Guide To Tax Laws In Canada Vs. The US

Taxes are something everyone needs to think about, and it is wise to be informed before making decisions.

There are many differences between Canadian and US tax laws.

This article will provide an overview of these differences, so you can make informed decisions about your taxes.

Canadian Tax Rates For 2018 Compared To US Tax Rates

Canadian income tax rates, 2018:

The federal tax rate is applied to taxable income in the brackets of $0 – $47,630 at marginal rates of 15% or 20.5%. There are also provincial taxes that vary by province. The income tax brackets are as follows:

Canadians pay different taxes based on province. The first $11,809 is taxed at a rate of 0%. The first $44,266 is taxed at a rate of 15%. The first $89,401 is taxed at a rate of 20.5%. The first $135,054 is taxed at a rate of 26% and any amount over this amount is taxed at 29%.

US Income Tax Rates, 2018:

The federal tax rate is applied to taxable income in the brackets of $0 – $9,325 at marginal rates of 12% or 22%. There are also state taxes that vary by state. The income tax brackets are as follows:

The US has a progressive income tax system, which means that the more money you make, the higher your tax bracket. The federal income tax brackets are 10%, 15%, 25%, 28%, 33% 35%, and 37%. The average American spends about 22% of their income on taxes, but this percentage may be higher or lower depending on your state.

Federal Income Tax Brackets & Rates in Canada Compared To The US

The US federal income tax brackets and rates are much higher than those of Canada. This is due to the different ways that the two countries allocate their taxes.

In the United States, there is a federal government, as well as 50 state governments. This means that there is a total of 51 potential governing bodies and they each have an opinion on what you should be taxed at and how much you should be taxed at. The same is not true in Canada. There is only one governing body – the federal government – who decides where your money will go and how much you will pay in taxes.

How to Save On Taxes When You’re Moving Between Canada And The US

It is important to know the tax implications of moving to another country and out of the country.

Taxes on moving out of the country:

Moving out of the country for a reason that isn’t employment related, can often mean that you’re subject to capital gains tax. Capital gains tax is levied on any increase in value from something sold or transferred. So if you own a house and you move out, then your house will be worth more than what you paid for it, so there will be a capital gain and taxes will need to be paid on those gains.

Taxes on moving to another country:

Generally speaking, there are two types of taxes when it comes to new residents entering Canada: income and property taxes. Income taxes are any money that is earned during the fiscal year. They include wages, veterans benefits, social security benefits, child support payments and any other type of income.

Canada Does Not Have Social Security Number Since They’re Different From IRS Numbers

Social Security Numbers are different from IRS numbers. The Social Insurance Number is a unique identifier for citizens of Canada but not for the IRS.

The Social Security Number is an American identification number which is used to identify the person with the government, but it’s different from the Social Insurance Number of Canada. The SIN is a unique identification number for Canadians and it’s similar to the SSN in some ways. However, unlike SSN, SIN has some data such as demographic information and citizenship status on the card.

Planning Ahead Is Key For Taxes in Canada and the US

Taxes are a major source of income for governments around the world. For this reason, it is important that people plan their taxes ahead of time so they do not get hit with a hefty late payment penalty.

There are various ways to ensure that one pays the correct amount in taxes each year. One can calculate what one will owe using an online calculator, use an accountant, or use tax software. All three options have their advantages and disadvantages, but they should all be considered when deciding which option is best for the individual or company in question.

Tax-Savvy Tips for Canadian Expats Living in the US

The recent Tax Cuts and Jobs Act of 2017 made a few changes to the U.S. tax law, which may have an impact on Canadian taxes as well.

In order to avoid paying double taxes on income earned in the United States, Canadian expats should be aware of the following:

– Canadian expats should make sure to fill out a U.S. Foreign Earned Income Exclusion (FEIE) form, which can save up to $103,900 for those who qualify.

– Some expenses from Canada do not apply for FEIE purposes and vice versa – it’s important that Canadians know what expenses they can deduct from their US tax return and what expenses they cannot deduct from their US tax return in order to avoid any confusion at tax time.

Tax Laws for Canadian Expats in the U.S., Explained

The U.S. taxes its citizens both when they live in the United States and when they live abroad. Americans residing in Canada are not subject to tax on their U.S.-sourced income, except for income that is effectively connected with a trade or business carried on in the United States, or if they are considered residents of the U.S. under the substantial presence test.

U.S.-based individuals who are considered residents of Canada also may be subject to certain U.S taxes, including:

-U.S tax on investment income from us sources;

-U.S tax on gains from disposition of US real property interests;

-U.S tax on Social Security benefits; and

-Consequences for estate planning

How to File Taxes as a Canadian Expat

Tax laws in the US and Canada are quite different, so expats should follow the tax filing procedure in their country of residence.

All Canadian citizens must file taxes in Canada, even if they are living abroad. But there are some exceptions to this rule, for example if they have been living abroad for 285 days or less.

Canadian expatriates must use the same tax year as their home country – so if you reside in Canada but work abroad, your tax year would be January-December. If you have only worked abroad but have not lived there for more than half a year – then your tax year would be your date of arrival to that country. However, if you have spent more than six months outside of Canada then you will need to file taxes that take into account both years (the one that was spent in Canada and the one that was spent outside of it)

Canadian Expat Tax Deductions And Credits You Can Take On Your U.S. Taxes

Canadian expats are required to file a U.S. tax return even when they are not living in the United States. This is because Canada and the United States have a tax treaty that stipulates that Canadian citizens must declare their US-sourced income on their Canadian return, even if it is exempt from US tax under the terms of the Treaty.

Only Canadian citizens who are considered nonresident aliens for the purposes of U.S. Taxation (those who spend less than 183 days in one calendar year) may elect to exclude this income on their U.S. Tax Return (the 1040 NR).

The 1040NR instructions provide instructions for filling out IRS Form 1040NR-EZ, which would be appropriate for Canadians with few or no deductions and credits to claim. This form is primarily used by those who are living in the United States but are not U.S. citizens

Non-Residents of Canada – Income Tax Guidelines For Canadians Living Outside of Canada And U.S. Citizens Residing Overseas

It is important to be aware of the differences between Canadian and U.S. tax laws for those residing in Canada and the United States, as well as those residing outside of Canada and the United States

The IRS has a global approach to taxation, which means that they impose taxes on the income of their citizens and residents wherever they live.

Canada has a territorial approach to taxation, which means that Canadian residents are only taxed on their income from sources located in Canada or from certain types of foreign investments situated in Canada.

The Federal Income Tax Act (FITA) does not make any distinction for non-residents with respect to how it treats income received from outside of Canada (i.e., any income derived from sources outside of Canada).As such, all non-residents receive H-1B visas to work in the States.

If you have any questions be don’t hesitate to contact Bomcas Canada Accounting and Tax Services. Website: www.bomcas.ca , Email: info@bomcas.ca, or Call: 780-667-5250