I have a complicated change in statuses for last 4 years. I am confused with latest developments. But here's a brief history
TN Visa - Mar 2003 - Started working in US - Filed US and CA taxes as dual resident
H1 Visa - 2004 - Filed US taxes for us income. Filed CA taxes with foreign income
GC in Jan 2005 - Filed US taxes for US income. Filed CA taxes with foreign income
[For 2004/2005 - Files married but seperate in US and single in CA as my wife doesn't have a CA SSN number]
I have RRSP in Canada. No property. I also have a CA trading account. My spouse is US citizen - has no status in Canada as i havn't filed any papers.
I also sponsored for my parents in 2002 for CA and they just got clearance. So they will be landing soon in Canada in @2-3 months.
My question is:
1) Am I considered to be Canadian resident - with my residential ties like license, parent sponsorhip, bank a/cs, cc, trading a/c etc? If so, what's the correct way to file?
2) By biggest fear is that I haven't filed anything about my CA RRSP/stock/bank accounts in 2005 taxes which I believe is a big mistake. What forms needs to be filed to rectify this? I haven't done any selling of stocks during this time - thx GOD!!
3) For future, what should I file under? I really don't need to maintain CA residency status. I can provide support to my parents from US.
4) Also I don't need to withdraw my RRSP. Can i leave them in Canada and still trade them from US? I need to figure out how to transfer non-RRSP stocks to US.
5) My passport is expiring in next six months. I am confused as to from where can I file for new - in US [which would mean i'm non-resident]?
Please advise.
regards,
it
Tax + Residency + passport struggle
Moderator: Mark T Serbinski CA CPA
Your various immigration statuses had [u]nothing[/u]to do with your Cdn tax status.
You should not have been filing any Cdn tax return after 2003, which would have been a departure return.
I presume that since you still have a trading account, and have sponsored someone for Cdn PR status, that you are giving a 'fake' Cdn address when convenient. This is not legitimate.
Read other threads on this site about RRSP filing and form 8891.
You should not have been filing any Cdn tax return after 2003, which would have been a departure return.
I presume that since you still have a trading account, and have sponsored someone for Cdn PR status, that you are giving a 'fake' Cdn address when convenient. This is not legitimate.
Read other threads on this site about RRSP filing and form 8891.
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cantousismessy
- Posts: 8
- Joined: Tue Jan 23, 2007 5:59 pm
Tax + Residency + passport struggle
Thx for the reply. I failed to mention above that I was sharing apartment till May 2006. Also I still have two Canadian cars which are in process of being imported to US. I used to work in michigan before, so every weekend, I will drive back to Toronto. In May 2006, I moved my stuff out as I changed work location from MI to South Carolina.
My question is:
1) For US return for 2006- What do I need to file besides TDF 90.22.1 & 8891?
2) For CA return - I believe I will have to file taxes for partial year with date of departure of May 06. Do I need to file any special forms with my tax returns?
3) For CA assests - Stocks - Do I have to sell this or can i transfer this to my RRSP accounts?
I tried searching forums on this and Grasmick but search function is limited and I'm not sure whether I captured everything reading through some of the articles.
My question is:
1) For US return for 2006- What do I need to file besides TDF 90.22.1 & 8891?
2) For CA return - I believe I will have to file taxes for partial year with date of departure of May 06. Do I need to file any special forms with my tax returns?
3) For CA assests - Stocks - Do I have to sell this or can i transfer this to my RRSP accounts?
I tried searching forums on this and Grasmick but search function is limited and I'm not sure whether I captured everything reading through some of the articles.
Gee... anything else you 'failed to mention!?
Questions 1 and 2 are answered elesewhere. Happy browsing. Whatever you do for 2006 in terms of RRSP reporting, you also needed to do for 2003,4,5.
May I ask why you and your spouse file separately in US? Usually this means quite a higher tax bill for both of you. I trust you tried it both ways to see.
As to what to do with your Cdn brokerage account. Since CRA will deeme these sold on departure, you could just as well sell them and bring the money to US. If they are mutaul funds, you will have to do this anyways. You could also transfer your stocks to a US broker.
Your RRSP must be witha Cdn firm that will deal with you while living in US (9 out of 10 will not), so time to find out now. I wouldn't bother trying to transfer your holdings into your RRSP. Selle them off and put the money into your RRSP if you wish (but, given that you are now in US, and RRSP is not deductible in US and is taxable, I wouldn't be putting anymore into it at this point.
Questions 1 and 2 are answered elesewhere. Happy browsing. Whatever you do for 2006 in terms of RRSP reporting, you also needed to do for 2003,4,5.
May I ask why you and your spouse file separately in US? Usually this means quite a higher tax bill for both of you. I trust you tried it both ways to see.
As to what to do with your Cdn brokerage account. Since CRA will deeme these sold on departure, you could just as well sell them and bring the money to US. If they are mutaul funds, you will have to do this anyways. You could also transfer your stocks to a US broker.
