Canadian moved to US on TN visa - tax questions

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MM12
Posts: 4
Joined: Wed Jul 21, 2021 10:28 pm

Canadian moved to US on TN visa - tax questions

Post by MM12 »

Hello,

I’m a Canadian citizen:
- lived/worked in Canada for 175days in 2021.
- then moved to the US on TN visa and I expect to physically be in the US for 180 days living/working for 2021.
- the remaining 10 days of year, I expect to be on vacation (outside North America).

I have no residential ties in Canada, what I still have is RRSP, LIRA, bank accounts, credit cards, and TFSA.

I’m hoping someone can help me with the following questions:

1- since I been in Canada less than 183 days and have no ties upon leaving, I’m considered NR and will only have to file income tax on Canadian income only for the 175 days I lived worked in Canada, is that correct ?

2- since I will be in the US for less than 183 days (in 3 years as per PPT), I’m also considered NR, and can file as such but I understand from reading the forum that:
A- it’s more advantageous to file as a resident aliens in the US ? So would it be recommended to do that in my situation ?
B- do I only file for income of the 180 days I been in the US ? Or for the full year including Canadian income ? If the later, do I get credits for the taxes paid in Canada for the first half of the year ? Or how would that work?

3- I intend to stay in the US for several years (assuming I’ll be able to renew my TN), so regarding 401K:
A- Roth or pre-tax? What happens to Roth if I end up going to Canada?
B- for 2021 401k limit, do I qualify for full limit (19.6k)? Does contributions (mine and Canadian employer) to my RPP (which is my LIRA now) for the first half of the year impact 401K limit ?

4- if I transfer my investments in-kind from my TFSA to US brokerage regular investment account, what cost basis would my capital gains be taxed based on if I sell while resident in the US ?

5- for 2022 if I have no income at all in Canada and no ties therefore NR, I only need to file taxes in the US ?

6- is there anything else I need to consider in my situation ?

Thanks in advance.
nelsona
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Re: Canadian moved to US on TN visa - tax questions

Post by nelsona »

1. You are considered LEAVING Canada, Emigrating on the date you move. You are not non-resident until the year after you leave.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
MM12
Posts: 4
Joined: Wed Jul 21, 2021 10:28 pm

Re: Canadian moved to US on TN visa - tax questions

Post by MM12 »

Hello Nelsona,

Thank you for replying.

Just to clarify, do you mean I'll be non resident in 2022 (the year after I leave), but when I file 2021 taxes before the deadline in 2022, my understanding is that I'll file as a non-resident as well, correct?

Just reading through "Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status", looks like for the 2021 tax year, I have no significant residential ties with canada, not enough secondary residential ties, and I'm a resident of another conutry (USA) (in canada for less than 183 days) where there's a treaty between US and Canada.

Am I missing something here?

Thanks again for your help, and I'd appreciate some help with questions 2-6 (mainly 3 as I'm trying to plan my 401k contributions very soon).

Regards
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Canadian moved to US on TN visa - tax questions

Post by nelsona »

As I said, you are an EMIGRANT in the year you move: Resident until the move date, non-resident after, but you do not file a non-resident return. You file a return for your province, with a departure date. In 2022, you will be non-resident, and would only file a non-resisnt tax return if you have certain Cdn income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
MM12
Posts: 4
Joined: Wed Jul 21, 2021 10:28 pm

Re: Canadian moved to US on TN visa - tax questions

Post by MM12 »

Ok Thanks, can you help with this question??

I intend to stay in the US for several years (assuming I’ll be able to renew my TN), so regarding 401K:
A- Roth or pre-tax? What happens to Roth if I end up going to Canada?
B- for 2021 401k limit, do I qualify for full limit (19.6k)? Does contributions (mine and Canadian employer) to my RPP (which is my LIRA now) for the first half of the year impact 401K limit ?

Thanks again
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian moved to US on TN visa - tax questions

Post by nelsona »

The decision to use Roth401(k) or 401(k) depends on many factors: you are essentially paying the tax now, and getting tax-free later. canada has adopted the same view, as long as you do not make any Roth contributions as a Cdn resident.

Your 401(k) limit for 2021 is the full yearly limit. These are not impacted by any Cdn contributions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: Canadian moved to US on TN visa - tax questions

Post by nelsona »

4. Transferring out of your TFSA is not a taxable event, so your tax basis would be the original. You might consider selling rather than in kind transfer.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
MM12
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Joined: Wed Jul 21, 2021 10:28 pm

Re: Canadian moved to US on TN visa - tax questions

Post by MM12 »

Thanks,

Regarding your recommendation to sell TFSA rather than transfer in kind, if I sell after I move to the US (now), would that be considered income that I have to pay taxes to in the US ?

If that’s the case? What would be the benefit of selling now in TFSA rather than inkind transfer ?

Thanks again
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
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Re: Canadian moved to US on TN visa - tax questions

Post by nelsona »

That advice was for those who take care of this before moving. You didn't, so you are on the hook for the gains when you sell (not transfer). Remember that Cdn mutual funds cannot be held in US, so if you have those you will have to sell.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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