TAXATION

This is the big one -- taxes.

A good agency should be asking for paperwork like a lease, roommate agreement, mortgage, etc. BEFORE they offer you the housing stipend tax-free.

Without a tax home, you should still get the meals & incidentals tax-free but the housing stipend will become regular income if you are not duplicating expenses (ie. paying for a place in Canada and one in your contract city).

There is another article on calculating your taxes and it is worth a read to see how much more in taxes you will pay if the housing stipend is taxed.

Example

Here is an example, say a nurse is heading from Toronto, ON to Massachusetts and is considering not keeping a tax home in Canada because they don’t want their friends or family to have to claim their rent on their taxes and they find even renting a room is very expensive in Toronto.

For simplicity, let’s say the nurse plans to work 2 contracts and then return to Toronto and figure out what to do with the remaining 6 months when they come back.

Let’s say the package is $3000/week.

Thus, $1,691 is taxable and $1309 is stipend money.

Broken down, the housing stipend is $861/week and M & I is $448/week.

Now, in this first scenario, we’ll pretend we didn’t keep a tax home, so everything except the meals & incidentals is taxable.

That means full taxes on $2552 per week and for 26 weeks (since this nurse will do two contracts this year).

That is $66,352 USD or $90,865 CAD that they will pay taxes on.

Again, for simplicity’s sake. we’ll say this nurse doesn’t work the other 6 months of the year. If they did or you do -- account for those funds in your calculations too!

Now, using an online income tax calculator for Ontario, we see the taxes owed over 26 weeks/6 months would be $18,693.

With Canada typically charging more in taxes, the final amount the nurse will have made is $67,415 CAD + M&I which is an additional $11,648 USD or $15,951 CAD tax free.

For a total of:

$79,063 CAD/year

Earlier, we said that $1,691 was the taxable with stipends. Let’s check and see the difference if the stipends had remained TAX-FREE...

Now we get, $43,966 USD or $60,209 CAD that is taxable. Which paints a much different picture...

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With Canada typically charging more in taxes, the final amount the nurse will have made is $46,337 CAD + Housing (which is an additional $22,386 USD or $30,656 CAD tax-free) + M&I (which is an additional $11,648 USD or $15,951 CAD tax-free).

For a total of:

$92,944 CAD/year

(a whopping $13,881 CAD difference).

For context, you could rent a place for $2,313 CAD per month and still would reach the same net pay as if you didn’t have any tax home at all.

If you split expenses with a friend who owns a two bedroom, you could pay a lot less.

Likewise, some nurses will say, “But that is nothing for Toronto rent, even for a one bedroom.” I get that. But who says it has to BE in Toronto? Why not rent something cheap like a room in a house in Hamilton or somewhere further from such an expensive city like Toronto, at least for those 6 months?