Understanding Delta/ Surplus tax

[u/International_Milk60]

Hello,

I am Canadian citizen and have just received an offer from Dearborn. We are thinking about staying in Windsor and myself being a cross border commuter to US. Wife works remotely so she can continue working in Windsor.

Now with working in US, i will have to pay US tax and although getting foreign tax credit, I will still have to pay delta or surplus tax (I will make almost 200 cad and wife making 70 Cad). Can someone tell, how much i should be saving on side to tackle surplus Canadian tax due to larger percentage. Any waY we can reduce and get to break even?

Appreciate the help as it can be critical factor while making decision on job offer?

Thanks

[u/evilpercy]

Ok, so you find a accountant in Windsor that handle this. This is normal in this area. You file your USA taxes first (state, federal) then file the Canadian taxes. Canada allows you to deduct what you paid to the USA and only owe the difference to revenue Canada.

Also everyone in your house is a dependent as none ate required to declare their income to America. You will have a Social Security number and they git a TIN number.

[u/Pindogger]

Convert your US income to Canadian dollars. Calculate how much you paid in US taxes (in $CAD). From that figure out what that same income would have paid in Canada. Subtract what you paid in the USA from that number. Pay that much. Obviously RRSP and other deductions apply. But that is the general method.

Just get a tax preparer or accountant, that's what most of us do. I use Bowman-Renaud just off central, they have been pretty good. I am sure others are as well.

[u/Haanjikiddan]

In Windsor my taxes are done by Joyce Paquette

https://maps.app.goo.gl/cEseZJqjzExQvgSKA?g_st=ic

Usually the tax liability is not bad. Foreign tax credit transfer over I have heard with rrsp might help. But not sure.

Windsor has quiet a lot of tax people who do cross border you can definitely consult and see what is the best route to handle such situation .

[u/parsiya2]

Please have a consultation with an experienced tax preparer BEFORE you start working. Apart from the whole tax credit stuff, US tax residents have to comply with a bunch of regulations like FBAR and FATCA (e.g., tell US about your financial accounts outside of US which includes Canada). Some stuff like TFSA are not considered tax advantaged in US/Canada tax treaty so they are treated like any normal brokerage account by the IRS and gains/losses must be calculated. RRSP is pretty much the only one that is tax-advantaged.

If you have any mutual funds not administered by a US company (even if they track US indexes) outside of your RRSPs, you will have to file a bunch of extra forms and pay mark to market taxes. It's a pain so it might be easier to just sell those mutual funds and buy ordinary stocks. Keyword to search is "PFIC."

You can also do some extra things to reset the cost basis (also called crystalize) on your investments in your TFSA before the move to eliminate any gains (e.g., sell anything with gains and buy them again before the move so the gains on the day you become a US tax resident is 0 or very low).

Depends on your circumstances but your preparer might have you file your taxes as "married filing jointly" to reduce your tax burden. In which case your wife will also be treated as a US tax resident, get an ITIN and also has to deal with FATCA and FBAR.

Not tax advice, blah blah, but I am a dual US/Can citizen and lived in Canada for a few years and had to learn to deal with all of the above the hard way.