Return to Canada - Work in US?

We are in a quandary....

We are trying to decide whether or not to move back to Canada this summer - feels like time and I noticed that a few others on this site have been returning as well. We have lived in US (California) for 14 years as TN & TD's. Living in the US now appears to be hindering our kids growth and independence as they are in their late teens and cannot get jobs or really do anything else other than attend University as a full time F1 and we end up paying exhorbitant tuition (non resident tuition at State Uni's).

My husband however, wishes to keep his contract in the US and is considering commuting since he feels that now isn't the time to give up a good job given the current economic climate.

We are currently in the top fed tax bracket and live in California, placing us at close to 50% tax bracket (and who knows what we will be paying after the CA increase and the increase next year under the new president). On top of that we are paying for our own health care and non-res tution for our son, our daughter follows suit next year.

If we return to Canada, I realize we will have to pay taxes to Canada and the US, but will they be signficantly higher than what we are paying or will the tax be offset by the healthcare and tuition savings. Our kids could get part time jobs to offset their costs, teenagers are expensive!!

I guess we are trying to determine if we should relocate and have my husband work in US, commute to Canada, all pull the plug and move (find new job in Canada), relocate student son to Canada and stay in US a little longer to ride out the economy.

Any tips/input on tax implications or moving would be greatly appreciated.

Well if your husband is in the US and you are Canadians resident in Canada, you basically all have to file as residents of Canada and he would file as a non-resident in the US. This means if the Canadian rate is higher than the US rate, once you've claimed the foreign tax credit for the US taxes you've paid then you would pay Canadian income tax on top of it.

Whether or not this causes you a major problem is very dependent on your personal situation. For example, if you live in BC you may actually find at the lower marginal rates you pay more tax in California than in BC, because the rates in California are actually higher!

The US/Canada tax treaty is probably the most comprehensive in the world, and you can claim all sorts of things on the foreign tax credit side, such as the FICA taxes.

The simplest thing to do really is to download a T1 package for whatever Province you're thinking of moving to, get your husband's W-2, convert it into Canadian dollars and actually work out from the Schedule how much tax you would pay if you lived in Canada, so you have a basis for comparison.

Obviously you will save money in Canada on the healthcare and tuition costs, you'd have to work out what they are too so you can compare.

I have to say your problem is a very common one with your children, it's mentioned very often on here, i.e. your kids grow up and have no status. There have even been a couple of people who grew up as kids in a dependent category and never left and ended up living illegally in the US. It's a precarious situation.