http://www.centa.com/CEN-TAPEDE/2003/expert/expert283-01.html

INGRAM replies

You cannot just pay tax to Canada on $28,000.
 
If you want to be treated as a Factual Resident of Canada which you can do on a TN visa, then you have to report all your US income to Canada.
 
Therefore, as an example, if you earned $60,000 US, you have to report it to Canada in Canadian Dollars of (2001 rates which is one of the years you have to file) of 92,904.98 Canadian and would owe tax to Canada on the whole $92,905.
 
The Canadian and BC tax on $92905 is $28,418.16.
 
The relevant taxes you would pay on $60,000 as a resident of New York City would be about  $3,720 FICA, $870 Medicare, $11,077.00 Federal and $3,201 for New York State.
 
Depending on where you live in NYC, there may be a Borough tax of another $150.00 or so.
 
However, the ones I know of total $18,868.00 US and convert to $29,215.52 in Canadian Dollars.
 
When plugged into the Foreign tax formula, you would owe no tax to Canada because the tax to the US is MORE than the Canadian Tax.
 
So, the answer is, you can work in New York and file in Canada as well.
 
That is what we do here for a living and we would be happy to help you out with the back filing for 2000 and 2001.
 
I have assumed in the above exampe that you are single.  If you were married and filing a joint US return, the federal tax would only be $7,172 and the New York State taxes would be  $2,400.
 
In this case, you would owe Canada about $7,500 because the foreign tax credit would not be as big. 
 
The reason for the difference is that the income has been split in half and taxed at a lower rate plus there is a larger standard deduction and another personal US exemption.
 
And the income is all in one name.
 
If you and your wife earned $30,000 US each ($60,000 total) and we had to do the Canadian returns for $30,000 each, the Canadian Tax would now only be $10,506.00 each and the foreign tax credits for tax paid to the US would be enough to wipe out the tax.
 
In other words, it is the ability to file a joint tax return in the US which makes the US rate lower for many people.
 
A TN visa holder accompanied by a spouse who is not working looks at his or her taxes and compares it to his single rate in Canada and thinks he has died and gone to heaven.  If both spouses are working in the US and make about equal income, the tax gap between Canada and the US narrows dramatically.
 
the only extra deduction that an American really gets is property taxes.  I do not count mortgage interest because any Canadian who wants to take the time, can rearrange hjis or her affairs to make their Canadian Mortgage deductible.
 
In addition, the US makes you spend 7.5% of your net income on medical before you can deduct medical and Union dues and other things are only deductible when they exceed 2%. therefore a person with a US income of $100,000 only gets a $500 deduction for $8,000 worth of medical bills and $100  deduction for $2,100 of Union or professional dues. 
 
In addition, to claim the itemized deductions in the US, one has to give up their Standard deduction which for a senior couple can be $8,000.
 
 
Canadians have to realize that they cannot apply for a visa to go and work in the USA except in very exceptional circumstances.  A US employer must provide the letters and paperwork for the visa.
 
This seminar will tell you how to stay out of trouble if you or your spouse are already working in the US and I could not explain it any better than to include another question I received this morning. 
 
To set the scene, Mother and Father are BOTH workin gin the US with professional visas.  However, they do not have Green Cards which means that their 18 year old son cannot work.
 
He chose to return to Canada to get a job and borrowed his mother's car.  When he arrived at the Canadian border, they told him (correctly) that if he was coming back to live in Canda, he could not bring the car into Canada without paying duty and turned him around.
 
He, being 18 and full of beans, then tried to get across at another border where they confiscated the car.  Mother managed to get it back by paying $1,800 worth of GST and BC PST.  Now, she has to import it and the US Governemtn will not let her export the car.  Hence, the email I am adding in here. 
 
I do not know "for sure" the answers here.  What is silly is that they have a car they took down from Canada and he could have just driven it home.  (If only they had asked first).
 
If anyone has had a similar situation and knows the answer, please send it back to me.  Otherwise, I will be calling Gail Stewart of Customs on Monday.
 
 Here is the question - Do you have the answer?