redleaf: (Default)
So, I have completed my Canadian taxes and i've limited myself to boring you with a limited Three Things:

1. Canadian taxes take longer then the US, especially for someone like me with no dependents and such.

2. You can tell there is more of a social safety net in Canada - the shear amount of deductions and credits that I get is so much larger then in the US, i'm sure the taxation is higher once i'm actually making money too :) .

3. There is so much less pressure when you know you won't get penalized for doing it wrong!

3a. Honestly, the taxes (ease, credits, assistance) is a strong pitch for me staying in Canada beyond the degree. They seem really willing to support new people and really want you to be there and be a good member of society.
redleaf: (flag)
Let me preface by saying I have not yet completed my Canadian taxes. It could yet be a horrible experience that will color my current thoughts. But right now my thoughts are so positive that I want to share!!!

To begin with, as a resident of Canada I get all the tax benefits of a citizen. ALL of them. Which, with the social net as it is, is a lot. Including a quarterly GST/HST tax check!! But there are two places where they really make you feel welcome and encourage you to stay in the country longer then your schooling through taxes:

1. The first time you do your taxes you get special consideration. First off, the guy leading the tax session was an actual employee of the Canadian Revenue Agency (CRA). He obviously knew a ton about taxes and about how it relates to international students in general. Clearly super helpful. They also gave us all our forms and an extra booklet made just for international students. Additionally, the first year we do taxes in Canada we have to send them to a special office that is designed to process provincial and federal forms for those who have just entered the country. They do this because the first year you do your forms, they check it for you and give you feedback. You do not get any sort of penalization if you do them wrong - and you actually get told if you are doing it right. How helpful is that?!?! Why did the US never do that when I started doing it on my own? There is also a direct line to their office to call about questions specific to people like me - you are actually encouraged to call (not email!) and ask about how the tax treaty for your country affects your taxes and such!

2. Tax credits for tuition and living expenses while in school are significantly higher then in the US and they ROLL OVER into future years. He literally said "You all are international students, so you pay a high amount of tuition. Thus, you should never have to pay taxes here while in school and possibly for a few years afterward, until you use up the accumulated credit." As long as you keep filing your taxes, this credit doesn't expire. You also get to apply non-roll over tax credits first, and then that after if there is more to apply it to . . . if not, it rolls over! Crazy. Seriously.

I am seriously looking forward to tackling these taxes this weekend and figuring out how much credit I have already!
redleaf: (Default)
So today I tackled my US and Maryland income taxes (mostly), as well as IRS
Publication 54 (2011): Tax Guide for U.S. Citizens and Resident Aliens Abroad, Publication 597: Information on the United States—Canada Income Tax Treaty, DEPARTMENT OF THE TREASURY TECHNICAL EXPLANATION OF THE PROTOCOL DONE AT CHELSEA ON SEPTEMBER 21, 2007 AMENDING THE CONVENTION BETWEEN
THE UNITED STATES OF AMERICA AND CANADA WITH RESPECT TO TAXES ON INCOME AND ON CAPITAL DONE AT WASHINGTON ON SEPTEMBER 26, 1980, AS AMENDED BY THE PROTOCOLS DONE ON JUNE 14, 1983, MARCH 28, 1994, MARCH 17, 1995, AND JULY 29, 1997, and finally Instructions for Form W-8ECI, Certificate of Foreign Person’s Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States.

Ok, the last one was a joke. The taxes weren't as hard as you would think - Maryland was by far the hardest because every time it said "non-resident" it meant you were a resident of another state and there were not instructions for if you were not currently living in another state. But yet, there was a special form if you were filing taxes on behalf of someone who had become deceased as a result of a terrorist attack. Oh well, I don't have to worry about MD next year.

What I kept sticking on was that I still have to pay taxes to the US on income I earn in Canada (or any other country) while not a resident of the States. By the rights of the treaty specifically with Canada I don't have to pay Canada if I make under $10,000, so I am not double taxed this year. But next year I most likely will be.

The US is the only country that requires its citizens to pay taxes on foreign earnings made while living abroad. Why is this? We aren't talking people living in the US moving money around over seas in tax havens to avoid paying Uncle Sam, we are talking average people, with normal jobs, that aren't currently using American infrastructure (though they certainly have benefited from it in the past) and probably are not planning to in the near future BECAUSE THEY RESIDE ABROAD. How could you possibly argue that people not living within the boundaries of the country and not employed by a company within the country should be taxed at the same rate (or at all?) as someone within the country? How many of them even vote or visit regularly?

I want to be a good citizen, but sometimes they make it very hard. If I end up living in this country for years I wouldn't have a problem filing a form with the IRS each year to "check in" and so they have an idea of my status, but If I have to pay the same taxes as someone using the interstates every day (etc) maybe I should test the bounds of the treaty and see if if I drop off the face of the earth they track me down . . . it isn't like i'd stop paying taxes where I actually lived.

Canadian taxes to come later this week!

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