Your RRSP must be witha Cdn firm that will deal with you while living in US (9 out of 10 will not), so time to find out now. I wouldn't bother trying to transfer your holdings into your RRSP. Selle them off and put the money into your RRSP if you wish (but, given that you are now in US, and RRSP is not deductible in US and is taxable, I wouldn't be putting anymore into it at this point.
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cantousismessy
- Posts: 8
- Joined: Tue Jan 23, 2007 5:59 pm
Sorry for the long post as I'm trying to digest all this information:
1) US Return - I thought that i don't have to file TDF 90.22.1 & 8891 for 03/04 as I was on TN and H-1 status resp. I only have to declare world income to US if I become a resident - which is Jan 05 when I got my GC [For TN it is mandatory to demonstrate to US that I have no intentions to become resident]. So should I not be filing for 05 only? Also how do I make changes to my previous year returns?
2) CA Return - I called IRA to understand the departure filing process. I was told that I will have to file T1161 to list my property - stocks/car/etc. However I don't need to file T1243 as my total non-registered assets are less then $25k. Bottomline, I need - T1 + T1161. Or are there more forms?
3) You are right about my instutitute not allowing to trade stocks for US residents. So i am in process of switching over to TD as their rep confirmed that they do allow.
4) I was told by my accountant that I have to file as seperate because I can't file joint return -- The US returns needs to be attached to CA return and my total income will be more [as spousal inc adds to it]. My spouse doesn't have CA status, so I was screwed]. I read somewhere in this forums that one can file US return as joint and then on CA return, just calculate a percentage [for total income as well as for tax credits for tax paid in US]. One would think that Accountants will figure all this out for you unless you wake up and do your own research & find out how much did u loose :shock:
5) What - if any - implication I have if i transfer stock to US brokerage account? Can I claim capital losses in 07 tax return - I'm assuming this will be in 07 tax return as I haven't done anything to my CA non-reg invest a/c in 06. Most shares have lost value. In all, captial losses will offset any captial gain from various stocks. Also I think it will be complicated exercise for me to report those transactions in US tax return for 07. So might as well as transfer them in US brokerage account. Problem with later approach is what cost basis should I use when I sell them in future - cost when I bought the shares or cost when they were transferrred to US. One of your posts mentions that one can use either. Any more info will be helpful as I will like to offset captial gain from my US portfolio to the capital loss in CA portofolio.
1) US Return - I thought that i don't have to file TDF 90.22.1 & 8891 for 03/04 as I was on TN and H-1 status resp. I only have to declare world income to US if I become a resident - which is Jan 05 when I got my GC [For TN it is mandatory to demonstrate to US that I have no intentions to become resident]. So should I not be filing for 05 only? Also how do I make changes to my previous year returns?
2) CA Return - I called IRA to understand the departure filing process. I was told that I will have to file T1161 to list my property - stocks/car/etc. However I don't need to file T1243 as my total non-registered assets are less then $25k. Bottomline, I need - T1 + T1161. Or are there more forms?
3) You are right about my instutitute not allowing to trade stocks for US residents. So i am in process of switching over to TD as their rep confirmed that they do allow.
4) I was told by my accountant that I have to file as seperate because I can't file joint return -- The US returns needs to be attached to CA return and my total income will be more [as spousal inc adds to it]. My spouse doesn't have CA status, so I was screwed]. I read somewhere in this forums that one can file US return as joint and then on CA return, just calculate a percentage [for total income as well as for tax credits for tax paid in US]. One would think that Accountants will figure all this out for you unless you wake up and do your own research & find out how much did u loose :shock:
5) What - if any - implication I have if i transfer stock to US brokerage account? Can I claim capital losses in 07 tax return - I'm assuming this will be in 07 tax return as I haven't done anything to my CA non-reg invest a/c in 06. Most shares have lost value. In all, captial losses will offset any captial gain from various stocks. Also I think it will be complicated exercise for me to report those transactions in US tax return for 07. So might as well as transfer them in US brokerage account. Problem with later approach is what cost basis should I use when I sell them in future - cost when I bought the shares or cost when they were transferrred to US. One of your posts mentions that one can use either. Any more info will be helpful as I will like to offset captial gain from my US portfolio to the capital loss in CA portofolio.
1) I suspect, that by filing a 1040NR (since that is what a non-resident files) in the past that you overpaid your US taxes. If you filed a 1040 but did not report your Cdn income, then you have misrepresented your income to the IRS. Whether on TN/H1 or even a tourist, you must file a 1040 if you are in US sufficent time, and youalways (as a Cdn) have the option of filing a normal 1040 like any US resident.
2) yopu need to follw the instructions in the "Emigrants" guide for mCRA, which will outline the extra departure tax you must pay, as well as the reduced deductions.
4). Your accountant was wrong. CRA (and your acct) are quite capable of determining what portion of your joint return was hers and yours. Doing what yoiu did may not have hamed your overall tax, but it might have made your spouse's higher.
I will say, that during the time that you were required to pay taxes in Canada (ie. until May 06), there may have been little value in aggressively reducing your US tax bill, since this would merely increase your Cdn one (by lowering your foreign tax credit). This may be so, but I suspect that your accountant would know how to do this properly anyways.
