Cdn Couple 1st year choice to file in Cal. as Residents

jgoveas · Post by **jgoveas** » Wed Apr 01, 2009 3:09 pm

Ha! Cool! That's good to know. I guess we've been married less than a year and I had income from Canada for half this year so maybe it may not have made such a difference this year. But that's definitely a neat thing to do when we go back. Thanks again!!

nelsona · Post by **nelsona** » Wed Apr 01, 2009 3:21 pm

Certainly being newlywed and temp move hasn't left much time for long-range fiscal planning.

jgoveas · Post by **jgoveas** » Wed Apr 01, 2009 3:25 pm

LOL clearly not! However, I have you to thank for not totally messing it up next year! Then again, with 50% divorce rates long range fiscal planning is hard to justify...I kid, I kid. The spousal RRSP move is definitely neat! If we get tempted by the sun again years down the line we'll be laughing thanks go you!

jgoveas · Post by **jgoveas** » Thu Apr 02, 2009 8:10 pm

nelsona, if you're still here, I re-read the emigrant's guide this morning and it seems 'Property' is also considered stocks in mutual funds. My husband unfortunately has over 25,000 (quite a bit more actually :() in mutual funds back home that aren't sheltered under RRSPs. Given the fact we would have to deem 'dispose' of them and considering we want to move back to Canada in July, is it better to simply file the US returns as non-residents (this might be difficult considering we broke ties with Canada) and then file as residents in Canada declaring US income and credits on taxes? Or do we not have a choice and we have to file as emigrants of Canada?

Thanks in advance again.

nelsona · Post by **nelsona** » Fri Apr 03, 2009 1:57 am

You have no choice.

When you return to Canada, you can undo the deeming (if to your advantage).

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 10:32 am

So we CAN undo it! yay! We have over 120,000 in stocks. By we I mean he. And since June 23rd was when it was highest (he's since lost a lot of money obviously after the crash) and we were panicking because deem disposing them would inflate the value incredibly since they've lost about 30% since. I will read more about undoing it next year.

nelsona · Post by **nelsona** » Fri Apr 03, 2009 11:04 am

Realize as well that there is deemed aquisition when returning to canada, so non-sheltered investments are considered BOUGHT on the day you return as well.

This would effectively erase all the cap losses incurred while you were away.

If he jhad actually sold them and rebought he would be in trouble. But the deemed disposition is not a trua sale, and thus iyt is possible, if one returns to canad awith the same invstments (very important) that the deeming can be undone.

So DON'T sell these losing items before returning to canada!

And don't sell any winners either otherwise you will be taxed in US and cali on them. Best to wait until 2009 if possible.

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 11:10 am

that makes sense! however, given that these were in mutual funds and I'm guessing the fund manager has played around with these after we left (his dad is co-owner of the funds so technically they seem to think they can act on these even though we're NRs) the exact stocks might have changed when we come back to canada. Will this be a huge problem for undeeming? or we simply lose on stocks already sold (we have to pay the tax on the deemed price on them).

nelsona · Post by **nelsona** » Fri Apr 03, 2009 11:45 am

Yes this will be a problem. Once they are sold, the deeming can't be undone.

Why would an adult have a joint investment account with a parent?

Any trades that were made are reportable in US., so hubby better kkep track of what is being done in the account!

In any event, you should have to actually PAY the deemed disposition tax until you actually sell the investments, so for the purposes of your 2008 tax return, pay particular attention to form T1244. This allows one to defer departure tax until later (ie. when some of it was sold). If you then unwind (that's the technical term) your previous deemed disposition, little tax has to change hands.

nelsona · Post by **nelsona** » Fri Apr 03, 2009 11:46 am

correction: your should NOT have to pay the tax right away.... by deferring.

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 11:50 am

"Why would an adult have a joint investment account with a parent?" Preaching to the choir ;)

Yes, I will be filling out form T1244 but will check to see if any of the stocks got sold. I'm guessing not many if they lost their worth but as you said, hubby needs to be paying attention to the fund...will throw something at him this evening.

Thanks nelsona!

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 3:32 pm

nelsona, sorry to beat this to death but my husband called up his investor to ask for the specifics to fill in the deemed disp. forms etc and the investor said that he only has 76 microsoft shares and the rest are all in mutual funds. I told him that the stocks in mutual funds count and need to be reported (that's what the lady at the CRA told me) and the investors says to him "mutual funds aren't stocks". I'm not insane right? Mutual funds are made up of OF stocks that have to be reported deemed disposed right?

Thanks again!

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 3:33 pm

nelsona, sorry to beat this to death but my husband called up his investor to ask for the specifics to fill in the deemed disp. forms etc and the investor said that he only has 76 microsoft shares and the rest are all in mutual funds. I told him that the stocks in mutual funds count and need to be reported (that's what the lady at the CRA told me) and the investors says to him "mutual funds aren't stocks". I'm not insane right? Mutual funds are made up of OF stocks that have to be reported deemed disposed right?

Thanks again!

nelsona · Post by **nelsona** » Fri Apr 03, 2009 8:07 pm

ANYTHING that is not Cdn real estate or RRSPs must be reported.

jgoveas · Post by **jgoveas** » Fri Apr 03, 2009 8:10 pm

Thank you! How can investors be that stupid??!

Ok, last question I promise on this: can we report the value of the mutual funds as a whole (bought date and 'deemed disposed date') or do we have to name each stock within the mutual funds which is what the CRA lady seemed to say.

THANK YOU!