Ca+On > Ca+NY?

y18313 · Post by **y18313** » Wed Nov 28, 2012 2:35 am

Thank you for this service, it is very helpful!

I have recently received my IR1 visa and only have a few months to activate it. Unfortunately, due to a recent development I have to delay my move to the US. I have to stay close to home in Ontario to look after an elderly parent. I intend to activate my visa and apply for a re-entry permit so that I may stay in Canada for one more year. I will continue on with my employment in Canada. My questions are as follows:

1. Does NY state recognize CAN/US tax treaty?
2. Would it more feasible if I move to a border city in NY state and commute from there.
3. Will I pay Canadian Fed + NY State taxes then? Would this be lower than Canadian federal + Ontario prov. taxes?
4. Will I lose OHIP coverage either way or only if I move to the border city.

nelsona · Post by **nelsona** » Wed Nov 28, 2012 9:12 am

If you don;t live in NT, you don;t have to pay NY tax just because you have GC. Your re-entry permit maens you don;t have to establish residency.

nelsona · Post by **nelsona** » Wed Nov 28, 2012 10:43 am

But, say, long term you wish to live in NY and work in Ontario.

You will become a CDn non-resident, including all the departure tax etc.You will pay Cdn and Ontario tax on your wages only (becuase your job is in ontario). You will lose your oHIP, unless you get special permission from OHIP for this arrangement; your employer may have to make special arrangements for you thru their insurance. Your car/plates/insuarnce will be from NY.

You will report world income to US (because of your GC), and to NY (because of your residence there), and take credit for Cdn/ON taxes on your IRS return. NY has a specific allowance for Ontario tax as a deduction again NY tax (other states do not have this).

Becasue of the hassles this will cause you, I would, as I said above, merely activate my GC and do what needs to be done to get a Re-entry premit for as long as you possiblty can. This should not make you a NY resident, even if you end up buying a "cottage" there to establish more ties.

y18313 · Post by **y18313** » Thu Nov 29, 2012 1:01 am

Thanks for the info! I didn't realize I would pay ON tax even if I lived in NY!

You mentioned "NY has a specific allowance for Ontario tax as a deduction again NY tax". Can you point me to where I can get more details on this? Is this similar to most other states or is the NY allowance more favorable than other states?

Looking to pick up a property in Fl to build some ties...

nelsona · Post by **nelsona** » Thu Nov 29, 2012 9:04 am

FL doesn't have any state income tax.

NY is the only state I know that specifically allows credit for foreign taxes. It allows it only against provincial tax charged, and only on income you report in NY obviously. You'll need to look this up yourself, I don't delve into each state taxes.

Other states give, at best cfredit for stae tax paid in other states.

y18313 · Post by **y18313** » Thu Jan 24, 2013 12:17 am

Thanks nelsona!

Earlier you mentioned "merely activate my GC and do what needs to be done to get a Re-entry premit for as long as you possiblty can. This should not make you a NY resident, even if you end up buying a "cottage" there to establish more ties"

I have also been told that while away on rentry permit, I should files taxes as a resident to show ties. Do you agree with this and would this have change my residency status where I would end up paying some state tax too?

nelsona · Post by **nelsona** » Thu Jan 24, 2013 3:17 pm

Filing as a US resident is not the same as filing as a NY resident. You have to file a US tax return, but you are not a NY resident. so don't pretend. Re-entry permit is what you need.

y18313 · Post by **y18313** » Thu Jan 24, 2013 10:12 pm

That's the response I was hoping for, so I would like to summarize and confirm my understanding from above, please confirm or correct me if I have gotten something wrong...

1. I will activate my IR visa soon and apply for a reentry permit the same day.
2. I will return to Canada and await a biometric appointment for which I will go back into the US and then wait for the reentry permit to arrive
3. While in Canada for the next two years, I will continue to be a resident of Ontario and have access to OHIP and will not need to submit departure tax return, nor import the car or anything else that goes along with migrating. correct?
4. I will have to submit US tax returns as a resident but will NOT be establishing residency in ANY state? Please confirm.

A few more questions:
1. Should I "transfer within account" my RRSP, DPSP, LIRA etc so that all growth till now is realized before visa activation?

2. Is there a need to communicate my Canadian employer of my new status? I don't see how anything would change from their perspective so they don't need to know, or do they?

3. When submitting a US tax return as a resident, do I not need to declare which state I am resident of?

nelsona · Post by **nelsona** » Fri Jan 25, 2013 12:39 pm

1.v For your RRSP, tes. For your other accounts, they will always be 10% taxable in US, so it does not matter.

2. not yet

y18313 · Post by **y18313** » Sat Feb 02, 2013 8:43 pm

1. How is LIRA treated differently than an RRSP. They should both be treated the same, no?

2. Also, if I activate my visa today but remain in Canada till end of year, am I able to contribute to my RRSP either within the first 60 days or after?

nelsona · Post by **nelsona** » Sun Feb 03, 2013 10:31 am

1. As I said earlier, your lira was a company pension. Company pensions, as opposed to self-funded RRSPs, do not have any contribution basis for IRS purposes, this they are fully taxable in US.

2. Yes. because you still live in Canada. But, in the long-run, you need to move your RRSP to a self-directed broker who will accept US residents, not the banks.