Dual citizen, Cdn resident, Tx issues re work in US

[marge]

Hi, my son is 27, a dual citizen, US and Cdn, moving to the States for the first time. He is being sent by his company, probably in August, and will work in PA. He didn't file US taxes last year; he plans to file both 2008 and 2009 by June 15th. All the other years were filed on time. When I was helping him, he always sent in the Treasury form, but I'm not sure if he has done so since he took over.

He also has RRSPs, including a contribution made in 2010 re 2009, which he will exclude according to the treaty, as in past years. He knows he shouldn't make any further purchases of RRSPs while a US resident, and plans not to make any changes to his current holdings.

My question is--Is there anything he needs to know, or do, in order to make sure his taxes are in order before he leaves?

I've been a member of this forum for a long time, and want to thank the Serbinski firm for providing this incredible service.

Thanks very much in advance for any help,
Marge

[nelsona]

He will need to file a departure return next spring as a final Cdn return.

He needs to notify any Cdn payors (bank, RRSP) that he will no longer be resident. he should be making palns to move any non-RRSP investemnt accounts to a US brokerage.

His 8891 filing will not change, nor with his requirementto file the Treasury FBAR form.

He absolutely needs to get his US returs up-to-date.

[marge]

Thanks very much, especially the reminder that the 8891 and Treasury forms need to be filed every year. I think it might have been easy for him to lose sight of that.

A clarification--by "departure return," do you mean a regular Cdn return for 2010, the only difference being that it would cover the part of the year he worked in Canada?

Thanks,
Marge

[nelsona]

It is the regular T1 for his province, however he is leaving Canada, so there are certain deparure requirements, notablt putting the date of departure on the return, and following all the directives in the Emigrnats guide from CRA.

Otherwise he will be on the hook for Cdn tax on his US income.

[marge]

Thank you. I just looked up the CRA guide for emigrants, and it seems that he does this next spring, i.e. there are no notification requirements ahead of time. Am I correct? Would the same apply for his US return, i.e. that he would file his US return next April, indicating the date of arrival, and pro-rating his exemptions?

Thanks again,
Marge

[nelsona]

Yes, the Cdn departure return would be filed next spring. But other aspects of his departure notification would be dome when he leaves (like bank, cancelling GST rebate, etc).

For US, didn't you say he is US citizen? Then there is no such thing as arrival date, he always has had to file. the only possible pro-rating he would have to do is the form 2555 FEIE if he uses that . Other deductions are not prorated on US returns.

[marge]

OK, thanks. Cancelling the GST rebate is an important detail--though I don't think he qualifies any more. I looked at the CRA site concerning emigrants' responsibities in general, to see if I could find out more about the "etc." part of your answer, rather than just asking what other things might be included in departure notification.

While at the site, I looked at the form called "DETERMINATION OF RESIDENCY STATUS (LEAVING CANADA)" (form # NR73 E (08). He should fill this out and send it in when he [i]actually[/i] leaves, right? The departure date would be the date when he begins working down there full-time, as opposed to flying down and staying in a hotel, but is still mostly working here, and still has his own place here. Even if the company wants his salary off its Canadian books, and he begins to be paid by the US plant, as long as he's not physically there full-time, he doesn't have a place there, and he does have a place here, his residency is still in Canada, right?

Also, would it be possible for him to wait a little while once he's there before sending in the form, to make sure the job is really panning out?

Does he actually have to close his Canadian bank accounts?

Thanks again for your help,
Marge

[nelsona]

He should NOT file NR73. It serves no useful purpose when moving toa a treaty country like US. (it would be filed at time of departure if it were necessary). Nothing needs to be closed.

As to the etc, I include notifying any Cdn payors that one has left.

Once he is working and living in US he ceases to be Cdn resident.

Maybe its time to let him ask his own questions....

[marge]

Thank you so much for all your help. He may indeed have other questions, but you have answered all mine!

Have a great day,
Marge