TN Taxation -- validating my understanding

hellomister40 · Post by **hellomister40** » Thu Oct 01, 2015 3:24 pm

hi All

I moved to the US on TN in Jan-2015. My wife and kids joined me in April-2015. We have a house in Canada (currently rented to a relative of mine but hoping to sell it before the end of the year). I had income in Canada the first two weeks of Jan. My wife had income in Canada until March-2015.

Is my understanding correct that?

1. I should immediately close my TFSA accounts to avoid taxation issues in the US
2. I will need to file a departing tax return with Canada (will need to declare Cad income of course) + worldwide income
3. I will need to file a tax (as married NOT filing separately) in the US (with Cad income declared

I plan to continue to keep my bank account in Canada. Thanks for the guidance.

nelsona · Post by **nelsona** » Thu Oct 01, 2015 4:14 pm

1. You should, but you will have taxation and reporting issues for 2015, since you will be filing for all 2015 in US.
2. You will file a departure return, but the date will be January 2015, so no US income will be required. Follow all departure return rules.
3. Correct. You will file like any other US resident couple, except you will also have Cdn income to report, as well as get credit for any Cdn tax.

hellomister40 · Post by **hellomister40** » Thu Oct 01, 2015 4:22 pm

merci beaucoup Nelsona for the clarifications

hellomister40 · Post by **hellomister40** » Thu Oct 01, 2015 4:40 pm

Hi Nelsona...one more Q. I read the following on http://madanca.com/blog/becoming-a-non- ... of-canada/

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9. Selling Your Home After Leaving Canada
If you sell your home in Canada after you become a non-resident of Canada, you will have to pay 25 percent tax on the gross selling price of your home. For example, if you sold your home for $400, 000 after you left Canada, then you will have to pay tax of $100,000, or 25 percent. This can cause financial hardship for many Canadians.

Fortunately, there is a special tax election that you can make to reduce the amount of tax to 25 percent of the gain on sale of your home. The gain is calculated as the selling price, less the original purchase price. You can claim the principal residence exemption for the period of time that you lived in the home. With the principal residence exemption, the increase in the value of your home while you lived in it will not be subjected to capital gains tax.
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I left in Jan as I mentioned and my family joined in April as I mentioned. Would you happen to know how exactly will they determine the tax liability on my house (which is my personal residence). To give you more data, I bought my house in April-2008 and family lived in it until April-2015. I expect deal to be finalized by November-2015 and I expect a gain in value of $70,000 (over the price I paid for it in April-2008). Will they just spread it out equally over the number of years I have owned the house?

nelsona · Post by **nelsona** » Thu Oct 01, 2015 7:48 pm

You get a year to sell tax-free, so the tax will be zero.

You left in January.