TN visa. And it was worth it. I didn't really have any huge inconvenience to deal with.....of course this was pre 9/11. But still

 

It does depend somewhat on what state (or even county) you're going to.....

 

I went down as a design engineer. Rules might be different for pilots.

[Swamp76]

Obviously if you live in Canada why would you pay tax in the USA?

 

Regardless of where you work (US, Thailand, Angola, PNG, etc) on a work permit/visa, you will pay income tax locally. That government that issued you the work permit wants their piece too. Many companies cover this local taxation as a benefit but the requirement by the local government is still there.

 

Revenue Canada considers this tax paid on your behalf as a taxable benefit. If properly reported it can cost you a significant amount of money.

 

Revenue Canada will not normally tax you twice on the same income. You can provide the proof of income tax paid elsewhere (if you are still filing in Canada) and have the tax owed in Canada reduced accordingly.

 

BTW: if you are using the OETC, then Revenue Canada will reduce the value of that receipt in accordance with the percentage of the foreign income that was considered taxable after application of the OETC.

 

I love government.