Hi,
I moved to the US on a TN back in June 2010. I have read in these forums that I should close my TFSA account as the income from that is taxable in the US.
My question is, do I report the income from the TFSA earned in the half year that I was in the States in 2010 or does it start in 2011?
And since I need to close this account, where should I move the money to? I would like to leave the money in Canada, so it will either have to be into my RRSP (I'm in my late 20's, and the RRSP was not maxed out for 2010) or my Canadian savings account. I got the impression that depositing funds into your Canadian savings account is a flag to CRA that you still have residential ties to Canada.
Will it be possible to declare non-residence of Canada since I still have a few Canadian bank accounts, a couple of credit cards (have not been used), my driver's license, and my health card (has not been used since I moved).
Thanks!
TFSA and RRSP in the US
Moderator: Mark T Serbinski CA CPA
It starts with whatever portion of the year you report on a 1040. If you are using 1040NR for the first portion of the year, then your pre-arrival TFSA income is not taxable in US.
However, mot first year arrivees fing that filing a 1040 for the entire year is actually beneficial, which means you report all income for tha tyear from all sources.
A bank account in canada is not a residential tie.
You DL is probably invalid, since you need to live in Province. Same for your hrealth card, since you did not make arrangements to keep it alive before you left (nor should you; your work coverage is more important).
However, mot first year arrivees fing that filing a 1040 for the entire year is actually beneficial, which means you report all income for tha tyear from all sources.
A bank account in canada is not a residential tie.
You DL is probably invalid, since you need to live in Province. Same for your hrealth card, since you did not make arrangements to keep it alive before you left (nor should you; your work coverage is more important).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
[quote="nelsona"]
However, mot first year arrivees fing that filing a 1040 for the entire year is actually beneficial, which means you report all income for tha tyear from all sources.
[/quote]
Thanks for your help. So, to clarify, on April 15, 2011, I will be filing a 1040? And why do people find it more beneficial to report all income for the year? Will I not be then paying double the taxes for the first part of the year when I was still in Canada?
However, mot first year arrivees fing that filing a 1040 for the entire year is actually beneficial, which means you report all income for tha tyear from all sources.
[/quote]
Thanks for your help. So, to clarify, on April 15, 2011, I will be filing a 1040? And why do people find it more beneficial to report all income for the year? Will I not be then paying double the taxes for the first part of the year when I was still in Canada?
Why beneficial?
Becasue if you file a "dual-status" return (which means non-resident for 1st part of year and resident for second part), you cannot file jointly with spouse, and you cannot use standard deduction, each of which results in higher tax on your US income.
By filing full-year 1040 (on which you MUST report all world income for entire year -- no choice), you avail yourself of both provisions above, thus lowering your US tax AND, by using foreign tax credits (form 1116) and/or foreign wgae exclusion (form 2555), you rarely end up paying any additional US tax on your Cdn income from the time you were living in canada.
Most people try it both ways. It almost always ends up lower using full 1040.
Becasue if you file a "dual-status" return (which means non-resident for 1st part of year and resident for second part), you cannot file jointly with spouse, and you cannot use standard deduction, each of which results in higher tax on your US income.
By filing full-year 1040 (on which you MUST report all world income for entire year -- no choice), you avail yourself of both provisions above, thus lowering your US tax AND, by using foreign tax credits (form 1116) and/or foreign wgae exclusion (form 2555), you rarely end up paying any additional US tax on your Cdn income from the time you were living in canada.
Most people try it both ways. It almost always ends up lower using full 1040.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing