Hi guys,
I have just accepted a new opportunity in the US and I have a few questions that I would really appreciate if I can get some insight on.
1) I do not have any ties to canada (no spouse, no property, no car). I am renting my current place under my name and my roommate. My roommate does not want to change the lease since the rent will go up if we do. He will talk repsonibility for all payments and he has no problems giving a written documentation of evacuating the apartment. Does allow me to be a non-resident of canada?
2) I am going on a TN visa. I heard that I should not apply for non-residency since it conflicts with the purpose of the TN visa. is this true?
3) Once I claim non-residency, can I ever be a resident of canada again?
4) I would like to keep my bank accounts in Canada and just one credit card. I can convert my driver's license to NY one but I really do not care since I would not drive in NY. Does that affect my non-residency status?
Thank you so much...
Cdn Relocating to the US
Moderator: Mark T Serbinski CA CPA
1. A letter from your roommate induicating he is taking over the lease is sufficient for you to be considered non-resident, if it is ever questionned. This is good practice anyways, regardless of tax issues, to protect yourself after you leave.
This will make you non-resident on the day you leave, you will file a departure return next spring (2006).
2. Tax residency and immigrant intent are 2 separate issues. You will not be considered having immmig intent until you file an I-485 (or marry a US citizen).
3. C'mon. You are a CDn citizen; you can go back any time.
4. Keeping a bank account in canada is fine (tell them that you are non-resident so that they will tax your intrest). You should get your NY DL, since otherwise you could be viewed by CRA as 'intending' to go back to Canada.
The 'Emigrants' Guide from CRA has useful information. Read it.
<i>nelsona non grata</i>
This will make you non-resident on the day you leave, you will file a departure return next spring (2006).
2. Tax residency and immigrant intent are 2 separate issues. You will not be considered having immmig intent until you file an I-485 (or marry a US citizen).
3. C'mon. You are a CDn citizen; you can go back any time.
4. Keeping a bank account in canada is fine (tell them that you are non-resident so that they will tax your intrest). You should get your NY DL, since otherwise you could be viewed by CRA as 'intending' to go back to Canada.
The 'Emigrants' Guide from CRA has useful information. Read it.
<i>nelsona non grata</i>
Hey M.
I'm sure others will give more indepth info, but I can answer a couple of these with my experience.
1. I'd be careful on this one. May be okay, but if you can still go back to it as you're name's still on the paper?
2. The key here is that there's rules for your TN Visa and then there's rules for determining residency for taxing you.
The TN simply states that it's only good for up to 1 year. Of course, as many do, you can renew with your employer in the US, etc. but each time it's a NEW TN.
Now, if you had no ties to Canada, then you can see that if you get a new TN for a couple of years in a row, then you can easily be a US resident / Canadian non-resident without causing any problems with getting the TNs.
If you fill-in all the correct forms for leaving Canada and becoming a non-resident, then there's no problem with the TN - again 2 different things - one's for a visa the other's for taxing you. Of course, you may have to file in both countries until you're not a resident of Canada as well.
3. Yes, you can become a resident of Canada again, but I've realized, for me atleast, the more important thing will be becoming a non-resident of the US. It's easy to become a resident of Canada after you've worked as a TN in the US for a few years - basically, just go home, start working, and you're there .. but the US still considers you a resident via a couple of different methods (ie: days per years, etc.) and there could well be a point in time where you're a resident of both countries and have to fill in tax forms for both countries. Again, for me, it's getting rid of my US residency that will take more effort when I return to Canada.
4. When I become a TN originally (have been one now for about 9 years), I got rid of absolutely any ties (driver's license, credit cards, etc.) with the exception of one bank account that's used for some rental real estate I own in Canada. That's it. I've heard that if there's anything RevCan could find that will make you a resident - and therefore taxable to them - they could well use it. So I'd get rid of the lot, but I'm just being careful. In fact, one could argue about the 1 bank account I kept, but I'm not too worried about it with my situation now.
I'm sure others will give more indepth info, but I can answer a couple of these with my experience.
1. I'd be careful on this one. May be okay, but if you can still go back to it as you're name's still on the paper?
2. The key here is that there's rules for your TN Visa and then there's rules for determining residency for taxing you.
The TN simply states that it's only good for up to 1 year. Of course, as many do, you can renew with your employer in the US, etc. but each time it's a NEW TN.
Now, if you had no ties to Canada, then you can see that if you get a new TN for a couple of years in a row, then you can easily be a US resident / Canadian non-resident without causing any problems with getting the TNs.
If you fill-in all the correct forms for leaving Canada and becoming a non-resident, then there's no problem with the TN - again 2 different things - one's for a visa the other's for taxing you. Of course, you may have to file in both countries until you're not a resident of Canada as well.
3. Yes, you can become a resident of Canada again, but I've realized, for me atleast, the more important thing will be becoming a non-resident of the US. It's easy to become a resident of Canada after you've worked as a TN in the US for a few years - basically, just go home, start working, and you're there .. but the US still considers you a resident via a couple of different methods (ie: days per years, etc.) and there could well be a point in time where you're a resident of both countries and have to fill in tax forms for both countries. Again, for me, it's getting rid of my US residency that will take more effort when I return to Canada.
4. When I become a TN originally (have been one now for about 9 years), I got rid of absolutely any ties (driver's license, credit cards, etc.) with the exception of one bank account that's used for some rental real estate I own in Canada. That's it. I've heard that if there's anything RevCan could find that will make you a resident - and therefore taxable to them - they could well use it. So I'd get rid of the lot, but I'm just being careful. In fact, one could argue about the 1 bank account I kept, but I'm not too worried about it with my situation now.
Russ is genarally correct in his assessment.
I would disagree on his take on how 'difficult' it would be to stop being a US resident for someone with no Green Card.
The IRS rules are quite simple: If you leave and become a tax resident elsewhere, you've left. Simple. No requirement to sell home, no need to divest of anything.
Canada makes this easy, since they will claim you as a tax resident on DAY ONE of your return.
The treaty also specifies that non-US GC/Citizens are almost 'by default' Cdn residents unless they have nothing in Canada.
That is not to say that the final year tax return is easy to prepare, just that it is very easy to determine when that moment occurs.
Oh, and there are no 'correct forms' to fill in when he leaves. One should NOT file the NR73 when leaving unless and until CRA requires it (which is rarely). He will simply file a 2005 tax return next spring, indicating the date that he left, and doing what is outlined in the 'Emigrants' Guide.
<i>nelsona non grata</i>
I would disagree on his take on how 'difficult' it would be to stop being a US resident for someone with no Green Card.
The IRS rules are quite simple: If you leave and become a tax resident elsewhere, you've left. Simple. No requirement to sell home, no need to divest of anything.
Canada makes this easy, since they will claim you as a tax resident on DAY ONE of your return.
The treaty also specifies that non-US GC/Citizens are almost 'by default' Cdn residents unless they have nothing in Canada.
That is not to say that the final year tax return is easy to prepare, just that it is very easy to determine when that moment occurs.
Oh, and there are no 'correct forms' to fill in when he leaves. One should NOT file the NR73 when leaving unless and until CRA requires it (which is rarely). He will simply file a 2005 tax return next spring, indicating the date that he left, and doing what is outlined in the 'Emigrants' Guide.
<i>nelsona non grata</i>
You <i>were </i> asked for it, so you had to file.
The MRQ asking forit is the same as CRA.
I left in 2000, from QC, and my wife continued to be employed there (although not living in Canada) for six months thereafter.
No NR73 was requested from either CRA or MRQ and no issue was taken to our chosen departure date.
Like I said elsewhere, in the late 90's MRQ was getting really hot about residency issues, especially becoming non-resident, or becoming resident in other provinces (ie. the population of Alexandria, ON was mysteriously rising). This has subsided.
<i>nelsona non grata</i>
The MRQ asking forit is the same as CRA.
I left in 2000, from QC, and my wife continued to be employed there (although not living in Canada) for six months thereafter.
No NR73 was requested from either CRA or MRQ and no issue was taken to our chosen departure date.
Like I said elsewhere, in the late 90's MRQ was getting really hot about residency issues, especially becoming non-resident, or becoming resident in other provinces (ie. the population of Alexandria, ON was mysteriously rising). This has subsided.
<i>nelsona non grata</i>
Nelson. Just a couple of questions referring to what you said about it's easy getting residency in Canada / non-residency in U.S.
In my case, I've got lots of ties to the US in the way of driver's license, bank accounts, E*trade, IRA, credit cards, address of course, etc. and in Canada, some rental properties that have been managed without my interaction by a management company with all annual forms filled in, and that's it there.
I would like to return to Canada as become a resident there again (am a CDN citizen) and become a non-resident of the U.S. Let's say I do it on Jan/1/2006.
As I've been writing off depreciation against my rentals in the US, and the properties should have increased in the last 10 years, I would like the option of being able to sell any of the properties in the next couple of years, but definitely want the US non-resident status so I don't have to file and therefore (as discussed in a different forum with you), I don't have to pay back the depreciation taken or the capital gain.
So, in Dec/30/2005, if I closed down most of my bank accounts but kept one, kept my IRA, closed all credit cards but one, etc. and then in early Jan/1/2006, I applied for a Provincial DL, opened a Canadian bank account, and created some income to me pretty quickly, would I not have to wait the approx. 3 years (ie: counting the number of days in the previous 3 years) I was thinking I'd have to go through before being a US non-resident? I know there's a test of some kind that determines which country you're more tied to, but thought that would not be a slam-dunk and would have to be careful to use it.
On the same subject, I'd of course file my US 2005 taxes in early 2006, but assuming no more US income, would I then not have to file any 2006, 2007, etc. US taxes in this scenario?
Thx. again.
In my case, I've got lots of ties to the US in the way of driver's license, bank accounts, E*trade, IRA, credit cards, address of course, etc. and in Canada, some rental properties that have been managed without my interaction by a management company with all annual forms filled in, and that's it there.
I would like to return to Canada as become a resident there again (am a CDN citizen) and become a non-resident of the U.S. Let's say I do it on Jan/1/2006.
As I've been writing off depreciation against my rentals in the US, and the properties should have increased in the last 10 years, I would like the option of being able to sell any of the properties in the next couple of years, but definitely want the US non-resident status so I don't have to file and therefore (as discussed in a different forum with you), I don't have to pay back the depreciation taken or the capital gain.
So, in Dec/30/2005, if I closed down most of my bank accounts but kept one, kept my IRA, closed all credit cards but one, etc. and then in early Jan/1/2006, I applied for a Provincial DL, opened a Canadian bank account, and created some income to me pretty quickly, would I not have to wait the approx. 3 years (ie: counting the number of days in the previous 3 years) I was thinking I'd have to go through before being a US non-resident? I know there's a test of some kind that determines which country you're more tied to, but thought that would not be a slam-dunk and would have to be careful to use it.
On the same subject, I'd of course file my US 2005 taxes in early 2006, but assuming no more US income, would I then not have to file any 2006, 2007, etc. US taxes in this scenario?
Thx. again.
Lest, we confuse people, it should be pointed out that you are talking about CANADIAN rental property that you have owned while being resident in US.
In general, none of these residency ties matter in US taxation, as it does in Cdn taxation. Presence, and possession of a GC or citizenship are the keys. No physical presence, no GC and no Citizenship, and you are likely a US NR for tax purposes.
The Substantial presence test does not apply when you leave. If you are an alien and you leave, you are by default resident only until the last day of that year, and this date can be moved up to the departure date as long as you make a tax home elsewhere (like in Canada).
<i>nelsona non grata</i>
In general, none of these residency ties matter in US taxation, as it does in Cdn taxation. Presence, and possession of a GC or citizenship are the keys. No physical presence, no GC and no Citizenship, and you are likely a US NR for tax purposes.
The Substantial presence test does not apply when you leave. If you are an alien and you leave, you are by default resident only until the last day of that year, and this date can be moved up to the departure date as long as you make a tax home elsewhere (like in Canada).
<i>nelsona non grata</i>
Nelson.
My fault if I didn't specify it correctly.
All my real estate is in Canada, bought when I was a Canadian resident before coming to the US.
I meant that all the depreciation I've taken against the Canadian properties on my US taxes does not have to be recaptured to the US if I sell when a resident of Canada / non-resident of US, correct?
And I thought it would follow that if I sell the properties say in a few years after becoming a Canadian resident again / non-resident US then as I wouldn't be filing in the US (as a non-resident of the US), then they also don't need to know about the capital gain of the properties. Correct?
Thx.
My fault if I didn't specify it correctly.
All my real estate is in Canada, bought when I was a Canadian resident before coming to the US.
I meant that all the depreciation I've taken against the Canadian properties on my US taxes does not have to be recaptured to the US if I sell when a resident of Canada / non-resident of US, correct?
And I thought it would follow that if I sell the properties say in a few years after becoming a Canadian resident again / non-resident US then as I wouldn't be filing in the US (as a non-resident of the US), then they also don't need to know about the capital gain of the properties. Correct?
Thx.
Nelson and Russ, thanks so much for your replies.
I search all over for answers to these RRSP questions but I could not find any so I would appreciate if I can get your thoughts.
1) in 2004 tax year my avg tax rate is less than 25%, does it make sense for me to pull money out of my rrsp until I reach the 25% limit. The reason I am thinking this is because of the 25% on non-resident rrsps wirthdraws and taxation as foreign income im the USA. This logically makes sense to me but I am not sure what i am missing.
2) What's the foreign income taxation rate for a US resident? and is there any personal allowance?
3) if you pull rrsp money out in 2005 (before filling 2004 taxes), can you claim in it under 2005?
Thx so much again...
I search all over for answers to these RRSP questions but I could not find any so I would appreciate if I can get your thoughts.
1) in 2004 tax year my avg tax rate is less than 25%, does it make sense for me to pull money out of my rrsp until I reach the 25% limit. The reason I am thinking this is because of the 25% on non-resident rrsps wirthdraws and taxation as foreign income im the USA. This logically makes sense to me but I am not sure what i am missing.
2) What's the foreign income taxation rate for a US resident? and is there any personal allowance?
3) if you pull rrsp money out in 2005 (before filling 2004 taxes), can you claim in it under 2005?
Thx so much again...
2004 is past, so you cannot take money out now and claim that it was taken out in 2004. Too late.
As to any 2005 withdrawal, it will be best to simply take the 25% tax, since you are now going to be working.
Foreign income is included like all other income in US. Except that your RRSP will not be 'fully' taxed, only the growth after you leave is taxable.
Your third q was already answered: if you pull it out any day in 2005 it MUST be reported in 2005.
<i>nelsona non grata</i>
As to any 2005 withdrawal, it will be best to simply take the 25% tax, since you are now going to be working.
Foreign income is included like all other income in US. Except that your RRSP will not be 'fully' taxed, only the growth after you leave is taxable.
Your third q was already answered: if you pull it out any day in 2005 it MUST be reported in 2005.
<i>nelsona non grata</i>