Is US grad student's scholarship, TA'ship $$ at Canadian univ subject to both US and Can. taxes?

[rasta723]

Hello,

I will be starting a Ph.D. program at a school in Montreal next month. Just wondering about anyone's past experience as an American student in Canada: did you have to pay US federal, Canadian federal and provincial (in my case, Quebec) taxes annually? I am just trying to estimate how much money I'll actually be taking in this academic year when the university promises--for example--$16,000 per semester in scholarship and $6,000 per semester as a teaching assistant. The university offices couldn't seem to give me a clear answer on this. Many thanks for any info you can provide!

[TakeruK]

For Canadian federal taxes, here is some useful info: http://www.cra-arc.g...tionalstudents/

Basically, a full time grad student will spend more than 183 days in Canada, and thus you are liable for Canadian taxes, but you are also eligible for tax credits.

In Canada, a "resident for tax purposes" has about $10,000 of tax-free income (personal exemption) and you also get educational tax credits. The educational tax credits is about equal to (your tuition) + ($400 per month as a full time student for "living expenses") + ($60 per month as a full time student for textbooks) + any monthly or annual bus passes you pay for. The numbers might have changed since I last checked, but it's about the same.

In addition, any money won through an award, fellowship, bursary, or scholarship is NOT TAXABLE. So, in your case, it seems like only your TA and RA income is taxable. For most of us, this comes no where near the ~$10k personal exemption + tuition part of our credits.

For provincial taxes, Quebec is notoriously different from the other provinces, so I don't know for sure. But usually the provincial tax system is a parallel structure to the federal tax system, so in the end, you will probably pay very little to zero taxes at the provincial level either.

Most Canadian students do not pay any taxes at all. In fact, our educational tax credits will accumulate and reduce the amount of taxes we have to pay after graduation when we get taxable income jobs! So it's most likely true that the only taxes you have to worry about, if any, are taxes owed to the US.

Hope that's helpful!

Edited August 12, 2012 by TakeruK

[kyjin]

You'll have to pay Canadian taxes, but since you're earning so little, you'll just end up with a very nice return next year. I don't know anything about Quebec's provincial taxes however as I'm in Alberta. As TakeruK mentioned, the tax credits are the greatest benefit in Canada. If you decide to work after graduation, you will probably have enough tax credits to not have to pay any tax for the first couple years.

As for US taxes, you'll have to file a tax return as well depending on your total income. If your worldwide earnings is under a certain amount, you won't have to file a return at all. Up to a certain amount of earnings abroad is considered tax free for the US, so you may not have to pay anything for your Canadian earnings. If you've worked in the US at all for the last year however, that is still taxable as usual.

Basically, you'll have to file two tax returns, but you'll probably get a rebate on both of them. My university has a number of free tax return services for students (usually done by students studying accounting) as well as extra help for international students, so you should have no problem.