Canadian Citizen Working in USA, about to move back to Canada

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
a_bushati
Posts: 11
Joined: Mon Mar 04, 2019 7:41 pm

Canadian Citizen Working in USA, about to move back to Canada

Post by a_bushati »

Hi,
Hope i can get some pointers related to taxes. I am a canadian citizen. Severed ties with Canada few years back (and at the time I filed my departure tax). Since then i have been living/working in USA under the NAFTA agreement.
I am considering quitting my job, and moving back to Canada.
I have a Roth IRA, 401k and non registered investments in the US. Any suggestions/pointers to other website materials appreciated. See questions below:

1. If I were to keep my non-registered accounts in the States as are (current status some with unrealized losses others with unrealized gains), for USA tax purposes would i deem these as disposed of on the day i leave the States? I.e. I pay taxes in the USA for the last year in question, and for Canada the cost basis would be the fair market value on the day i leave USA...

2. Would i be able to keep my Roth IRA and 401k in the US as is, and not have to pay taxes in Canada/USA (since i do not plan to take any money out any time soon)?

Thank you.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian Citizen Working in USA, about to move back to Canada

Post by nelsona »

1. US does not recognize deemed transactions, except for those for Cdn residents moving TO the US (and this is only by treaty).

But once you are no longer taxable in US, your gains and losses are not either, so the advice is always to sell your losers before leaving, and hold on to your winners until later.

Canada will only tax the FUTURE gains/loss based on the new value acquired the day you move. Another reason to sell losers before moving.

Btw, you cannot keep these non-retirement accounts for very long after you leave US. You will need to transfer stocks/ETFs and sell mutuals.

2. Yes, but only if your broker agrees. Some do not. You need to determine this before leaving. Once that is taken care of your accounts will be treated the same in both countries for tax purposes.

This gives you an opportunity BEFORE MOVING to move as much of your 401(k) to a Roth, pay the US tax now, and then have the Roth grow tax-free in US and Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
a_bushati
Posts: 11
Joined: Mon Mar 04, 2019 7:41 pm

Re: Canadian Citizen Working in USA, about to move back to Canada

Post by a_bushati »

Nelsona - Much appreciated!
a_bushati
Posts: 11
Joined: Mon Mar 04, 2019 7:41 pm

Re: Canadian Citizen Working in USA, about to move back to Canada

Post by a_bushati »

Nelsona,

Regarding my non-registered investments, assuming in 2022, before i leave USA for Canada, if I sell the losers and keep the winners (and assuming the brokerage company allows me to keep my non registered investments even as no longer a US resident), how do I treat the non realized gains when i file my USA taxes in 2023?

E.g. if i have bought shares of a stock in 2021, which by the time i leave have a non realized gain of $1,000, for Canadian tax purposes, as you mention above, these are not considered as a gain (anything above will be considered so), however for US tax purposes, do i declare the 1000 as capital gain, even though i would have not sold the investment...?

Thank you.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian Citizen Working in USA, about to move back to Canada

Post by nelsona »

In 2023, you will be a Cdn resident, so your cap gains will be Cdn-sourced, not US, so you won;t even include them on your 1040NR, which is solely to file US-sourced income. You might not even have to file a 1040NR.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply