Questions for Canadian moving to US

nelsona · Post by **nelsona** » Tue Feb 12, 2008 10:05 am

As I said, you can't simply 'claim' to be Cdn resident. canada, for one, likes to 'kick out' those who live in other countries, in order to trigger deemed disposition. As they like to point out: Residency is a matter of fact.

And the US, for another, would probably like to know how someone living in US claims to live in Canada. Since you apparently aren't married, yo ucan't even claim that your spouse makes you resident in canada.

I can't think of any downside, other than the increasing large OHIP premiums that are being charged on ON tax return, and the need for blue cross when in US.

None of your commuting expenses will be deductible on your Cdn return although the rent on your US appartment probably could be deductible.

The other thing you will have to watch for is car/registration/insuarnce. The resident rules for requiring someone to register their car are not the same as the tax rules. You may need to resgister in MA. You may need an MA DL, and your insurance, based on living in TO, may not be valid in mass, which may force you to, in turn, import your car tio US, and register your car in MA, get local insurance, and a Mass DL, handing in your ONtario DL and plates.

nelsona · Post by **nelsona** » Tue Feb 12, 2008 10:07 am

... and you don't need to be palnning to retire in US to benefit from social security, I would say if you paln to spend more than 2 or 3 years in US over the next 40, contributing to SS is not bad.

Duckman · Post by **Duckman** » Tue Feb 12, 2008 5:18 pm

It would be very nice if I can keep all my bank accounts and still be kicked out of Can =P Do you think that'd be possible? Besides my bank accounts, credit cards, driver's licencse and family, I would have no other "ties" to canada. Could I still be a non-resident while keeping those intact?

nelsona · Post by **nelsona** » Tue Feb 12, 2008 5:50 pm

OF COURSE. None of these things EVER make you resident of canada when you live in US. Only a spouse and house does, and even then that is reversible.

Your parents are not your depaendants. Your driver;s license won;'t be any good anymore but who cares. An ontario DL is not a precious keepsake.

But this whole thread has been about KEEPING Cdn residency while not having any ties there. Now you are asking about giving up Cdn residency but keeping minor ties.

Which is it?

Duckman · Post by **Duckman** » Tue Feb 12, 2008 7:30 pm

That's exactly my problem - i'm not sure which route to go - and I definitely don't want to be considered a resident by both countries.

Duckman · Post by **Duckman** » Tue Feb 12, 2008 7:58 pm

I was under the impression that a collection of minor ties in Canada, and/or lack of ties in US could be used to establish canadian residency, despite not having the primary ties. Could it be argued that my parent's home is my place of permanent residence, and hence a major tie to canada, since it will always be available to me?

nelsona · Post by **nelsona** » Wed Feb 13, 2008 7:48 am

Only if (a) you stay in hotels in US, and (b) you aren't working and living in US most of the time.

Minor ties are really only important when you go to a NON-treaty country.

nelsona · Post by **nelsona** » Wed Feb 13, 2008 10:27 am

I noticed you posted this question to Ingram and got slightly different answers. I would point out that he does anwswer these in a hurry and extrapolates a lot of information.

It is legal to work on 1099 as TN.

It is NOT cut-and-dried that you are an employee. many contractors get TNs instead of b1 simply because it is easier.

That sais, while you *might* have to pay income tax, your can get compliance letter for CPP which would absolve you from FICA.

The issue still falls on where you spend most of your time.

And if you do live in canada, then your US rent is deductible in Canada. Not on US return.

Duckman · Post by **Duckman** » Wed Feb 13, 2008 11:17 am

Why is there a difference between a treaty and non-treaty country in terms of using minor ties?

Most of my time will be spent in the US. I think the easiest way to go about this would be to break all ties necessary to be classified as a canadian non-resident - what you've said all along :D

nelsona · Post by **nelsona** » Wed Feb 13, 2008 11:23 am

Because all tax treaties have a Residency tie-breaker that decides between the 2 countries in question, this trumps any internal definition that they might apply.

Without a treaty, then CRA can say that 1,2 or 7 minor ties make up residncy (that is the whole point behind NR73, which I;m sure you have studdied carefully).

And that is why NR73, in the end, asks you if you meet the residency rules in the country you are going to and IF they have a treaty with canada.

Duckman · Post by **Duckman** » Wed Feb 13, 2008 12:10 pm

Can the situation be summed up as:

1. IRS considers me a resident of the US because I am in the US for more than 183 days. Closer connection cannot be established since presence > 183.
2. CRA considers me a resident of CAN because my permanent home (parent's home) is in Toronto. The home I have in MA is on a non-lease sublet - I can cancel anytime.
3. Tie breaker of treaty considers me a resident of CAN because my permanent home is in Toronto
4. If I wanted to be taxed as a US resident, I would need to go further down the tie breaker rules:
a) need to prove that my home in MA is "permanent",
b) my center of vital interests are as strong in US as they are in Can - I would obtainbank accounts, credit cards, drivers licence, health ins in MA
c) my habitual abode is in MA, therefore breaking the tie
5. Invoking c) would allow me to keep my ties in canada.

nelsona · Post by **nelsona** » Wed Feb 13, 2008 12:21 pm

Pretty much, except that your parents home is not automatically yours, you have no lease or mortgage or deed. They do. You could justifiably skip this step.

Sum it up easier:

The moment YOU go down to live and work in US and do not have a house or spouse in canada, you are a US resident and Cdn non-resident. This is your situation: A Cdn non-resident, and a US resident

If you do have a house or spouse in canada, then you must at least have a home in US, and your spouse should be visiting you, not the other way 'round. This is called a deemed non-resident, and a US resident. CRA tax treatment of a deemed non-resident is identical to non-resident.

If you hava a house or spouse in canada and visit them on weekends, living out of a suitcase when in US, you are a Cdn resident, and a US non-resident, no matter how many days you spend in US (Form 8833 if more than 183 day, 8840 if less)

jay · Post by **jay** » Mon Feb 25, 2008 4:40 pm

nelsona. I was working as an independent contractor at Toronto before. And I registered an incorporated company. I moved to US half year ago. I still have some money left in the company. I plan to file tax as non-resident of Canada this year. My question is: if next year I want to get dividend from the company, shall I file tax in Canada or just file to US? Thanks in advance.

nelsona · Post by **nelsona** » Mon Feb 25, 2008 11:17 pm

First, you will file as a DEPARTING resident of canada for 2007.

Your 'dividend' will be taxed in canada and US. How it is taxed depends on what type of income it is.

jay · Post by **jay** » Wed Feb 27, 2008 11:26 am

get a little confused. The company is incorporated. As owner I can get money either annual salary or dividend. If I treat it as dividend, after I paid Canadian tax, I have to pay US tax again? How? just treat net dividend(after Canadian tax) as income? And as my understanding, keeping an incorporated company in Canada won't affect my non-resident status. Is it correct? Thanks a lot.