J-1/J-2 Visa - Capital gains and dividends

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bandana
Posts: 16
Joined: Sat Jun 25, 2011 9:41 pm

J-1/J-2 Visa - Capital gains and dividends

Post by bandana »

Hi,

My spouse and I will soon be going to the US (she on a J-1, and I on a J-2) so that she can take up new employment. Given the J status of the visas, and considering what I have read on this forum and elsewhere, we will be non-residents as far as the IRS is concerned.

1) Am I right in assuming, therefore, that we will continue to be Canadian residents for tax purposes?
2) If so, how should be handle and report dividends and cap. gains/losses of our equity investments? We both have a fair portfolio of Canadian equity (mostly dividend-paying REITs) and Canadian income trusts. These receive preferential tax treatment in Canada. (i.e. only 50% of capital gains are taxed, and dividends are taxed in a preferential manner). As such, do we declare capital gains on our Canadian tax return, or on 1040NR Schedule D?
3) Can we trade on our Canadian brokerage accounts while we are in J-status in the US, or should we transfer assets to a US brokerage?
4) Since we will be deemed residents (I believe) of Canada, does that mean we can continue to contribute to our Canadian TFSA's? I can find nothing on the CRA website that says we can't based on physical presence. The only distinction appears to be based on whether one is considered a resident or a non-resident.

I have searched for specific answers to these questions, and have found none! Thanks so much for taking the time to respond. It will be truly appreciated.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

1. You are correct. Regardless of how few ties you mat have in canada, you cannot break Cdn tax residency because you cannot meet US tax residency standards in the first years of J status.

2. You are taxable in canada on all your income. You only report US-sourced income on 1040. For Cdn residents, only cap gains from US real estate is reportable in US. Dividends from US firms are taxable at the flat rate.

3. You cannot trade in a Cdn investement account while on US soil. You may wish to move your stocks to a US brokerge. It is unlikley thatyou would be able to move your REITs and ither funds.

4. TFSA are still alowed for now. You will want to collapse these if you become US resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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