Dual Citizen, living in US, working for Canadian Subsidary.

MicrosoftWabbit · Post by **MicrosoftWabbit** » Sat Aug 13, 2011 6:44 am

It appears that I am likely to get a job offer ( > $150K) to work for the Canadian Subsidiary of a software firm which is an easy commute from my US home. I will be paid out of Canada and will be in Canada over 183 days/yr in 2012 and onwards.

I also run a US LLC and will likely do some weekend consulting to prior clients in the US, from my US residence. Once (hopefully) we sell our main US property (25 acres rezoned R9 URBAN just before the property crash), we will likely be moving across the border. The LLC income will cover US Medical Insurance nicely. I am not planning to contribute to a RRSP prior to moving there. I am planning to contribute to 401K. Considering turning the "disregarded" LLC into a C or S corporation, with payouts to the wife exclusively (she does generate revenue and will rarely be in Canada).

I am planning to have tax returns for both US and Canada done by specialists for at least the first two years.

Main questions are gotcha that are not anticipated.

Thanks!

nelsona · Post by **nelsona** » Wed Aug 17, 2011 11:31 am

You would only be allowed to contribute to 401(K) for the first 5 years, if your fimr allows it and handles it. Your SS contributions will cease immediately.

MicrosoftWabbit · Post by **MicrosoftWabbit** » Wed Aug 17, 2011 9:23 pm

Followup question -- since I will have income in both the US (Consulting) and in Canada (Employee), and will likely be 'resident in Canada for purposes of taxation' according to Canada, and may concurrently be 'resident in USA for purposes of taxation' to the IRS...

Would it be possible to concurrently contribute to both a RRSP and to an IRA at the same time? I realize that the RRSP contribution may not be deductable on my US return, and the reverse...

If so, what are the magical requirement with this "foot in each country" approach?

nelsona · Post by **nelsona** » Thu Aug 18, 2011 5:37 am

You can ALWAYS contribute to both an IRA and an RRSP, as long as you have the required income and/or contribution room. No magic.

Its the deductibility that is the majical issue. personal IRA and RRSP are NEVER deductible in the 'other' country. Only contributions to employer-sponsored plans are.

Under Cdn rules, if you live in canada and pay into a 401(k), it is deductible in Canada only if you do not participate in an employer RRSP, and only for the first five years after your transfer. And your 401(k) contribs reduce your RRSP allowance.

Resident for tax purposes in US is really a meaningles term, since US taxes you on citizenship. You would be Cdn resident by virtue of days in canada. You would not want to contribute to a Roth or Roth 401(k) during years when you were even suspected as being a Cdn resident, but an IRA is fine (with no Cdn deductibility of course).