Timing of Move US to Canada

[lebrx002]

I’m planning on moving from US to Canada in next 16 months. I have some flexibility in move timing. Are there any timing implications that I should consider? I was thinking a move earlier in the year would be beneficial as I have some traditional 401k money to convert to Roth IRAs (from a previous employer) that could be executed at lower tax rate given US income from a few months of working. Any thoughts here?

[lebrx002]

I’m also a green card holder and plan to renounce it. Am I only taxed in US pre-renounciation in the tax year?

[nelsona]

Generally, one files a full year 1040 when leaving US, regardless of renunciation or not. There is no tax advantage in renouncing immediately.

[lebrx002]

If I minimize my US income in a given year, wouldn’t my US tax rate be lower? I’m trying to understand if I should time accordingly the Roth conversion from a tax standpoint.

[nelsona]

You didn't ask about minimizing your income, you asked about timing a move to/from US.

1040NR will give a higher tax than 1040, which requires reporting full year world income. If you are minimizing income, then yes, converting to Roth in a year with low income is best.

[depreciationrecapture]

Would the US income alone for the year we move be considered as the base on which marginal tax for 401k to roth conversion be applied or would the canadian income be added and that would be the base?

[nelsona]

Depends how you file and when you leave US. It is often better to file full year (with Cdn income) in departure year. for better tax rate. But any Cdn wages you would earn after departure, would likely be excludable using Foreign earned income exclusion.