Transition Financial Advisors, Inc

Tax System

Tax filing deadlines are April 15th in the US and April 30th in Canada for personal taxes.

In Canada, you get a Social Insurance Number (SIN) while in the US you get a Social Security Number (SSN).

1 return is filed per married couple in the US vs. 1 return per person in Canada.

A W2 slip in the US is equivalent to a T4 slip in Canada.

A 1099 slip is generally equivalent to a T3 or T5 slip in Canada.

In Canada, only Quebec has a separate return and collects its own taxes.  In the US, 43 states have a separate return and collect their own taxes (the other seven do not have state income tax).

Both Canada and the US allow a tax deduction for medical expenses but limit it by 3% of net income and 7.5% of adjusted gross income respectively.

The closest thing to an RRSP in the US is an Individual Retirement Account (IRA).  RRSP contributions are always deductible and have a maximum of 30% in foreign holdings.  IRAs are not always deductible and you can hold up to 100% in foreign holdings however, there are many other retirement options where you can put up to 25% of your income.

In Canada, Lottery winnings are not taxable and are paid out in a lump sum.  In the US, Lottery winnings are taxable and are paid out over a 20-year period unless the cash option is requested in advance.

In Canada, a capital gain realized on your personal residence is not a taxable event.  In the US, however, it is and you must file a form with your taxes to claim the exemption of $250,000 per person ($500,000 per married couple) if you lived in the house for two years or more.

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Both tax systems have an Alternative Minimum Tax.