Financial Channel

Hi all,

I've just accepted a co-op job in California for the fall term, but I'm just wondering how taxes will work when I'm there. My friends that worked there last term said that they were taxed about 30% on their pay, but I wondering if I might be able to get any of that 30% back at the end of the year. I estimate that I will be getting about $25k of taxable income throughout the term.

Any help would be greatly appreciated!

Thanks!

You have to check with the IRS

I've read extensively on that but my predicament is different from yours as while I'm working in the US, my income is still borne by my Canadian company.

My situation doesn't require me to pay any Taxes to the IRS if the duration of my stay is less then 6 months.

In your situation, I think that whatever you pay there can then be deducted on this side of the border,

In the end, you will not have paid more then what you would have in Canada as their tax rates are much lower

Your University Co-op placement office and staff should be able to provide you information on this.

If you are in US for only 4 months, you have a danger of double taxation. I am not here to scare you, but if you are considered to be resident in Canada during the year, your worldwide income needs to be TAXED at Canada.

Now, US may want to tax you as well because your income is earned in the US, but I am not certain about the US tax law.

Nope, he won't be double taxed. Any taxes you pay to the IRS will be counted as a Foreign Tax Credit on your Canadian return. Canada and the US have special agreements in place to prevent double taxation.