Moving Back To Canada

baileybones · Post by **baileybones** » Sun Jun 26, 2005 12:32 pm

I am a green card holder currently living in the U.S. but we plan on moving back to Canada in the near future.

The plan is to reside in Canada but to keep working with the same U.S. company except now as a contractor. Not on their payroll as an employee but more like myself been self-employed.

I have a couple of questions.

1)Am I allowed legally to keep my green card? Someone told me if I do, I'm required to file U.S. tax returns every year.

2)If I give up the green card do I still have to file a U.S. tax return? Even though I'm living in Canada I'm still been paid by a U.S. company even though it's now as a contractor. Does this require U. S. tax filings?

3)Any obvious reasons (besides maybe moving back to the U.S. one day) to give up or not give up the green card? Any tax reasons one way or the other?

Thank You

nelsona · Post by **nelsona** » Mon Jun 27, 2005 12:23 am

1) You can maintain your green card while not living in US, however the departure from US should be for short-term, lees that 2 years or so, and requires pre-approval. You will not be able to keep Grren card while permanently living in Canada unless you keep STRONG ties in US as well.

Green card holdrs are indeed required to keep filing 1040s in US just like a US citizen, regardless of where they live.

2) If you give up Green Card (formally at the consulate) you are free from having to report world income to IRS. The fact that you are a contractor would make you only taxable in canada, even tho the firm is in US.

3) I guess that depaends on how much effort you put in to getting the GC, and how soon you will be going back. It is unlikely that you would ever owe much more than a couple of hundred dollars to IRS every year (if that). If the tax would be come more burdensome, say, if you contemplated moving to a tax-free country, then you could give it up.

If you stay out of US (don't count 'visits') for a couple of years though, this will all be moot, as you will quite likely lose your GC anywyas.

nelsona non grata... and non pro

danny · Post by **danny** » Tue Jul 05, 2005 11:45 am

danny · Post by **danny** » Tue Jul 05, 2005 11:47 am

i disagree. as long as you keep your ties intact you should be able to maintain GC without any problems.

and as for taxes as long as you pay cdn taxes your US taxes might be lower so no problems there too.

dont give up that G

nelsona · Post by **nelsona** » Tue Jul 05, 2005 12:10 pm

Not sure what you disagree with danny.

If one keeps ties in US one keeps GC, if one does not they will eventually lose GC. This was already said.

If your point is one should at (almost) all costs keep GC, I would agree with you.

nelsona non grata... and non pro

danny · Post by **danny** » Tue Jul 05, 2005 12:29 pm

i disagreed about the 2 yr statement, that one loses it after 2 yrs. if ties are there its ok

nelsona · Post by **nelsona** » Tue Jul 05, 2005 1:37 pm

Danny, one loses their GC after about 2 years IF THERE IS NO TIES!!!

We've said all along that maintaining ties will keep a GC indefinitely.

nelsona non grata... and non pro

MaggieA · Post by **MaggieA** » Wed Jul 06, 2005 9:21 pm

I had the impression that it wasn't possible to retain GC more than a couple of years if not actually living in the US.

Can anyone explain what kind of ties would allow someone to accomplish this?

nelsona · Post by **nelsona** » Thu Jul 07, 2005 5:42 am

Maintaining a house in US, working abroad for a US company, visiting US several times, maintaining memberships etc.

That, faithfully filing a 1040, and meticulous maintenance and renewal of your re-entry permit can keep you legal.

THink of the CRA's definition of residential ties. All the ones that we try to shed when leaving Canada... one has to keep when leaving US.

nelsona non grata... and non pro

baileybones · Post by **baileybones** » Thu Jul 14, 2005 12:33 am

Thanks for all the info. After reading the posts I think I'm going to try to retain my GC.

In your opinion - if I keep my U.S. bank account, keep my U.S. credit cards, have a registered IRA and visit the U.S. several times a year - would that be enough to have the necessary ties to be considered legal? At the same time I'd also be working as a contractor (not an employee) for a U.S. company.

Also - I assume I would file my CDN taxes first, then file a 1040NR
second using CDN taxes as a credit on the U.S form? Would that be correct?

Thanks again.

nelsona · Post by **nelsona** » Thu Jul 14, 2005 12:44 am

<blockquote id="quote">quote:<hr height="1" noshade id="quote">if I keep my U.S. bank account, keep my U.S. credit cards, have a registered IRA and visit the U.S. several times a year - would that be enough to have the necessary ties to be considered legal?<hr height="1" noshade id="quote"></blockquote id="quote">

Not without also filing and maintaining a re-entry permit. You really should have property in US to maintain Permanent residency.

<blockquote id="quote">quote:<hr height="1" noshade id="quote">I assume I would file my CDN taxes first, then file a 1040NR<hr height="1" noshade id="quote"></blockquote id="quote">

ABSOLUTELY NOT!!!! Filing a 1040NR is expressly forbidden for GC holders. This would be a sure-fire way oif losing your GC.

You will file a 1040 (as I said at the very initial response to your Q), and either exclude Cdn wages and/or take foreign tax credits on your 1040.

Your Cdn return will report world income, with no exclusions or credits, except possibly some tax creit for US tax paid on any US-sourced interst you earn.

nelsona non grata... and non pro

baileybones · Post by **baileybones** » Fri Jul 15, 2005 1:02 am

Thanks Nelson. I went back and read again and saw where you mentioned filing a 1040 (not a 1040NR).

Is the re-entry permit a special form? Is it something that customs gives you to complete when crossing the border into the U.S.?

Norbert Schlenker · Post by **Norbert Schlenker** » Fri Jul 15, 2005 12:13 pm

<blockquote id="quote">quote:<hr height="1" noshade id="quote">Is the re-entry permit a special form? Is it something that customs gives you to complete when crossing the border into the U.S.?<hr height="1" noshade id="quote"></blockquote id="quote">
A re-entry permit is an INS form, colloquially called a "white passport". You need to apply for and get it before leaving the US or you run the risk of losing your green card.

<blockquote id="quote">quote:<hr height="1" noshade id="quote">Any obvious reasons (besides maybe moving back to the U.S. one day) to give up or not give up the green card? Any tax reasons one way or the other?<hr height="1" noshade id="quote"></blockquote id="quote">
Very good tax reasons. If you keep it, you may be subject to expatriate taxation and estate taxes. If you give it up, you may be stuck with Canadian tax rates for good. You have to decide what works for you.

danny · Post by **danny** » Mon Jul 18, 2005 12:43 pm

ya but if the person is living in Canada anyway he is going to be subject to cdn taxes anyway.

but for sure the GC keeps the US option open

nelsona · Post by **nelsona** » Mon Jul 18, 2005 12:56 pm

danny,

Canada doesn't have estate tax, so it is quite possibele, until US estate tax is repealed, that US estate tax would be more than any deemed disposition on death tax in Canada

nelsona non grata... and non pro