US or CDN tax - contract in the US

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Moving2Canada
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Joined: Thu Jun 25, 2015 12:58 pm

US or CDN tax - contract in the US

Post by Moving2Canada »

My family and I are Canadian and have lived/worked in US for 10 years. We are looking to move back to Canada next year. My family wants to move mid year (summer) but my current employer would like me to finish my contract through the end of December.

1) Would my income be taxed in US (and not in Canada), even though I would have ties for part of the year in Canada? I saw another post about spouse not getting a DL or joining church, etc. but my kids would need to go to school.

2) If I finished my contract early in September/October, could I move to Canada then and have my 2019 income taxed in US or would my Jan-Sep income be taxed in US and, if any, Oct-Dec income taxed in Canada?

Thanks. If this question is on another thread, please advise. I couldn't find it but I may not have been searching correctly.
nelsona
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Re: US or CDN tax - contract in the US

Post by nelsona »

Whatever income you make after YOU move will be taxed in Canada, and will also be taxed in US, since you will want to file joint full-year 1040 for that year anyways.

Who gets to tax the income from the second part of the year first (and thus who gives you credit) will depend on the arrangement you make with your employer, whether you do the work in Canada or US, and whether you remain an employee or become a contractor.
The simplest would be to become a contractor.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2Canada
Posts: 20
Joined: Thu Jun 25, 2015 12:58 pm

Re: US or CDN tax - contract in the US

Post by Moving2Canada »

Thank you.

By "YOU", you mean me (and not my wife and kids), correct? So if they move in the summer but I remain in the U.S. through Dec 31, then only the U.S. would tax, correct? It won't make sense for me to become a contractor just for the last 4-5 months of the year (from the perspective of contracts, etc.).

My fear was that if my family moved in August/September (even though I didn't until Dec 31) that CRA might determine that I have ties in Canada and thus should be taxed in Canada as well. My employer would like me to remain in the U.S. through the end of the year.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: US or CDN tax - contract in the US

Post by nelsona »

Yes, YOU will not be considered Cdn resident if YOU do not move back, AND your family visits you in US rather than you visit them.
But if you go to Canada on long weekends, etc, that along with them living in Canada will make you resident of canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2Canada
Posts: 20
Joined: Thu Jun 25, 2015 12:58 pm

Re: US or CDN tax - contract in the US

Post by Moving2Canada »

Thank you for the clarification.

What about deferred payments? For example, I work until Dec 31 in the U.S. but don't receive my paycheque until January 15 of the following year. Is that money taxed in the U.S. only?

What about bonus earned in one year (while living/working in the U.S.) and received (after move to Canada) the following year or under vesting schedule the following 3 years? (vesting is not contingent on remaining employed but rather as a clawback provision, if necessary)

Is there a way to structure bonus payments so they will be taxed only where they were earned?
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: US or CDN tax - contract in the US

Post by nelsona »

Money received after moving to Canada will be taxed in both countries. If yearly Amount less than 10K will be exempt from tax in US by treaty. You will need to apply for refund on 1040NR.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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