I am a US citizen who immigrated to Canada in last May (I have Canadian Permanent Residency card). I work for a Canadian company and live in Ontario. My spouse and kids are still in US and we have a house in US in which they live. I have bank accounts in US and also capital gains and dividends from stocks I own with brokerage in the US. Since I am taxed on worldwide income on US return, wanted to find out:
1. I need to report interest and dividends from US on Canadian return also in addition to reporting them on US and state returns. Do I take the deduction of interest and dividends on line 256 (Additional Deductions) of T1-Page 3 as US and Canada have a treaty? or, do I include the entire interest and dividend as investment income on Canadian return and then claim foreign tax credit (for payment to US) against the US interest and dividend?
2. Similarly, for stocks sales in the US, do I report it as foreign capital gains on Canadian return and then claim foreign tax credit against it or do I deduct the entire gains on Line 256 of T1-Page 3 (assuming it's covered in the US-Canada treaty)
3. I have both traditional and roth IRAs in the US as well as 401k plans. Are any earnings from them need to included on Canadian tax return? (I contributed to Roth for 2013 also from US sourced income). Do I need to notify CRA about them on any form?
4. Do I file Canadian return first or the US tax returns (I am getting refund on Canadian tax return and filed for extension of US tax returns, so have some time to file my 2013 taxes)
Thanks
US citizen moved to Canada after getting Canadian PR card
Moderator: Mark T Serbinski CA CPA
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DonMurphyCanada
- Posts: 73
- Joined: Sat Mar 01, 2014 11:41 pm
Sorry Tony don't have any answers for your questions but also remember FBAR reporting if the value of all your Canadian accounts were over 10000 US at any time during the year and try to stay away from investing is RESP's and TFSA's as the will create a paperwork nightmare for you. Search for other posts in this forum for the details.
Don
Don
"... and try to stay away from investing is RESP's and TFSA's as the will create a paperwork nightmare for you."
To which I would add, avoid PFICs. That means no Canadian mutual funds or ETFs (Exchange Traded Funds). You can, however, buy US-managed ETFs which invest in the Canadian market, and you can do this through a Canadian brokerage which will purchase them for you on the US market.
Once you report your Canadian address to your US brokerage, they will ask you to take your business to Canada.
To which I would add, avoid PFICs. That means no Canadian mutual funds or ETFs (Exchange Traded Funds). You can, however, buy US-managed ETFs which invest in the Canadian market, and you can do this through a Canadian brokerage which will purchase them for you on the US market.
Once you report your Canadian address to your US brokerage, they will ask you to take your business to Canada.
Aside from the secondary issues of foreign reporting, the real question is residency.
First, if you are considred a CDn resident, you are considered a NEWCOMER to canada, so you do not file a run-of-the-mill Cdn return. You need to consulr the newcomers guide from CRA.
If you are NOT a Cdn tax resident, then you would only report your Cdn-source wages, as a non-resident. Any investment income, regardless of whre the account is, would only be taxed in US.
But, assuming you are a Cdn tax resident from May, then you need to evaluate all your holdings on your aaival date, as cap gains will accrue from that value, not your origina;/adjusted cost basis you will use on your 1040.
A quirk in the tax treaty would mean that only the US tax on US dividends would be eligible for tax credit on your Cdn return. Any relief for double taxation on any other income, would be from your US tax returm, , form 1116, specifically re-sourcing what would now be considered Cdn-sourced gains (again, where the broker is matters not). Depending on how little time you spent in US between May-Dec, you may also be eligible for using 2555 to exclude your Cdn wages.
You cannot contribute to Roth while resident of canada or the Roth is broken for Cdn tax purposes (ie, no sheltering). I hope you made these contributions before May or you are screwed.
First, if you are considred a CDn resident, you are considered a NEWCOMER to canada, so you do not file a run-of-the-mill Cdn return. You need to consulr the newcomers guide from CRA.
If you are NOT a Cdn tax resident, then you would only report your Cdn-source wages, as a non-resident. Any investment income, regardless of whre the account is, would only be taxed in US.
But, assuming you are a Cdn tax resident from May, then you need to evaluate all your holdings on your aaival date, as cap gains will accrue from that value, not your origina;/adjusted cost basis you will use on your 1040.
A quirk in the tax treaty would mean that only the US tax on US dividends would be eligible for tax credit on your Cdn return. Any relief for double taxation on any other income, would be from your US tax returm, , form 1116, specifically re-sourcing what would now be considered Cdn-sourced gains (again, where the broker is matters not). Depending on how little time you spent in US between May-Dec, you may also be eligible for using 2555 to exclude your Cdn wages.
You cannot contribute to Roth while resident of canada or the Roth is broken for Cdn tax purposes (ie, no sheltering). I hope you made these contributions before May or you are screwed.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best