Tax preparation questions for moving to California

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wpower6
Posts: 4
Joined: Sun Jul 12, 2020 6:34 pm

Tax preparation questions for moving to California

Post by wpower6 » Sat Jul 18, 2020 11:44 am

Hi folks, I am moving to California from Canada very soon. Have been browsing posts here they are very helpful! I understand everybody's case is a bit different, so hope you can help provide some clarification to my situation. Thanks a lot!

My situation:
All investment are in RRSP and TFS. And unfortunately in each account i have overall unrealized capital losses (some securities do have some unrealized capital gains). I have real estate properties too. I will move in late July but my spouse will stay in Canada till early next year.

Questions:
The overall question is what are the preparations I should complete before my departure day and what other things I should do shortly after I lived in US? I also listed some specific questions below, but any other advices are appreciated.

1. Do I need to sell my stocks and ETFs in RRSP and TFSA and re-purchase them? Do I need to take any action on my houses?

I understand Canada’s departure tax won’t apply deemed disposition to TFSA and RRSP, and also won’t tax your real estate properties (either primary residence or rental properIty). Is that correct?

However, on the US tax side, I understand federal tax allows deferring income from RRSP but will tax TFSA gains. California will tax your gains in RRSP. Do federal and California only tax the realized gain made in the tax year (if you sell, or received dividends), or any unrealized gains similar to the idea of deemed disposition?

Therefore, should I keep the securities in RRSP and TFSA with unrealized capital losses, in order to offset certain capital gains or other income tax in the future?

Is it recommended to close TFSA account? How about RRSP? It will cost a lot to withdraw and close the account so will try to not.

2. Any preference to keep the houses in Canada for rental, or sell as soon as possible. Any pros/cons, or things to be careful about, for each option? Would things be different if holding TN so need to maintain tie to Canada?
I did hear that California will double tax your rental income in Canada...

3. Many people recommended to find a cross-boarder accountant to file tax returns, at least for the first year. Any idea how much that roughly cost for the first year, and would it be cheaper in future years as it will be simpler? Heard it can be really expensive (a few thousand dollars per person) so better be prepared. If prepare myself is there any good resource/tool? Thanks!

4. Am I a deemed non-resident for the duration I am in the US (Aug-Dec)? Would it change anything in terms of tax if I come back to visit my spouse vs my spouse visiting me?

5. Any other things I should do before my departure, or shortly after I arrive there?

I know it's a lot questions, and thanks a lot for the help!

calvin_g
Posts: 23
Joined: Fri Dec 02, 2005 12:17 am

Re: Tax preparation questions for moving to California

Post by calvin_g » Wed Jul 22, 2020 8:30 pm

Went through the exact same thing 15 years ago except I was completely ignorant about the tax/compliance requirements complications.

All I can tell you is if you don't plan to return to Canada, then sell your RRSP, RESP pay the tax. Move the proceed to invest in the US. Much better investment choices, no reporting nightmare and potentially hefty fines if done incorrectly.

I sold my house too.

Good luck!

wpower6
Posts: 4
Joined: Sun Jul 12, 2020 6:34 pm

Re: Tax preparation questions for moving to California

Post by wpower6 » Sun Jul 26, 2020 10:31 pm

Thank you Calvin!

Thank you very much for the suggestion.I will be on TN status so it's supposed to be temporary Therefore need to keep some Canada tie, and one way to do that is to keep the house in Canada.



calvin_g wrote:
> Went through the exact same thing 15 years ago except I was completely
> ignorant about the tax/compliance requirements complications.
>
> All I can tell you is if you don't plan to return to Canada, then sell your
> RRSP, RESP pay the tax. Move the proceed to invest in the US. Much better
> investment choices, no reporting nightmare and potentially hefty fines if
> done incorrectly.
>
> I sold my house too.
>
> Good luck!

nelsona
Posts: 16452
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tax preparation questions for moving to California

Post by nelsona » Mon Jul 27, 2020 10:07 am

You do NOT need to keep any ties in Canada or elsewhere on TN. It is not a tourist or student status!
You onlt need to leave when you are no longer on TN (or other valid status)>
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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