Ok, just some brief background: 27 years old (Albertan). $500k of stocks and ETFs in a margin account, $300k of equity, $200k margin loan. ~$100k in capital gains. $20k RRSP, with $10k in unused RRSP deductions. I receive ~$10k in Canadian dividends from the stock account, which are used to cover the interest on the margin loan.
Contemplating a (permanent) job offer in California for a job that pays ~$250k-$300k/year including bonus.
Whats an optimal way of dealing with my margin account? With California taxes being so high compared to Alberta taxes, would there be any benefit to *not* becoming a non-resident of Canada (under the theory that I could retain residency and offset all of my Alberta tax burden with margin interest and foreign tax credit deductions)?
Scenario
Moderator: Mark T Serbinski CA CPA
If you become non-resident, all you stock etc will become 'deemed' sold on that day, so you could see yourself hit with a big tax bill (which you can defer as long as you don't sell). Generally the IRS (but not necessarily california) will only tax you on the gains made after arrival in US.
Cdn residency is a matter of fact, so you would at a minimum need to maintain a permanent place to live in Canada. The problem is that even if you do this, if you stay in US more than 183 days and you also have a place to live in US, Canada can "push" you into non-residency (the status is called "deemed non-resident), and get their hands on your accrued capital gains.
And california is quite free to make up its own mind as to whether you are resident there, too. At the very least your wages in california wil betaxed there (and by IRS as well), so you could see your self paying california tax on everything, while still paying for the privilege of declring yourself Cdn resident.
Your other schemes dealing with your income stream, etc are all fine. The issue is how much it will cost you (taxes aside) to maintain a residence in AB.
You also have the issue of maintaining a brokerage account while not residing in AB, which would require that you transfer all your holdings to a US firm, which is doable for most investments other than mutual funds, which are not transferable.
Cdn residency is a matter of fact, so you would at a minimum need to maintain a permanent place to live in Canada. The problem is that even if you do this, if you stay in US more than 183 days and you also have a place to live in US, Canada can "push" you into non-residency (the status is called "deemed non-resident), and get their hands on your accrued capital gains.
And california is quite free to make up its own mind as to whether you are resident there, too. At the very least your wages in california wil betaxed there (and by IRS as well), so you could see your self paying california tax on everything, while still paying for the privilege of declring yourself Cdn resident.
Your other schemes dealing with your income stream, etc are all fine. The issue is how much it will cost you (taxes aside) to maintain a residence in AB.
You also have the issue of maintaining a brokerage account while not residing in AB, which would require that you transfer all your holdings to a US firm, which is doable for most investments other than mutual funds, which are not transferable.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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Mark T Serbinski CA CPA
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California Job
You should note that whether you are a resident of Canada or not is not a question of choice, but of the facts in your circumstances.
In any event, if you will be living and working in California, you will be subject to paying tax at U.S. federal and California rates regardless of whether you are still considered a Canadian resident. One downside of being a resident of both countries is that your net taxes end up being the higher of the tax rates of the two jurisdictions for each type of income.
In any event, if you will be living and working in California, you will be subject to paying tax at U.S. federal and California rates regardless of whether you are still considered a Canadian resident. One downside of being a resident of both countries is that your net taxes end up being the higher of the tax rates of the two jurisdictions for each type of income.
Mark