5) the tax people don't care where the stocks are held in determining the tax. If you sell them before you left canada, you owe tax in Canada. If you sell after leaving canada, you ow to Canada (when you leave) and US when you sell.
You can claim losses on your US return for stocks that you sell after becoming US resident. You must report gains on stock you sell after you became US resident. The losses can be calculated based on their 'normal' cost bassi. the gains can be calculated in either the normal way or by using your deemed disposition price that you will report on your final 2006 return.
2) yopu need to follw the instructions in the "Emigrants" guide for mCRA, which will outline the extra departure tax you must pay, as well as the reduced deductions.
4). Your accountant was wrong. CRA (and your acct) are quite capable of determining what portion of your joint return was hers and yours. Doing what yoiu did may not have hamed your overall tax, but it might have made your spouse's higher.
I will say, that during the time that you were required to pay taxes in Canada (ie. until May 06), there may have been little value in aggressively reducing your US tax bill, since this would merely increase your Cdn one (by lowering your foreign tax credit). This may be so, but I suspect that your accountant would know how to do this properly anyways.
5) the tax people don't care where the stocks are held in determining the tax. If you sell them before you left canada, you owe tax in Canada. If you sell after leaving canada, you ow to Canada (when you leave) and US when you sell.
You can claim losses on your US return for stocks that you sell after becoming US resident. You must report gains on stock you sell after you became US resident. The losses can be calculated based on their 'normal' cost bassi. the gains can be calculated in either the normal way or by using your deemed disposition price that you will report on your final 2006 return.
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... a transfer of stock does not trigger a cap gain or loss in either US or Canada
Your departure from canad in May triggered deemed cap gains and losses regardless of what you do with the stock afterwards.
Your departure from canad in May triggered deemed cap gains and losses regardless of what you do with the stock afterwards.
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cantousismessy
- Posts: 8
- Joined: Tue Jan 23, 2007 5:59 pm
Well ... If I understand this, then train has already left the station for me
i.e. My departure date is May 06. But I didn't sell my stocks - I would have done that if I had knew that I will be paying taxes in CA and US after departure date as I'm will only US resident after departure date.
I'm sure answer is NO but is there any other option that can be explored? I hate the double taxation. What I'm afraid about is that if I report Capital Gain/Loss in US now, they will surely investigate the original transactions. They will question as to how come I didn't report this accounts back in 03/04/05. Not sure what's the penalty associated if I file a revision.
i.e. My departure date is May 06. But I didn't sell my stocks - I would have done that if I had knew that I will be paying taxes in CA and US after departure date as I'm will only US resident after departure date.
I'm sure answer is NO but is there any other option that can be explored? I hate the double taxation. What I'm afraid about is that if I report Capital Gain/Loss in US now, they will surely investigate the original transactions. They will question as to how come I didn't report this accounts back in 03/04/05. Not sure what's the penalty associated if I file a revision.
I don't know hwhat you mean by double taxation. On your 2006 Cdn return, you will report your cap gains and losses as if you sold all your stocks. That is it for Canada on these stocks, forever.
Your 2006 US return will show nothing, since you didn't sell anything. When you do eventually sell, you will have the choice on how to report thse s sales as I outlined above. You will not be double taxed. in fact, done correctly, you may be able to claim the losses from before May twice, opnce on your 2006 return and once on your US return when you fianlly do sell.
For your gains, they will be 'split' between canada and US.
Your 2006 US return will show nothing, since you didn't sell anything. When you do eventually sell, you will have the choice on how to report thse s sales as I outlined above. You will not be double taxed. in fact, done correctly, you may be able to claim the losses from before May twice, opnce on your 2006 return and once on your US return when you fianlly do sell.
For your gains, they will be 'split' between canada and US.
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cantousismessy
- Posts: 8
- Joined: Tue Jan 23, 2007 5:59 pm
Thxs for clarification. i thought that have to report capital gain when I file departure return and then when i actually sell the stock in US, I pay capital gain
Number of share - 1
Bought 2000 - 10
Departure - may 2006 - Price - 14
Actual sell date while in US - 20
So I though I have to pay captial gain tax based on $4 gain during departure in Canada and again $10 gain while in US. From your note, it seems that i can use $14 as cost basis and then pay tax on capital gain of $6.
Number of share - 1
Bought 2000 - 10
Departure - may 2006 - Price - 14
Actual sell date while in US - 20
So I though I have to pay captial gain tax based on $4 gain during departure in Canada and again $10 gain while in US. From your note, it seems that i can use $14 as cost basis and then pay tax on capital gain of $6.
That is how it used to be, but since 2000 those moving to US can use the deemed disposition value asa new basis.
For stocks that have lost, you don't have to do this, so you can double up on your cap loss claim.
So, your first task is to redo your 2005 Cdn (and probably US) return.
For stocks that have lost, you don't have to do this, so you can double up on your cap loss claim.
So, your first task is to redo your 2005 Cdn (and probably US) return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing