I am a canadian citizen who lived in an offshore jurisdiction from 1999 until 2004. My company relocated me to the US and secured an L1 visa for me in the fall of 2004 to present. Although I continue to be paid out of my offshore jursidiction I have filed US personal taxes. I will be leaving the company in 12 weeks and will be entitled to severance. Am I able to sever my US residency ties go back to the offshore jurisdiction to collect these proceeds on a tax free basis prior to returning to Canada (eg my residency will be that of the offshore jurisdiction and not the US nor Canada).
Secondly What impact will these payments have on my ability to claim unemployment insurance benefits once I return to Canada. Finally is there an income threshold above which you are not eligible for UI benefits (eg I would be claiming from the state of Florida)
Severing US residency
Moderator: Mark T Serbinski CA CPA
I'll let you deal with UI yourself, but you will only be entitled once you return to Canada.
For Cdn taxes, you don't exist until you return, so going to another country avoids Cdn taxation.
For US taxes though, while you will avoid the REQUIREMENT to report the fianl part of your income the moment you leave US (if you establish a tax home elsewhere), doing so will put you in dual-status mode, which you will likely find is a higher tax rate.
You may find that reporting full year 1040 will still yield lowest US tax, regardless of whether you go straight bac k to canada or go first to this mysterious third country.
For Cdn taxes, you don't exist until you return, so going to another country avoids Cdn taxation.
For US taxes though, while you will avoid the REQUIREMENT to report the fianl part of your income the moment you leave US (if you establish a tax home elsewhere), doing so will put you in dual-status mode, which you will likely find is a higher tax rate.
You may find that reporting full year 1040 will still yield lowest US tax, regardless of whether you go straight bac k to canada or go first to this mysterious third country.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Nelson
Thank you very much for your reply. Given the incredible acumen you have shown on this and the Grasmick board I was hoping that you would comment.
If I might indulge you (or anyone else!) with a few more questions
1. In respect of severing the "requirement" to file in the US by establishing a tax home elsewhere what is required. Would it be sufficient to terminate my lease, make arrangements for movers to move items, have my employer notify INS that by Visa is to be terminated?
2. As for a dual status filing approximately how much of a percentage impact will it have assuming that federally I am at the maximum tax rates. The severance and other entitlements I get seem to suggest that it makes the most sense to get these tax free since they will easily exceed my income for the first 5 months.
3. As for automobiles can I get the US exportation approval process done in Florida and then drive the vehicle up to Canada? What impact will the timing of this have on when I assume residency in Canada? Alternatively can I get the vehicle up to Canada as a visitor and then sort after I am up there?
4. Is it possible to go up to Canada to secure a residence now for when we return (mid June) or will this adversely impact my "intent" to return?
Thank you in advance
Thank you very much for your reply. Given the incredible acumen you have shown on this and the Grasmick board I was hoping that you would comment.
If I might indulge you (or anyone else!) with a few more questions
1. In respect of severing the "requirement" to file in the US by establishing a tax home elsewhere what is required. Would it be sufficient to terminate my lease, make arrangements for movers to move items, have my employer notify INS that by Visa is to be terminated?
2. As for a dual status filing approximately how much of a percentage impact will it have assuming that federally I am at the maximum tax rates. The severance and other entitlements I get seem to suggest that it makes the most sense to get these tax free since they will easily exceed my income for the first 5 months.
3. As for automobiles can I get the US exportation approval process done in Florida and then drive the vehicle up to Canada? What impact will the timing of this have on when I assume residency in Canada? Alternatively can I get the vehicle up to Canada as a visitor and then sort after I am up there?
4. Is it possible to go up to Canada to secure a residence now for when we return (mid June) or will this adversely impact my "intent" to return?
Thank you in advance
1. No. you would have to sufficiently indicate the NEW tax home.
2. best to do the taxes both ways and see for your self. To many variables that I nam not getting paid top analyse.
3. A big effect, if this third country is non-treaty with Canada.
4. This will make you resident of canada unless the third country is a treaty-country and yyou meet thier tax terms,
In general, once you leave US and have no standing there, you had best not set foot into Canada unrtil you are ready to live there permanently , or at least until all income events have taken place. Otherwise you have demonstrated intent to return to Canada and have no tax standing elsewhere.
2. best to do the taxes both ways and see for your self. To many variables that I nam not getting paid top analyse.
3. A big effect, if this third country is non-treaty with Canada.
4. This will make you resident of canada unless the third country is a treaty-country and yyou meet thier tax terms,
In general, once you leave US and have no standing there, you had best not set foot into Canada unrtil you are ready to live there permanently , or at least until all income events have taken place. Otherwise you have demonstrated intent to return to Canada and have no tax standing elsewhere.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing