TN leaving US back to Canada - filing

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marie999
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TN leaving US back to Canada - filing

Post by marie999 » Tue Dec 04, 2018 6:17 pm

I've been working in the US for a number of years on TN visas. I am returning back to Canada 12/2018, but not exactly sure of the differences between the dates I could choose to return.

1. If I return on: Dec/15/2018, does this mean I will file a 2018 1040 up to 12/15/18?
2. If so, do I file the 1040 right away? (such as on 12/15/18) or can I file a few months later once I have all info for 2018?
3. Would I also file a 1040NR for 12/16/18 - 12/31/18 by 04/15/2019 showing no US income?
4. And finally let the IRS know I've gone for good by filing a 1040NR for 2019 on 04/15/2020?

5. If instead I return on: Dec/31/2018, I file a 2018 1040 up to 12/31/2018?
6. And let the IRS know I've gone for good by filing a 1040NR for 2019 on 04/15/2020? And that's it?

Sorry for the point form but wanted to determine what's required. My first concern is when exactly I file the 2018 1040.

Thank you.

nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Tue Dec 04, 2018 11:19 pm

You will file a full year 1040 in US, because there is no point doing otherwise. You are allowed to do this regardless of the date you leave. You would not have to file anything in US for 2019 if you had no US income.

For Canada, -- if you establish a residence in December -- you will file a "newcomer" return for 2019, for the 15 days you are in Canada, especially if you have a Roth, since you are required to report its existence in your first year in Canada. You would also need to report any income you received from US in that last 2 weeks.
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nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Tue Dec 04, 2018 11:20 pm

You file your 1040 at usual time. In fact, because you would be living abroad you get an extra two months.
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marie999
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Re: TN leaving US back to Canada - filing

Post by marie999 » Wed Dec 05, 2018 2:48 pm

Thank you Nelson. Really appreciated.

I have a couple of other concerns here as well if you don't mind.

1. I have a rental property in Canada that I had before moving to the States on TNs. I have been filing NR4/NR6 in past years. I assume that if I return near the end of December 2018, then I do not file the NR6 for 2019 as I'll be a resident as of Jan/1/2019.

2. When you mention a 'newcomer' return I see there's a form (T4055) with lots of good information. However, no actual tax form.
So, I assume that by April 30, 2019, I still file the Canadian forms I have been filing for years (Section 216, T1159, T776, etc.) for 01/01/2018 - 12/15/2018 and also a standard T1 for 12/16/2018 - 12/31/2018? (nothing sooner announcing I'm here now?).

3. Unwinding deemed disposition. I believe I have to file a form saying I don't want the capital gains on the rental house being taxed at the time I become a Canadian resident but at the time of later sale some day which I think is 'deemed disposition'. I thought I read somewhere that it had to be done within 30 days of becoming a Canadian resident again but I can't find the info or the form looking over the CRA site. Is this correct?

4. This may be an unusual one. In the Word version of the T4055 pamphlet, for deemed disposition it states:
"If you ceased to be a resident of Canada after October 1, 1996, and you later re-establish Canadian residency for income tax purposes, you can elect to make an adjustment to the deemed dispositions you reported when you emigrated from Canada."

It was really close to that October 1, 1996 date when I ceased being a resident of Canada. Is there any advantage of looking up if I left before October 1, 1996 to do with 'deemed disposition' or is it the same or better to be after that date?

Thank you again.

nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Thu Dec 06, 2018 1:09 pm

1. The 216 rules apply until you become Cdn resident. Once that happens, stop the withholding etc. File 216 up to your move back date.
2. Sounds about right.
3. For your former residence, there was never deemed disposition. You are talking about "change of use" regulations. You can avoid having to pay cap gains now, but only if you did not depreciate your rental in Canada (like you had to in US). Look at change in use rules.
4. For investments that you paid tax on when you left because of deemed disposition, you can elect to unwind that, as if deemed disposition never happened. You can only do this if you STILL OWN the investment, and you would only do this if your investment has LOST value since you left, since you are agreeing to use the original cost basis when you do sell, rather than the value when you returned to Canada.

So, for example, you bought ABC for $10, and it was worth $20 when you left. It is now worth $30 when you return. You would NOT unwind deemed dispo in this case, since your cost basis for future sale would be $10 instead of $30, but they would only refund you the tax you paid on the $10 deemed gain .
On the other hand, if you bought ABC for $10 and it was worth $20 when you left. It is now worth $15. You could elect to get the tax back on that $10 deemed gain, and your basis would be $10 instead of $15, so you would now be $5 ahead.

