Help - didn't sell investments before moving to US

[gwilks1]

Hi helpful forum members,

Hope you have some advice for me. I recently moved from Canada to the US for a job on TN status. Previous to that I was already in the US on F student status so I definitely meet the substantial presence test and I believe I will have to be considered a US resident alien and will elect for non-residency in Canada.

The issue is that I had investments in a margin account that I did not sell before entering the US. I know I will have to do the deemed deposition and that the recommended advice is to sell before leaving to save some hassle. Unfortunately I did not find this advice until after I arrived...

My understanding is that if I sell now, the capital gains has to be counted as world income on my US tax return. I also understand that dividends should be being withheld by Canada at 15% (Part XIII tax).

1) I am OK with counting capital gains as US world income but I heard some nightmare scenarios where the cost base of the investments have to be counted from when I purchased the investments and not when I moved to the US? If so, would this mean I would have been taxed twice for the time before my move (once at deemed deposition, and again on US return) ?

2) My Cdn brokerages BMOIVL and Questrade aree telling me they can't let me keep my accounts as a Cdn non-resident - are they going to force me to sell? Can they force me to sell? Has anyone kept their investments just sitting in Canada? Which brokerage?

3) Will I have a tax liability (Part I tax?) to Canada if there have been capital gains since the date I became a non-resident? How is it deducted/withheld? If so, would there be Foreign Tax Credit available for me to claim on my US return?

4): I also have a TFSA and RRSP... I understand there are special forms to fill out for the RRSP for it to be tax-exempt in the US. But for TFSA, it sounds like I may have to treat it like a margin account since TFSA has no status/standing in the US?

Any help appreciated!

[nelsona]

First off, your time on F doesn't count towards SPT, so don't include that. Your move to US for work makes you a US resident and Cdn non-resident, not time spent in US.

You shouldn't worry about double taxation. You will have deemed disposition on your Cdn tax return, and will only owe US tax on the increased value after departure, using Rev Proc, 2010-19. Search for this topic on this forum.

There is no longer an RRSP form (8891) and you should close your TFSA asap.