I am posting two cases which are two possibilities. The information on tax will have significant influence on our decisions.
Background- I am on TN visa. My departure return was approved earlier and I am a non resident so is my wife who is on TN.
Case 1-
Our kid is joining Canadian university. We are thinking of renting an apartment which will be leased in my wife's name and she can stay with the kid for part of the year say 4 to 6 months for first two years. She can work remotely for her TN during her stay.
a) Will she be considered as Canadian resident then?
b) If yes, Does she need to continue to withhold 25 % rental income in another province?
I will continue to work in US. I will not visit them instead wife and kid will visit US.
c) If she is considered Canadian resident, how will that affect my Canada tax liability on US income?
Case 2- I can try and am likely to get international assignment back to Canada for upto 3 years. The company will compensate me for tax difference between two countries for salary.
However, when I return back to US after end of assignment, will my US owned home be considered under deemed disposition?
How will that affect me?
Do I need to convert 401K to Roth?
What are areas I need to look into before consider possible move in both cases?
Thanks
Non resident on TN visa getting International assignment
Moderator: Mark T Serbinski CA CPA
Case 1: She would not become resident in Canada.
Case 2: As long as you don't buy a home in Canada and elect it to be your Prncipal residence, your US home can continue to be your principal residence and -- while subject to deemed disposition -- will not be taxab;e in canada. Besides, there is a rule under deemed disposition, that nothing you had when you arrived in Canada will be subject to demmed dispo whe nyou leave, if it is less than 5 year stay in canada (in the last 10 -- so you have to be in US for 5 years for this to apply). Otherwise the gain is taxable.
If you are going to go back to US, there is no need to convert anything, just don't make any Roth or Roth401(K) contributions as a Cdn resident. Besides, depending on how your Cdn secondment is structured, you may still be an employee of the firm (and may still participate in your 401(K) etc), In that case you still wouldn't be able to move your 401(k) anyways.)
Case 2: As long as you don't buy a home in Canada and elect it to be your Prncipal residence, your US home can continue to be your principal residence and -- while subject to deemed disposition -- will not be taxab;e in canada. Besides, there is a rule under deemed disposition, that nothing you had when you arrived in Canada will be subject to demmed dispo whe nyou leave, if it is less than 5 year stay in canada (in the last 10 -- so you have to be in US for 5 years for this to apply). Otherwise the gain is taxable.
If you are going to go back to US, there is no need to convert anything, just don't make any Roth or Roth401(K) contributions as a Cdn resident. Besides, depending on how your Cdn secondment is structured, you may still be an employee of the firm (and may still participate in your 401(K) etc), In that case you still wouldn't be able to move your 401(k) anyways.)
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
Nelsona- Thanks.
Case 1- My wife likes Canada more than US. Does this mean that she has to keep a count of days that in any calendar year she does not exceed 183 days in Canada. It gets challanging since travel days can be counted as stay in both countries.
Case 2- One question. Does your answer imply that I have to keep my US house available to me without renting throughout my stay in Canada if I decide to buy a house in Canada as a future home for my kid ?
If I rent US home, I will not have any house to be called as principal home but renting helps my new mortgage amount due to rental income.
Your comment on 401K is very helpful.
Thanks again.
Case 1- My wife likes Canada more than US. Does this mean that she has to keep a count of days that in any calendar year she does not exceed 183 days in Canada. It gets challanging since travel days can be counted as stay in both countries.
Case 2- One question. Does your answer imply that I have to keep my US house available to me without renting throughout my stay in Canada if I decide to buy a house in Canada as a future home for my kid ?
If I rent US home, I will not have any house to be called as principal home but renting helps my new mortgage amount due to rental income.
Your comment on 401K is very helpful.
Thanks again.
Case 1. Yes, it would be impossible for her to claim that hew centre of vital interests is in US if she spends more that 183 days in year in canada. You said 4 to 6 months.
Case 2. Yes. Once you rent it out, it cannot be your prinipal residence. Your house in canad becomes your principal residence, and the house in US become subject to tax on rent and will be part of your deemed disposition upon leaving canada (unles you spend 5 years in US before going back to canada for less than 5 years).
Case 2. Yes. Once you rent it out, it cannot be your prinipal residence. Your house in canad becomes your principal residence, and the house in US become subject to tax on rent and will be part of your deemed disposition upon leaving canada (unles you spend 5 years in US before going back to canada for less than 5 years).
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