Dual citizen living in Canada working in the US

canampilot · Post by **canampilot** » Thu Apr 19, 2007 9:42 pm

My wife and I have the opportunity to move back to B.C after living in the US for several years. I am happy with my company as they will allow me to reside in Canada and still continue to work for them(provided I aquire US citizenship). Questions;
1) Could someone please explain my tax options while residing in Canada?
2) What kind of capital gains must I pay for selling my US home in order to purchase a canadian residence?
3) We both plan on working part time in Canada as well but the main source of income will be from the US.Is this a problem?

nelsona · Post by **nelsona** » Sat Apr 21, 2007 3:08 am

1) you will report all your income to Canada, BC and US. A series of complicated foreign tax credits will result in you paying BC taxrates.

2)You will not pay any cap gains in Canada, so long as you sell your US home at approx the same time that you buy your Cdn one. Any US tax will depend on you having lived in your current residence 2 of 5 years, and your gain is less than $500K.
3) not a problem, see 1.

canampilot · Post by **canampilot** » Sat Apr 21, 2007 8:39 am

Thanks,Nelson.
Some people say I should just move back to Canada,forget the USC idea and take a similar job in Canada. Then should I ever want to move back to the US or take a job as an independent contractor reapply for a GC through my wife who is a USC.
What if I only work a small amount of time in the US,is USC worth it? I guess only I really know the answer to that but as far as tax advantages/disadvantages how do you see it?

nelsona · Post by **nelsona** » Sat Apr 21, 2007 11:28 am

If you've lived in the US for several years, you may be penalized for wanting to give up your GC anywys, so you might as well have all the rights of USC.

Besides, your wife will always have to file in US, sometimes with you, so you aren't going to be ridding yourself of US tax regime.

Get citizenship, IMO.

canampilot · Post by **canampilot** » Sun Apr 22, 2007 7:46 am

I have not heard of this penalization for surrendering a GC,please explain.
On another thread it was mentioned how the benefits of being a dual citizen and working as an independent contractor for a US company can be beneficial. That and the benefits of US SS appeal to me. So far so good with keeping the USC application. Can anyone tell me why they renounce USC to become an Expat?
If I do aquire USC I plan on transfering my 401K to an RRSP. Any idea how much this costs to do? Also, I plan on having no assets in the US if my principle residence is in Canada. Yes Canadian tax is higher but with 3 dependents receiving Child tax credit, cheaper med/dental,ui, CPP and flexible RRSP's I can see dual citizenship is very advantageous. Also,in the future I can collect US SS and CPP as a dual in Canada??...interesting.

nelsona · Post by **nelsona** » Sun Apr 22, 2007 8:38 pm

I would lokk at expat tax on IRS website.

nelsona · Post by **nelsona** » Sun Apr 22, 2007 8:41 pm

There is no advantage in transferring 401(k) to RRSP in Canada.

canampilot · Post by **canampilot** » Sun Apr 22, 2007 9:24 pm

Ok so can I switch my 401K to an IRA?
Given the info these threads are providing I am not in favor of surrendering my GC -especailly if my job as a pilot(and licenses) are compatible for both countries.

nelsona · Post by **nelsona** » Mon Apr 23, 2007 7:55 am

Obviously you can switch your 401(k) to an IRA, presumably after your current employer (most firms won't allow it while still working there).

canampilot · Post by **canampilot** » Mon Apr 30, 2007 1:56 pm

You are absolutely correct,Nelson. My employer just informed me that unless I'm terminated for employment I can not transfer my 401K to an IRA. Since I plan on remaining with this company indefinetly I'll just leave it as a 401k there for now.
If I live in Canada as a dual and still have a 401K with this US employer what harm is there in that?

nelsona · Post by **nelsona** » Mon Apr 30, 2007 2:16 pm

There is no harm in having the 401(K).

Continuing to fund it however, is not advisable, since you will be fully taxed in canada when putting the money in, and fully taxed in US when taking it out, so there is little to be gained in continuing to fund your 401(k).

canampilot · Post by **canampilot** » Mon Apr 30, 2007 7:32 pm

So in that case it makes sense to transfer my 401K to an IRA after termination with this US company.
How does one manage an IRA while residing in Canada? I'll do some reading up on this to while waiting for a reply.
Thanks

nelsona · Post by **nelsona** » Tue May 01, 2007 6:17 am

It doesn't matter from a tax point of view whether you move it to an IRA or not, since you shouldn't fund the IRA either, for the same reasons .

canampilot · Post by **canampilot** » Wed May 02, 2007 7:34 am

Does anyone know if my credit score here in the US is transferable to Canada. We have accounts in Canada from the past but most of our recent credit history is down here.

nelsona · Post by **nelsona** » Wed May 02, 2007 7:53 am

Score means nothing in Canada. Your US history may be transfereable, but remember that canadian lenders doesn't rely robotically on these factors.

If you have income, and assets you will have no problem getting loans, etc.

I would not worry about trying to transfer anything or have Cdn institions look into your US past.