Income tax in Canada vs US

[shaul]

In Canada there is a strong opinion that we pay much more taxes than in States, so i decided to calculate rates using different websites.

Result i got was very strange. I took as gross income 120K.

I got in California (both Fed and State tax) = $36,176
In Ontario (both Fed and provincial) = $36,719
In Alberta (both Fed and provincial) = $33,865 (much lower than in Cali).
And this is considering the fact that we have free health care.

Maybe I did something wrong?

I used:
Tax Brackets (Federal Income Tax Rates) 2000 through 2009
Canadian Income Tax Calculator 2009
California Income Tax Rates - California & other state tax rates information. CA tax calculator.

-- Mon Aug 17, 2009 11:31 am --

I used next websites for comparison

http://www.moneychimp.com/features/tax_brackets.htm
http://lsminsurance.ca/calculators/canada/income-tax
http://swz.salary.com/salarywizard/layo ... te_CA.html

[Reba]

nope, probably didn't do anything wrong. Tax rates in the US are much like tax rates in Canada, and yet somehow everyone thinks Canada's are higher.

However, I will note that some states do not have income tax Alaska,
New Hampshire, Tennessee, Florida, South Dakota, Washington,
Nevada, Texas, and Wyoming. And some states have lower income taxes than others. I believe California has one of the highest rates of income tax in the country.

There are A LOT of factors to consider when moving your tax home for whatever reason. Income taxes is one. What you get for your money is another. What you can deduct on your tax returns is another. This site might help http://www.retirementliving.com/RLtaxes.html

When I moved to North Carolina, my tax burden actually went UP from what I was paying in Ontario. And of course, I have no "free" healthcare here in North Carolina. Wages are considerably lower here, income tax rates are within points of a percentage, PLUS we pay property tax on our vehicles, as well as "real" property, to the city & county! The only thing that is lower is the sales tax, but not by much really considering.

Here's a listing of US state income tax rates
http://www.taxadmin.org/fta/rate/ind_inc.html
and US federal income tax rates http://www.moneychimp.com/features/tax_brackets.htm

And Canada income tax rates http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

[shaul]

My understanding that the only advantage in Cali that you can write off more taxes than in Ontario (like property tax, medical expences, interest on mortgage etc).
Wonder if they have analog of our RRSP tax shelter?

[Steven]

Yes, an IRA is the equivalent of an RRSP. And they're recognized as such in the tax treaty. California also has a State equivalent to an RESP.

Tax calculators give an incomplete picture because of deductions you can claim, really the only way to do it is to sit there with a tax return and work it out. I keep using the official Alberta tax calculator every year and it's always way off and I claim virtually no deductions.

California is one of the highest taxing States, in fact I think it's the highest although because of the size of NYC most people seem to think it's NY but it's the NYC taxes that make it go from middling to expensive.

One of the things for example that makes the US more expensive for Canadians is that Canadian citizen children aren't eligible for the US child tax credit unless they're LPRs.

Everything depends on your income of course because California income taxes on lower incomes are pretty low, but you can say the same about BC.

Another thing is that CPP contributions in Canada max out around $46,000, but in the US, social security contributions go all the way up to $103,000 I think and bear in mind that's in US dollars.