US citizen with complicated CA tax issues

[rwbit]

I have a rather complex situation…yes, that means I am a US citizen working under a work permit (3 year permit) in CA.

First, the company transferred me (and my non working wife) to Canada in the beginning of 2007. The process involved creating a separate Canadian employee account since the division I was working for was a separate U S owned division. This meant that I had to sever all my ties to my existing 401k since I had no US income. When I transferred to Canada, I was told I could keep my Social Security and Medicare from the States and not contribute to the CPP…no problem but, I could not continue to contribute to my 401k since it is not recognized as a retirement plan in Canada. After investigating the company Defined Contribution RSP and personal RRSP’s I am still without a place to put my retirement contributions (including any company match of funds). Am I am missing something? There doesn’t appear to be any advantage to these plans since I would need to claim the income when I return to the US and pay upto 25% to close out my account if I emptied it earlier than retirement age. (I do not plan on retiring in Canada). My income is about $150K Cdn (plus $50K Cdn bonus which is taxed at a capital gain rate). With no options to shelter my money, I am subject to a substantial tax burden.

Are there any tax shelters or deductions available to US citizens working as temporary residents in Canada?

Second, I enrolled in the company stock purchase plan (after tax purchase) when I arrived in Canada. This plan was eliminated when our US entity bought out the minority share holders of the CA company.
The good news was a nice return on my stock purchases, the bad news is that I may have to give up every dollar made to capital gains. As I understand it, US citizens must submit returns where ever they live but having to pay capital gains to both CA and the US seems a bit much. My first glance indicates I may owe the US about $15K Usd…and I haven’t even figured out what my hit will be from Canada.

Do I actually have to pay capital gains to both? What is the capital gains tax rate assuming I earned $200K Cdn in 2007 and my net gain from the sale of the stock was $30Cdn.

Last question, I sold my house in NY when I moved to Canada and purchased a house in Oakville with intent to honor my 3 year stay. But, as situations have it, the company may want me to relocate back to the states (So. Carolina) in a couple of months. This will mean that I will not satisfy the 2 year residency requirement for avoiding capital gains on my house.
Are there exceptions to the 2 year rule? And will I have to pay capital gains on the profit from my Canadian house to the US & CA?

Thanks for entertaining these questions and any advice given.

[Carson]

You need a cross border accountant.

[rwbit]

I agree. The company was supposed to provide tax advice and complete my tax forms but unfortunately the service provided is substandard for my situation.