What are the tax implications of living in Canada and working in the US?
Part of it really depends on which state you’re working in the US. I spent a good chunk of 2006 living in Ontario and working in Ohio. Ohio’s taxation level is comparable to Ontario. As a matter of fact people in the top tier in Ohio pay more tax than someone in Ontario. There are tax treaties between Canada and the US. So basically you can claim credit for the taxes you already paid the US goverments. The taxes in the US to be aware of are the Social Security and Medicare taxes. They can consume up to 15% of your US paycheque – assuming you’re working on a W2. 30% if you’re on a 1099. There is a form CPT56 you can obtain from the CRA which under treaty your american employer will use it to not charge you old age and medicare (since you’re covered for the Canadian version). However its very difficult to get one. Nobody at the CRA I spoke to on the phone was able to help me get one. I had to escalate my request through my MP to get the CRA to sign and stamp the letter. Also since you’re