For the record, how long ago did you leave Canada? unwinding is not often done by individual investors, since they either sell after leaving, or have made gains. and it is always good to sell losers before leaving US anyways, for US tax purposes.
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marie999
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Re: TN leaving US back to Canada - filing

Post by marie999 » Thu Dec 06, 2018 2:36 pm

Thank you Nelson.

Sounds like #3 may be a problem for me.
My CDN accountant has indeed been depreciating the property for the last number of years. So if the 'change of use' doesn't change (ie: will still be a rental and not my primary residence when I move back to Canada), do I have to pay back all the depreciation plus the capital gains on the rental unit?

ie: original price: $100K
today price: $200K
depreciation taken: $30K

Would that mean I would have a capital gain of $100K and $30K depreciation that has to be paid back once I become a CDN resident again?
Or can I file a form to put that off both depreciation and capital gains until I sell the unit some year in the future?
Or if that's not possible, can I pay back the depreciation, file a form and have the capital gains put off until sale date?

I thought there was one but don't know if it would apply to me. I have looked over the various forms but can't see answers to this.

Thanks.

marie999
Posts: 12
Joined: Thu Jun 01, 2017 6:26 pm

Re: TN leaving US back to Canada - filing

Post by marie999 » Thu Dec 06, 2018 4:23 pm

One other note - I bought this property in Canada before moving to the US and it has always been a rental property. Thx.

nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Thu Dec 06, 2018 5:12 pm

well then the only issue is if you make it your home.
Depreciation lowers your cost basis, increasing your gain.

I'll let your acct figure that out.
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marie999
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Re: TN leaving US back to Canada - filing

Post by marie999 » Thu Dec 06, 2018 5:16 pm

No capital gains or depreciation at time of coming back to Canada.

That's great Nelson, thanks.

nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Thu Dec 06, 2018 5:24 pm

No cap gains or depreciation if you don't change its use.
Nelsona Non grata. Non pro. Search previous posts.

marie999
Posts: 12
Joined: Thu Jun 01, 2017 6:26 pm

Re: TN leaving US back to Canada - filing

Post by marie999 » Wed Dec 12, 2018 3:04 pm

Great info, thanks again.

Just to be clear though, for the Canadian side:
a. for that last few weeks I will be in Canada for 2018, I would then file a 2018 Canadian tax return in 2019?
b. for the rental property, I would also file a 2018 Canadian tax return as a non-resident, up to when I become a Canadian resident in Dec/2018?
c. when I return to Canada, I am bringing nothing back (no car, furnishings, etc), so all I have to do is hand the Canadian immigration officer a paper copy of my TN, tell them I'm now becoming a Canadian resident, and ask them to send the paper TN to the US immigration side?
d. and that's it as far as Canada is concerned in filing any paperwork until Apr/2019 tax time?

Thank you.

nelsona
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Re: TN leaving US back to Canada - filing

Post by nelsona » Wed Dec 12, 2018 3:25 pm

a. yes, as a newcomer with an arrival date sometime in Dec. It will include any rental income you get after that date.
b. you will still have to file a 216 for the income and expenses you incurred in 2018, that are not on your newcomer return.
c. If you are bringing nothing back you just have to hand them your TN (they know what to do with it). But if you are bringing things back -- even if it is only later -- (including your car, etc), you need to file a form with CBSA to declare any of these items as newcomer/returning goods to avoid any issues.
d. Your newcomer return and your 216 return will have a filing deadline that you can look up in the guide for those returns.
Nelsona Non grata. Non pro. Search previous posts.

marie999
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Joined: Thu Jun 01, 2017 6:26 pm

Re: TN leaving US back to Canada - filing

Post by marie999 » Thu Dec 13, 2018 3:30 pm

Thanks Nelson.

I have an IRA with TD Ameritrade.

In other threads I see you saying that I must get a letter from them saying they will still hold the account in the US as a Canadian non-resident.
I have indeed got that letter from them now so I wanted to check:

1. Is that all I have to do as far as US side is concerned? It sounds like they simply change my address to my soon-to-be Canadian address and there's no forms to fill in or reporting to the IRS?
2. I plan on not touching the IRA for a number of years so until then do I have to file anything on the US side (ie: 1040NR) or note it on the Canadian side? Once I start taking periodic payments I see you've said that a 1040NR should be filed annually due to the withholding percent, but just wanted to make sure nothing required before withdrawing money.

Thank you again.

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