Hello bojo1234-ga!
Here is the information that you?ve requested regarding the various
taxes you could pay in your situation. It is a pretty unique
situation, so it?s not exactly cut and dry. Although, from my
research, I have a feeling that there are many Windsor residents
working in Detroit. Here?s what I found.
- - - - - - - - - - - - - - - - - - - - -
U.S. FEDERAL INCOME TAX
There is no escaping the U.S. Federal Income Tax, no matter where you
work or live. According to IRS Publication 514, Foreign Tax Credit for
Individuals:
?If you are a U.S. citizen, you are taxed by the United States on your
worldwide income wherever you live. You are normally entitled to take
a credit for foreign taxes you pay or accrue.?
http://www.irs.gov/publications/p514/ar02.html#d0e712
As you are probably aware, the U.S. income tax laws and schedules are
extremely complicated, with the final assessed tax being dependent
upon your income, filing status, number of exemptions, deductions,
etc., etc., etc., . . . You can find the proposed 2006 income tax rate
schedules at the IRS website.
http://www.irs.gov/formspubs/article/0,,id=150856,00.html
- - - - - - - - - - - - - - - - - - - - -
MICHIGAN INCOME TAX
If you work in Michigan, they?ll find a way to take their cut, as well.
?You must file a Michigan income tax return (MI-1040 and Schedule NR
for nonresidents and part year residents) and pay Michigan income tax
on salary wages and other employee compensation for work performed in
Michigan.?
http://www.michigan.gov/treasury/0,1607,7-121-24321-6445--F,00.html
The Michigan state income tax rate is 3.90%, regardless of income
level, with adjustments made according to the number of personal
exemptions for which you qualify.
http://www.bankrate.com/brm/itax/edit/state/profiles/state_tax_Mich.asp
- - - - - - - - - - - - - - - - - - - - -
DETROIT CITY TAX
Some cities in Michigan also levy an additional income tax upon those
who work within them. Detroit is one of these cities and assesses an
additional 2.55% income tax on city residents, and 1.275% on
non-residents of the city who work there.
http://www.michigan.gov/treasury/0,1607,7-121-24321-7114--F,00.html
- - - - - - - - - - - - - - - - - - - - -
CANADIAN INCOME TAX
Establishing residence in Canada would subject you to taxation in Canada, as well.
?A person who is a resident of Canada for any part of the year is
subject to Canadian income tax on their world wide income during the
time that they are a resident of Canada. During the time that they
are not a resident of Canada, they will pay Canadian income tax only
on income earned from Canadian sources.?
http://www.taxtips.ca/personal_income_tax.htm#WhoPaysTax
The Canadian federal income tax rates vary from 15-29%, depending upon
your income level. You can find detailed rate tables at:
http://www.taxtips.ca/fedtax.htm
To determine your legal residence status in Canada, see the Canadian
Revenue Agency bulletin IT-221R3.
http://www.cra-arc.gc.ca/E/pub/tp/it221r3-consolid/it221r3-consolid-e.pdf
IRS Publication 514 mentioned above does discuss the Foreign Income
Tax Credit, and it appears that you would probably recover the income
taxes assessed by the Canadian government given your described
circumstances.
http://www.irs.gov/publications/p514/ar02.html#d0e712
- - - - - - - - - - - - - - - - - - - - -
ONTARIO PROVINICAL INCOME TAX
According to Ontario Tax Code:
?An income tax shall be paid as hereinafter required for each taxation
year by every individual,
who was resident in Ontario on the last day of the taxation year.?
http://www.e-laws.gov.on.ca/DBLaws/Statutes/English/90i02_e.htm
Ontario provincial income tax rates vary from around 15-32%, with
marginal rates between 22% and 46%, depending, of course, upon your
income level. A detailed table can be found at:
http://www.2ontario.com/welcome/bctx_606.asp
Again, IRS Publication 514 indicates that you would probably be able
to recover any taxes assessed by Ontario through the Foreign Income
Tax Credit.
- - - - - - - - - - - - - - - - - - - - -
WINDSOR, ONTARIO PROPERTY TAX
Windsor, Ontario levies a city property tax, which is calculated as
0.017 times the assessed property value (or 1.7%). This would be
required of all city residents. More information can be found at the
city website.
http://www.citywindsor.ca/000006.asp
- - - - - - - - - - - - - - - - - - - - -
PERTINENT IRS PUBLICATIONS
I?ve mentioned some IRS publications that will be of value to a U.S.
citizen, living in a foreign country. Here are links to three of them.
Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad
http://www.irs.gov/publications/p54/index.html
Publication 514, Foreign Tax Credit for Individuals
http://www.irs.gov/publications/p514/index.html
Publication 597, Information on the United States-Canada Income Tax Treaty
http://www.irs.gov/publications/p597/index.html
- - - - - - - - - - - - - - - - - - - -
This should give you the information that you have requested. Good
luck navigating the complicated tax codes, and good luck with your
future endeavors! If you have any need of further clarification,
please let me know how I can help.
Sincerely,
Boquinha-ga
Search terms:
Canada tax rate
Ontario tax rate
Windsor Ontario
Federal tax rate
Michigan tax rate
Ontario income tax |
