Best day of the year to activate greencard & cut Canada

simplelife · Post by **simplelife** » Wed Oct 21, 2015 11:42 am

I should receive my spousal visa stamp in December, I will have an option of activating my US status and move on December 31st or January 1st (at Toronto airport, before flying to US).

I'm wondering which is a better day to cease being Canadian tax resident?

I'm thinking if I enter US on December 31st, wouldn't I have to file US taxes also for year 2015? would be nice to avoid this ...

I also have a business (corp) with fiscal year ending in February 2016, it will have a net loss for the year. Should I file to dissolve it on December 31st or should it be done at the fiscal year end (after final corporate taxes are filed).

I'm thinking that maybe becoming US resident with still undissolved corporation interest will complicate my US taxes for year 2016.

Since I have a little flexibility, when would you suggest to activate GC and dissolve corp?

nelsona · Post by **nelsona** » Wed Oct 21, 2015 7:15 pm

The Cdn departure date need not coincide with your US "arrival date", which could be as early as December. Departure will be a FACTUAL date, when you no longer have primary residential ties such as a home in canada. When will you give that up (or take up a similar home in US)?
Ordinarily I would say dec 31, just to get the departure return done and over with in the spring, rather than in spring 2017.

But with a business, there are some tax meshing issues that come up. Someone else can answer that portion.

simplelife · Post by **simplelife** » Thu Oct 22, 2015 9:44 am

So, from what you're saying I understand that I can become US tax resident on January 1, 2016 but cease being Canada tax resident on December 31st, because my Canada departure is factual and not when I physically step outside of Canada?

In that case, I would prefer it to be at the end of December, this way my final CRA return will be for 2015 (and nothing else to file for 2016)

But my USA entry would take place on January 1, with activation of green card and taking up residence on that day. This way, I will have no US taxes to file in 2016 and will file clean US-only return in 2017.

What are some solid ways to substantiate my factual departure date of, say, Dec 30 or 31?

1) I am currently renting in Canada, I would give notice to my landlord that I am moving out on December 31st.
2) Contact provincial Medicare to tell them I am moving to US in a day or two and to terminate my Medicare coverage as of December 31st.
3) Make sure that on my US apartment lease agreement start day is December 31, 2015 (and save this contract, in case I need to prove in future to CRA)

can you suggest anything else that I can save as proof that I ceased being Canada resident on or before December 31st, 2015?

nelsona · Post by **nelsona** » Thu Oct 22, 2015 10:25 am

"This way, I will have no US taxes to file in 2016 and will file clean US-only return in 2017." I think you meant 2015 and 2016 here.

I wouldn't worry about "proof". Just enter US on jan 1 should be enough. What you ahve listed is more than enough.

I would be dissolving the corp before dec 31, otherwise you will have complex (and perhaps unfavorably taxed) US return and will still have to file a return in canada for 2016.

In all this I assume you have not spent an inordinate amount of time in US in 2015? If you have spent 183 days or more you may have 2015 US reporting.

simplelife · Post by **simplelife** » Thu Oct 22, 2015 10:49 am

Yep, all sounds good.

No, didn't spend that much time.

To confirm: on the final CRA T1 return, when entering "date of departure", I will be able to enter my factual date of December 30 or 31st, provided I do the 1-3 mentioned above.

(p.s.: Thank you so much for sharing your insight. On a separate subject, I noticed that this forum is suffering from spam. I think it is primarily due to outdated phpBB software. An upgrade to the latest version of phpBB should help to reduce the number of spammers. It is difficult to eliminate all spammers, but one idea would be to charge a $5 one time fee (via paypal) to all users who want the ability to start posting. This will weed out spammers)

nelsona · Post by **nelsona** » Thu Oct 22, 2015 10:55 am

The only thing you really "need" to do is vacate your appartment before dec 31 OR show up at the border on jan 1, either is sufficient for you to be able to putr a dec 31 departure date.
All other matters (as well as your driver's license) can be handled in due course.

This is not a clockwork operation. just proceed like anyone moving to a new country would.

You should be reading over the Emigrant" section of CRA website to make sure you comply with all departure tax requiremnts, as well as advising any institutions that you will be a US resident.

simplelife · Post by **simplelife** » Mon Oct 26, 2015 4:16 pm

I probably need to have a Plan B, just in case if my spousal visa stamp is delayed till beyond January 1st. (I read, sometimes embassy can be delayed)

For example, if I show up to the border on January 10th or 20th, putting date of departure of December 31st would be out of question?

The following conditions would still apply:
1) given up provincial medicare before Dec 31st
2) signed apt lease in US with start date of before Dec 31st
3) notify current landlord of move out as of Dec 31st (and stay with friends till departure)
4) Wife has already moved to the US and established domicile there
5) Don't own property. Sold car / transferred before Dec 31st, closed most accounts, have no retirements/RRSP etc
6) Bought US health insurance with starting date of January 1st

Could I be physically present on Canadian soil for up to Jan 20th, yet still be factual non-resident and be allowed to put date of departure as Dec 31st and not need to file T1 for 2016?

nelsona · Post by **nelsona** » Mon Oct 26, 2015 4:46 pm

If it is delayed, then you can't really be considered non-resident of canada on Jan 01, 2016, unless you are physically in US on jan 01, 2016 (which I suspect is not allowed pending stamping).

But that isn't the end of the world.

You would in thsi case file a full-year 1040, but also a 2016 departure return.

99% of emigrants don't/can't put a dec 31 departure date on their return. Its not a big deal. In fact CRA views such returns suspiciously.

And in all your lists, the only thing that has any bearing is moving out of appartment, all else has no impact on defining departure date. Moving out, and physically being in US is all that matters. All those other things you mentionned can be done in the course of time.

nelsona · Post by **nelsona** » Mon Oct 26, 2015 4:48 pm

Your plan B will be to file a departure return in 2016 instead of 2015.