Canadian commuting to US for work

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Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Canadian commuting to US for work

Post by Moving2PS »

Hello !

I have a job offer in the northern Seattle area. I will be on TN status. I plan on relocating to southern BC and commuting everyday. Plan to have my family and kids in southern BC (white rock/south surrey area)

I have the following questions

1. Am I right in understanding that as a daily commuter from Canada to US, I will be considered a Non-Resident Alien for US tax purpose. So I will file the US tax return based on US employment income only. I will also file Canadian tax returns and pay the delta $ to CRA and province of BC.

2. Does the above mean that my TFSA and kids RESP are shielded from US taxation? Kids will always be living in Canada. I will be contributing towards their RESP as always. Will I also get contribution room for TFSA each year if I am living in Canada and commuting to US for work?

3. When we first move to southern BC I plan to rent my current house (primary residence) for 5-6 months while I set my family up in a rented condo in BC. I expect to buy a house in 6 months time in BC. When I eventually sell my primary residence (which would have been on short term rental) do I now have to pay capital gains tax? I will need every bit of the equity to afford a house in southern BC. Is there any clause that lets you rent your residence for a short time while you relocate to a new city and find a new residence to buy through the sale of your previous primary residence?

4. Is there any US tax implications with respect to the sale of my Canadian primary residence?

5. I have been looking through threads of Canadians working in US on TN status talking about liquidating entire TFSA, closing all bank accounts etc. As a daily commuter to US do I need to go to that extreme? I do understand if I were to permanently move to US at some point based on the Substantial presence test I would be a deemed resident of US and all of the above would be necessary. But as long as I am a daily commuter I should be ok holding on to TFSA, Kids RESP, my Canadian chequing and savings acct etc...right?

I would like to understand my tax implications in US and Canada before I decide to accept the job offer and move.

Thank you !
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Canadian commuting to US for work

Post by nelsona »

1, Correct. You will have an option however, if your US taxrate exceeds your CDn one (it happens), to file a special 1040NR with a lower tax rate, but we can discuss that next year.

2. Yes, nothing will change for your CDn taxation and residency

3. Not really, but you will not owe taxes on the gains made before renting. You should get a good evaluaution when you change the use of your property.

4. Not if you remain CDn resident. Even if you become US resident, you would not be taxed unless you sold three years after moving.

5. You do not need to do any of those things.

HOWEVER, you might wish to consider moving to WA (no state tax). You will save so much in taxes, that the minor inconvenience of dealing with some of the items you mentioned may be worth it, since you are willing to move to BC, consider moving 50 mile south. Are you getting a gas allowance from your employer?

I know that taxes are not everything, but you would do this if moving tp say Texas.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Re: Canadian commuting to US for work

Post by Moving2PS »

Thank you Nelsona for the quick reply. I was really hoping you would reply.

I did consider moving to Seattle area with the family. I used to live in the northern Seattle area back in the day when I was single. Truly enjoyed the "no state tax" :)

Unfortunately I'm in a volatile field (Aerospace) and with everything going on with the world right now I wouldn't be surprised if I were to ever lose my job. Under those circumstances the option of hopping into your car and driving and hr and a half north and not having to ever worry about visa/status in US would be a big blessing. With kids going to school, uprooting and moving during lay off might not be the best option for them. I am trying to ensure that my job will not affect my family.

I am not chasing green card ...this is just an opportunity to make decent $ and move to a city with relatively milder Canadian winter.

Are you a cross border tax specialist or did u learn about it through your own tax/employment journey across the border? just curious :)

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

Re: Canadian commuting to US for work

Post by nelsona »

I'll let you decide how much of an expert I am.

You are moving your kids already, no? Your "decent $" will be highly taxed in BC.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Re: Canadian commuting to US for work

Post by Moving2PS »

I am currently in Quebec ...I believe BC taxes are slightly better off...hence the optimism :)
Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Re: Canadian commuting to US for work

Post by Moving2PS »

Nelsona, if I decided to reside in the state of WA (as suggested by you), By when should I liquidate my TFSA (all in neg returns ATM).

Can I leave my RESP's to grow or should they be liquidated as well?

How long will I be considered a Non Resident alien for US tax purpose if i reside in US?

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

Re: Canadian commuting to US for work

Post by nelsona »

You should liquidate the TFSA now. You can refill it when you come back.
Keep the RESP, you may need to declare the internal income, but not worry about a trust report.

You will be considered departed Cdn emigrant the day you you move. While you would only be fully resident when you pass SPT (183 day in US this year), you will likely file a full year US resident tax return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Re: Canadian commuting to US for work

Post by Moving2PS »

and if I sold my primary residence before moving, is there any capital gain payable to CRA or can I move my funds to US to aid down payment for a home 2-3 yrs down the lane. Just trying to figure out my options.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian commuting to US for work

Post by nelsona »

You can sell before or after, as I mentioned in the first response.

Keep in mind that taxation is based on income, no matter where the money is kept. Moving money across the border or not does not trigger/prevent taxation.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Moving2PS
Posts: 9
Joined: Wed Mar 09, 2022 5:02 pm

Re: Canadian commuting to US for work

Post by Moving2PS »

Thank you sir !!!

Something interesting I just came across (you probably know this )

https://polaristax.com/resp-and-rdsps-b ... uirements/

To Summarize :

1. I have to close both mine and my spouse's TFSA (in red ) [ Just curious...what happens if i leave TFSA's open...do not contribute or change investments. Right now 100% of TFSA is in stocks. Without me selling any of my investments why would I need to pay any capital gains?]

2. Keep RESP /RRSP/Locked in RRSP open. No more contribution while we are non residents

3. Sell the house, use the $ to purchase new residence if and when possible.

4. Close chequing / savings acct and the one canadian credit card.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Canadian commuting to US for work

Post by nelsona »

Why would you close your Cdn bank/credit cards? These will be handy for any Cdn transactions you WILL have over the years, and will keep your credit rating ticking. No need to close for any reason.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
abderrazakchat
Posts: 3
Joined: Thu Jun 23, 2022 10:17 am

Re: Canadian commuting to US for work

Post by abderrazakchat »

You understand this pretty well. In one place, you will be a non-resident, and on the other hand, you will not be able to apply for an official job. Still, you can always search for some https://moneylifewax.com/side-hustle-ideas/. Try to find some hustle jobs if you are interested in gaining some extra money when you are traveling 2-3 hours per day is enough to get paid by some additional money, keep in mind that this kind of job also needs a contract. Still, this contact is just for you and the guys you were thinking of working for.
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