Canadian moving to US under TN advice

futtake · Post by **futtake** » Mon Sep 28, 2015 2:33 pm

Hello,

I am a from Ontario Canada and have just accepted a job in Seattle WA. I will be relocating to the US for 2-3 years. I am trying to figure out everything I need to do tax wise so that I make sure I report everything correctly and save as much money as possible.

My situation:

Working and earned Canadian (Ontario) income from Jan 1, 2015 to Sept 5, 2015. Will relocate and start working in Seattle WA, from Oct 12, 2015 till the end of the year. 2016 all my income will be earned in Seattle WA and will be living exclusively in the states.

I do not have any property or spouse in Ontario, Canada.

I do have Checking/Saving accounts, Credit Card, TFSA and RRSP all in Ontario that I would like to leave until I return in 2-3 years.

My Questions:
First should I hire a tax professional or try and navigate both tax systems myself?

I assume for 2015 I would be a tax resident of Canada and a non-resident alien in the US, is this correct?

In 2016 would I be a non tax resident of Canada and a tax residient of the US?

Am I able to take advantage of Washington's lower tax rate while on my TN visa or will I be paying Ontario taxes and be refunded my US taxes?

I assume every year I would file a tax return with both Canada and the US?

nelsona · Post by **nelsona** » Mon Sep 28, 2015 4:09 pm

You situation is simple, since you are moving near the end of the year.
You will file a departure return for Canada with October departure date.
In US you will file a 1040NR reporting only your US income for the year. It shouldn't be difficult to do. Would be more difficult if you ahd moved in 1st quarter of year.

You do not need to close any accounts, but you should close the TFSA before year-end as this is not tax-free in US and has a huge reporting burden. You can alwys re-fund the TFSA when/if you ever come back to Canada.

futtake · Post by **futtake** » Mon Sep 28, 2015 4:57 pm

Thanks for the reply, right now I have a significant amount of money in my tfsa, if it is easier to not have a tfsa while working abroad, then what should I do with my Canadian savings ~60k.

nelsona · Post by **nelsona** » Mon Sep 28, 2015 9:03 pm

Take it to US before it loses more? Put it in Cdn bank, or on downpayment on a home in WA.

futtake · Post by **futtake** » Tue Sep 29, 2015 12:03 am

Ok a few more questions, if I am filing a departure return, does that mean I am declaring my self a nonresident of Ontario, does that mean I have to sever all ties with Ontario, canceling my drivers license ect. After 2-3 years I am planning to return to Canada. I am not sure I want to liquidate 60k of assets and bring them to the US, just to bring them back to canada in 2-3 years, especially with such a poor exchange rate, if I do leave these assets in Canada does this mean I will have to leave them in a bank account as cash and not be able to invest them.

nelsona · Post by **nelsona** » Tue Sep 29, 2015 10:11 am

No. Your DL will not be any good once you live and wortk in US, so it will be pointles to keep (and your sate may require you hand it to them anywys). This isnot a significant tie in any event.

US residnts are forbidden from ahving invest,et accounts in canad (other than shelterted accounts). Investmebts in TFSA will be taxed in US and will expose you to all sorts of odious reporting requirements.

Dbtw, do you know how many people go to US for "2-3 years" and never leave? Or come back 30 years later? Drop the TFSA. The C$ is not going up any time soon anyways, It was anomoly that it didn't stay at the 60-70 cent range it had been for many many years. Put the money to good use in US (you can always invest in Cdn firms that trade in US, if that is your concern, and earn tax-free gains if you go back).

futtake · Post by **futtake** » Tue Sep 29, 2015 1:29 pm

Thanks for all the help, sorry if my questions seem naive.

So from what I understand, for the 2015 tax season I will file my taxes in Canada as normal but declaring emigration. In the US I would file a non resident claim. In the 2016 tax season I would file file taxes in the US as a resident. If I keep my Canadian rrsp I would use the appropriate form to claim it. My tfsa should be dissolved before 2016 so that I don't have to worry about the complicated filing process if a tfsa. Would I have to file taxes in Canada in 2016? If keep a bank account in Canada I would have to report that also on my 2016 us taxes.

Is everything correct? Would I be able to files these taxes on my own as long as I take the time to make sure everything correct.

nelsona · Post by **nelsona** » Tue Sep 29, 2015 1:47 pm

Your 2015 Cdn return is not quite "normal" becuase it will be a departure return. Follw the rules outlined in the Emigrants guide.

In US , as I said, you will file a 1040NR, not a 1040.

There is no longer a special form in US to report existence of RRSP.

You will not have to file any taxes in canada for 2016, unless yopu woirk or sell/rent out Cdn real estate.
These are definitely doable using off the shelf on-line software (Ufile in canada, taxact in US).

futtake · Post by **futtake** » Tue Sep 29, 2015 10:41 pm

Ok great, thanks for all the help.

When you say there is no longer a form to report RRSP does that mean it does not get reported?

nelsona · Post by **nelsona** » Wed Sep 30, 2015 9:12 am

Not reported on your income tax return (unless you withdraw from it). It is included in your foreign assets reporting.

futtake · Post by **futtake** » Wed Sep 30, 2015 11:26 am

Ok I see what you are saying, although it appears if I have more than $10000 in foreign assets I will have to fill out the FinCEN form and if I have more than $50000 in total foreign assets I will have to fill out Form 8938

It seems if I maintain a foreign bank account I would still have to complete Form 1040, as only the RRSP seems exempt.

nelsona · Post by **nelsona** » Wed Sep 30, 2015 4:10 pm

As a 1040 filer, you would aof course have to report income from anywhere in the world, including interest from a Cdn bank account.

futtake · Post by **futtake** » Thu Feb 11, 2016 1:44 am

[quote="nelsona"]You situation is simple, since you are moving near the end of the year.
You will file a departure return for Canada with October departure date.
In US you will file a 1040NR reporting only your US income for the year. It shouldn't be difficult to do. Would be more difficult if you ahd moved in 1st quarter of year.

You do not need to close any accounts, but you should close the TFSA before year-end as this is not tax-free in US and has a huge reporting burden. You can alwys re-fund the TFSA when/if you ever come back to Canada.[/quote]

If I am filing a departure return in canada for my departure date, and a 1040 for my US income, doesnt that technically make me a non-resident for the part of the year that moved to the US til the end of the year?

futtake · Post by **futtake** » Thu Feb 11, 2016 1:45 am

Sorry I ment 1040-NR

nelsona · Post by **nelsona** » Thu Feb 11, 2016 7:16 am

Non-resident of Canada? Yes.