Sale of stock in US - living in Canada

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maricami
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Sale of stock in US - living in Canada

Post by maricami » Fri Feb 19, 2010 2:24 pm

In 2009 I sold some stock I am holding is a US account (Schwabs). No US taxes were withheld on this sale. Now I live in Canada (since 2006). I am planning to include this sale to my Canadian tax return, but do I have to file in the US as well, even if no taxes were withheld? Thanks.

nelsona
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Post by nelsona » Fri Feb 19, 2010 2:27 pm

This is reporatable and taxable in Canada only . The fact that you own it with an amereican broker means nothing.
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nelsona
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Post by nelsona » Fri Feb 19, 2010 2:30 pm

Remember that if you held this stock when you moved to Canada, the cost basis is based on the proce on that dae, not when you bought it.
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maricami
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Post by maricami » Fri Feb 19, 2010 2:39 pm

Thanks for the quick reply Nelsona !

Like I said, I moved back to Canada in 2006 (after 9 years in the US). I believe (based on previous information you gave me a long time ago) that the base price for my stocks is equals to the price on the day I entered Canada again (in 2006). Can you refresh my memory ? Is that correct ?

nelsona
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Post by nelsona » Sun Feb 21, 2010 1:48 am

I just said that.
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maricami
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Post by maricami » Sun Feb 21, 2010 8:54 am

hehe... I know... we were writing at the same time... but you were faster than me :)
Thanks for your quick replies... as always :)

maricami
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Post by maricami » Mon Feb 22, 2010 11:15 pm

I have a follow up question... or concern, I should say. (sorry for the long story)

When I moved back to Canada in 2006, I tried to change my Schwab address to my new Canadian address. That's when I learned that I could not do that and I was told by Schwab that I had to close my account. I really didn't want to sell my stock at that time and I was told (by a customer representative at Schwab!) to change my address back to a US address, like the address of a friend... which I did ! Since then, I kind of fell in a gray zone because I wanted to avoid to attract attention to my account. That's why I had not done any selling or buying from that account since then. I just wanted to keep it quietly alive until I decide to sell everything in the future and close the account at the same time. But last year I was forced to sell some stock (about 1/3 of them) because I have a margin loan on that account and the stock fell too low, forcing me to sell.

As Nelsona suggested, I will include the sell of my US stock in my Canadian tax return, but I am not planning to file any US tax form for 2009. But can this situation become a problem for me on the long run? Can the IRS force me to withhold US taxes on future selling ? Can Schwab find out about my Canadian residency and force me to close my account ?

bernadettej21
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Post by bernadettej21 » Tue Feb 23, 2010 3:49 am

[quote="maricami"]I have a follow up question... or concern, I should say. (sorry for the long story)

When I moved back to Canada in 2006, I tried to change my Schwab address to my new Canadian address. That's when I learned that I could not do that and I was told by Schwab that I had to close my account. I really didn't want to sell my stock at that time and I was told (by a customer representative at Schwab!) to change my address back to a US address, like the address of a friend... which I did ! Since then, I kind of fell in a gray zone because I wanted to avoid to attract attention to my account. That's why I had not done any selling or buying from that account since then. I just wanted to keep it quietly alive until I decide to sell everything in the future and close the account at the same time. But last year I was forced to sell some stock (about 1/3 of them) because I have a margin loan on that account and the stock fell too low, forcing me to sell.

As Nelsona suggested, I will include the sell of my US stock in my Canadian tax return, but I am not planning to file any US tax form for 2009. But can this situation become a problem for me on the long run? Can the IRS force me to withhold US taxes on future selling ? Can Schwab find out about my Canadian residency and force me to close my account ?[/quote]


I think nelsona's suggestion is right that you will include the sell of your US stock in your canadian tax return. I don't think so if IRS force you to withhold US taxes on the future selling and Schwab find out about your canadian residency and force you to close your account. Just wait for others opinion and suggestion. :)
bernadette c. junsan

nelsona
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Post by nelsona » Tue Feb 23, 2010 8:17 am

The keeping of your US account did not and does not affect your tax situation.

Keeping the account with a fake US address is a regualtory issue. The schwab person was breaking fed regs when he told you to fake the address, and you were complicit.

The correct thing for you to do was to TRANSFER your holdings to a Cdn broker when you moved,

Again, this would have had no impact on taxess in either US or Canada.
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maricami
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Post by maricami » Tue Feb 23, 2010 9:57 am

I also wanted to transfer back then, but I was under the impression that it was not possible because Schwab didn't have any links with Canada (I couldn't find any). I thought my only option was to sell. Did I miss something there ?

nelsona
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Post by nelsona » Tue Feb 23, 2010 10:19 am

There need not be any commercial link between the two transfering brokers.

You find a broker in canada, tell them you wnat to give them your business, and they will do anything they need to transfer the stocks.

This is done routinely, whether cross-border or not, when one wants to change brokers.
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bruce
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Post by bruce » Tue Feb 23, 2010 10:28 am

Ignoring the capital gains, you might owe the IRS for taxes on any dividends. Your fake US address means that Schwab would not have withheld any taxes. So unless you took the initiative to file/pay US taxes, you might have a US tax liability.

maricami
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Post by maricami » Tue Feb 23, 2010 10:39 am

I can't believe it's that simple ! I should have done this earlier. I guess it's not too late for me to do this, right ? Does it have to be an independent Canadian broker, or can it be done with a bank in their brokerage branch?

Last question (I promise!), since I have a margin loan on this account, is it better to pay it back cash, before doing the stock transfer to Canada ?

nelsona
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Post by nelsona » Tue Feb 23, 2010 11:30 am

Yes it is that simple (if you have stocks, mutuals must be sold).

Any broker, full-service or discount doesn't matter.

As to the margin account, that is up to the lender. Most lenders require some kind of payback before moving accounts.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

maricami
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Post by maricami » Mon Mar 08, 2010 9:12 pm

Very soon I will move my US stock to a Canadian account. What will be my cost basis after the transfer ??? Is it still the price of the stock when I moved back to Canada in 2006 ? Or will it be the price on the day the tranfer will be done ? Thanks.

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