Hi all,
Here is our sitution. Hope we can get some tax savings advises for planning:
1) Original working full time in a company in Vancouver, recently forced to be tranferred to California since Sept 2012.
2) Spouse has a full time job in Vancouver (also have a 2-year old staying with spouse)
3) Each of us earn {a salary income every year} *Edited by Admin
4) We have a {} home in Vancouver with a {}* mortgage. Edited by Admin
5) I am flying back quite often to Vancouver to see the family.
Questions:
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6) Is there a chance that I can be qualified to be a non-resident in Canada? If so, what do I need to do to achieve that? Will selling the Vancouver house help?
7) How will the US 401k and Canada RRSP work in this situation? Will the 401k contribution be deductible on the purchase of RRSP? (assuming I can't stay away from being a resident in Canada)
8) Will I ever be considered as a non-resident in US if I receive a paid salary in US but rarely lives in US?
9) Is it possible to waive social security tax if I am paying CPP or vice versa?
10) Will buying an investment house in US help in this situation? (eg. mortgage interest deduction, etc...)
11) Can I claim any interest expense on our Vancouver house on the US tax return?
12) Can I ever claim any commuting/travelling expenses (as I am flying back and forth very often) even though my company is treating me US local?
13) Will getting a tax consultant / financial planner help in this situation? Or the situation is too simple/restrictive to do anything?
14) Anything other suggestion?
Thanks,
Andrew
Canadian transferring to US (spouse still staying in Canada)
Moderator: Mark T Serbinski CA CPA
6. Not as you describe. You would need to have them vist you exclusively for you to be considered "deemed non-resident" by treaty.
7. Your 401(k) will basically eat up your RRSP contribution room, but the contributions to 401(k) will be tax deductible in Canada. do NOT use Roth/Roth401(k) or IRA.
8. No
9. You will only pay SS of your US wages, not CPP. There is no way to change this and no way canada can forsce you to pay CPP/EI on these wages.
10. Not really, as none of the expenses will be deductible in canada.
11. Yes.
12. no
13. Not really
14. Be very careful if you ever sell your house, since you may need to file a US tax return (other than 1040NR), and you only get a 250K exemption on cap gains (500K joint). If you are thinking of selling and have bullt up big gain --even tio move within YVR, make sure you do this before meeting any Us tax residency status (ie 183 days in calendar year in US).
The only specific advide you will need is how to make sure you only file 1040NR on your US wages, and nothing else. Otherwise you become like the US coitizen living in canada with the reporting nightmare that goes on every year.
7. Your 401(k) will basically eat up your RRSP contribution room, but the contributions to 401(k) will be tax deductible in Canada. do NOT use Roth/Roth401(k) or IRA.
8. No
9. You will only pay SS of your US wages, not CPP. There is no way to change this and no way canada can forsce you to pay CPP/EI on these wages.
10. Not really, as none of the expenses will be deductible in canada.
11. Yes.
12. no
13. Not really
14. Be very careful if you ever sell your house, since you may need to file a US tax return (other than 1040NR), and you only get a 250K exemption on cap gains (500K joint). If you are thinking of selling and have bullt up big gain --even tio move within YVR, make sure you do this before meeting any Us tax residency status (ie 183 days in calendar year in US).
The only specific advide you will need is how to make sure you only file 1040NR on your US wages, and nothing else. Otherwise you become like the US coitizen living in canada with the reporting nightmare that goes on every year.
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
Hi nelsona,
6. I don't quite understand what you mean by: [You would need to have them vist you exclusively for you to be considered "deemed non-resident" by treaty.]
Do you mean I rarely come back to Canada and they come over and visit me often? Then, I can be considered non-res?
14. I am only holding a L1B visa and I will not stay in US forever. Do you mean that if I live more than 183 days in US, I am subject to capital gain tax if I sold my house in Canada even if the house has nothing to do with my job and it was purchased before I tranfer? Will things get more complicated if I claim interest expense on my mortgage in Canada?
15. Is the 250k capital gain in USA exemption apply to foreigner as well?
Thanks,
Andrew
6. I don't quite understand what you mean by: [You would need to have them vist you exclusively for you to be considered "deemed non-resident" by treaty.]
Do you mean I rarely come back to Canada and they come over and visit me often? Then, I can be considered non-res?
14. I am only holding a L1B visa and I will not stay in US forever. Do you mean that if I live more than 183 days in US, I am subject to capital gain tax if I sold my house in Canada even if the house has nothing to do with my job and it was purchased before I tranfer? Will things get more complicated if I claim interest expense on my mortgage in Canada?
15. Is the 250k capital gain in USA exemption apply to foreigner as well?
Thanks,
Andrew
6. That is correct. By returning regularly to canada you cannot claim that the US is your centre of viatl interest (a trety term which defines residence in your case). THEY would have to visit you.
14. Yes, US residents are taxed on worldwide income, and that includes home. The cap gains exclusion is noyt 100% on home like it is in Canada. The reporting of the interst doesn't matter.
15. it applies only on your home. If your home is in canada and you are a non-residenrt, you don;t report the sale, since it is not US-sourced. US non-residents only report US-source income (work in US, real property in US).
14. Yes, US residents are taxed on worldwide income, and that includes home. The cap gains exclusion is noyt 100% on home like it is in Canada. The reporting of the interst doesn't matter.
15. it applies only on your home. If your home is in canada and you are a non-residenrt, you don;t report the sale, since it is not US-sourced. US non-residents only report US-source income (work in US, real property in US).
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