Canada/US income tax question

sandve · Post by **sandve** » Tue Jan 11, 2011 8:32 pm

Hoping to get some advice on the following:

I moved from Canada to the US for work in July 2009 (under TN status). For 2009, I filed T1 in Canada (had income in Canada from Jan - Jul) and 1040NR in US (was here <183 days). I did not indicate in the T1 return that I had moved from Canada since I thought I had to maintain my Canadian resident status because of the TN. I still have bank accounts / credit cards / investments / RRSPs / TFSA in Canada (but no property, drivers license, etc.)

I have since been told (and please correct me if this is wrong) that I do not need to maintain Canadian (tax) residency in order to keep my TN.

For 2010, I only have income from US (except for very minimal interest income from Canadian bank accounts - <$100). I have to file as a resident in the US (1040). Do I still need to file in Canada? In speaking with others who are in similar situations, they said they stopped filing Canadian returns at this point.

I think my options are as follows:
1. Amend my 2009 T1 to indicate departure from Canada. I believe there is a departure tax to be paid. What exactly is taxed and is there a rough estimate of what the tax % would be?
2. For 2010, file 1040 in US and T1 in Canada showing US income as worldwide income.
3. For 2010, only file 1040 in US and do nothing for Canada.

What's the right / best thing to do? I don't have any immediate plans of moving back to Canada (2-3 years) but also (obviously) don't want to be paying unnecessary taxes...

Thanks!

nelsona · Post by **nelsona** » Wed Jan 12, 2011 8:27 am

You left canada in July 2009 and thus did bot have tax residency there from that date. You should have file a dpearture return for 2009 with July departure dtae. In fact you should smend your return for that year. If you did file a full year T1, then you were also required to report your US income to CRA. Did you? If not, all the more reason to correct 2009 and make it your departure return.

Number 1 is your only correct option.

Read the emigrants guide from CRA. The departure tax is the gains that your investments (outside RRSP or TFSA) made before leaving.

nelsona · Post by **nelsona** » Wed Jan 12, 2011 8:28 am

,, and close your TFSA, it is of no use to you in US (its taxable) and you have complex forms to file or big penalties.

Also rememeber 8891 form for RRSP, and FBAR for all your Cdn accounts.

sandve · Post by **sandve** » Wed Jan 12, 2011 2:59 pm

Thank you. A few more follow-up questions:

1. Does this mean I actually have to cash out the investments that I have in Canada or do I just pay a tax on the gains I would have realized had I cashed them out when I left?
2. Can I still keep bank accounts, etc. after filing a departure return?
3. There seems to be the option to amend a return online -- should I use that or is that for other (less complicated) situations?

Thanks!

nelsona · Post by **nelsona** » Wed Jan 12, 2011 7:36 pm

1. Your non-shelterd investments only need to be deemed sold on the day of departure. They should be moved to US in any event, since you are not allowed to trade in Cdn investment accounts.
2. A bank account yes. Investment account, no.
3. You will need to file a paper amendment, I'm quite sure, since you will be including forms that you had not previously included.