Canadian Moving Back Home, But Will Still Work from US

hallidina · Post by **hallidina** » Fri Feb 04, 2011 11:31 pm

In advance, I appreciate your help.
Some bkgrnd:
1. I've been working in the US since 2003, first on a G4, than TN and now H1-B (green card in process) for a few different firms.
2. I have been given the option to move my family back to Toronto (I travel a lot, and better for my family to be near "home"). I think this automatically makes me a Canadian Residence (and US Resident at the same time as I've been here for 8+ years)
3. I will still be coming to NY for roughly 2 days a week and working from here. I will still be paid by the US-entity, not the Canadian (does this matter)?

Questions:
1. I understand that I will be taxed on both Canadian and US income and will have to file 2 returns etc and presumably at the end of the day, I will have paid tax in Canada on the income earned while working from home (3 days) and tax in the US on income earned while working NY... Hoping this is correct?

I'm unsure on what I should do with and the tax implications of:

A. current stocks?
B. my IRA?

What are the tax implications?

Finally, I have some unvested stock and deferred, unvested, cash. How will this be taxed after I move from Canada...

Thank you kindly in advance. H

nelsona · Post by **nelsona** » Sat Feb 05, 2011 5:12 am

You will become Cdn resident. As to what status you have in US, much will depend on your GC. IF you ever get GC (big if), you will need to convert it to a commuter GC in order to keep it alive if you live in canada. GCs are supposed to live in US.

The length of time you've been in US does not matter for US tax purposes. Once you leave, without GC you are no longer resident. Once you have GC you are resident no matter how long you live in US.

1. Correct. In the end you will pay Ontario rates for all your income. the only problem with your situation is that you also need to pay CPP and EI on your income earned in canada. This may get tricky.

A. When you return to canada, canada will assume your cost basis for future cap gains as of that day.

B. Your IRA remains unchanged. Do not make any more Roth or Roth401(k) contributions or transfers however once you live in Canada.

hallidina · Post by **hallidina** » Sat Feb 05, 2011 12:02 pm

Thanks for the quick reply!
How do I figure out the CPP/EI bit? Didn't even think about that. Presumably, my US based employer will be deducting Social Security and Medicare already?

Regarding IRA, can I make contributions to regular 401K while in Canada? Or should I check w/ employer regarding contributions to RRSP? Thanks again.

hallidina · Post by **hallidina** » Sat Feb 05, 2011 12:14 pm

Also -- does my company have to pay me as a Canadian employee or can they continue paying me as a US employee (to my US account etc)?

Finally, on the GC issue, I've already filed -- do I need to maintain a physical address in the US to be eligible to rec'v?

Thanks!!

nelsona · Post by **nelsona** » Sat Feb 05, 2011 1:39 pm

Yoiu can always cpontribute to 401(k), and as of 2010, it is tax deductible on your Cdn return.

Your RRSP would not be deductible on your US return, and would limit your 401(k) deduction on your Cdn return.

nelsona · Post by **nelsona** » Sat Feb 05, 2011 1:45 pm

Yes you need to styay in US until GC is awarded and beyond, or switch to commuter GC.

The employer should be paying you as a Cdn employee for the days you work in Canada.

NECdn · Post by **NECdn** » Wed Feb 09, 2011 3:48 pm

When you say "paying you as a Cdn employee" what does that mean? Will the human resources folks need to be aware of and follow Canadian payroll laws?!?

In my case, we are moving back to Canada and looking into whether I can remain as an employee of my US Institution. In this case I would be working from home in Canada. I currently have an H1B. Are there any issues I should watch out for?

nelsona · Post by **nelsona** » Wed Feb 09, 2011 3:56 pm

"When you say "paying you as a Cdn employee" what does that mean? Will the human resources folks need to be aware of and follow Canadian payroll laws?!? "

Yes. Of course. You are going to be working permanently in Canada. Cdn tax, provincial tax, EI and CPP.

Your other choice is to be a contractor. The fringe benefits for a US employee living in Canada are meaning less for the most part, so just ask them to pay you more in place of these.

hallidina · Post by **hallidina** » Sat Feb 12, 2011 10:35 pm

Question from my earlier post:

Background: have been living and working in the US for several years, first on a G4, than a TN and most recently (for several years) on an H1B.

I'm moving the family back to Canada and will be working 2-3 days a week from home in Canada and 2-3 days a week in NY (where my head office's company is based). If I were to maintain a residence in NY, in addition to a residence in Canada, what would the tax implications be?

Is there an optimal arrangement that I should work w/ my employer to achieve -- i.e. I can be paid as a US employee, or I could potentially be paid from our Canadian office as a Canadian employee?

What are the considerations that I need to be aware of? Am I going to end up paying more in tax because I'm working in both Canada and US (relative to if I was simply based in Canada)?

Thanks.

nelsona · Post by **nelsona** » Sat Feb 12, 2011 11:00 pm

I thought we covered this. Your employement in canada will be taxed in canada. Your US employemnt will be taxed in US, AND in whichever country you and your familty spent most nights in year, all will be taxed.

I cannot tell you which will be optimal, but I can almost guarantee that you will pay more tax shifting back and forth, than if you choose one and stay there, the way foreign tax credits work.

nelsona · Post by **nelsona** » Sat Feb 12, 2011 11:06 pm

NY and ON have similar taxrates. You will no doubt have other income, as will your spouse. That is whay it is impossible to figure (and I'm not asking for any more details) what your "best" tax situation would be.

But you will be an employee *somewhere*, and is typically best to be resident where you work.

hallidina · Post by **hallidina** » Sat Feb 12, 2011 11:34 pm

Nelsona, I should have been more clear -- my question, distilled: does it matter, for tax purposes, if I maintain a residence in NY AND in Canada (vs. a residence in Canada, and stay in a hotel when I'm down in NY). Thanks!!

nelsona · Post by **nelsona** » Sun Feb 13, 2011 10:06 am

Probably not. You will be highly taxed.