Most of article are about how to become a non-resident of Canada. It seems no one ask about keeping resident status in Canada in order to be able to apply the Lifelong Learning Plan(LLP).
My wife will move to US and hold a H1-B visa. I am a Canadian citizen and will move with her to the US. I have a H4 visa. I am planning to attend a post-graduate program in US. I am thinking I may be able to participate and move some money out of my RRSP.
1. One condition I must meet in order to be able to participate the LLP is that I must be Canadian resident. What are the ways to keep my Canadian resident status even I will be living in US with my family?
2. If I am considered as a resident in Canada by CRA, do I still need to file joint tax return with my wife? If yes, I will need to get a ITIN, does that mean I will be considered by IRS as a resident in US and I will be a deemed non-resident in Canada?
3. What will change my resident status in Canada? Say, I start working in US on TN or H1-B visa, or I close all my bank account including RRSP?
4. Is my wife a deemed non-resident of Canada even she is living with me, a Canadian resident living in US( sorry, I couldn't find any other way to describe it). Can she keep her bank account, RRSP and maybe a credit card in Canada?
I appreciate any comments / suggestions very much.
keep resident status in Canada in order to participate LLP
Moderator: Mark T Serbinski CA CPA
I'll try to answer the questions first, and then elaborate:
1. Unless you and/or your family maintain a home in Canada, and not in US, the only way YOU can be considered CDn resident is if YOU go down there specifically on a student visa (and not decide later).
2. It will be to her advantage to fiel a joint return with you, as this will lower her taxrate. How you file in US will not affect Cdn residency determination.
3. Unless you are on a student visa, whether or not you work, you will be considered Cdn non-resident, since you will be US resident.
...
1. Unless you and/or your family maintain a home in Canada, and not in US, the only way YOU can be considered CDn resident is if YOU go down there specifically on a student visa (and not decide later).
2. It will be to her advantage to fiel a joint return with you, as this will lower her taxrate. How you file in US will not affect Cdn residency determination.
3. Unless you are on a student visa, whether or not you work, you will be considered Cdn non-resident, since you will be US resident.
...
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
4. Your wife will be a non-resident of canada, since she will be living and working in US, with her family. There isn't much way around that. Even keeping a house in canada will se her classified as a deemed non-resident, which is essentailly the same thing. There is no advantage for her to be considered anything but non-resident.
The keeping of anything but a house or dependants in canada is considered minor ties and can be kept. The treaty definition of residency would make all of you resident of US, except in the case where one of you would enter and stay on student visa.
Now, to the matter of the LLP. Since the LLP must be repaid at some point, I wouldn't be contorting my life just to get access to that money. Remember, the instant you would become non-residenr, you would have to pay it back or include the balance in income, so, unless you are only planning to go to US for a couple of years, there isn't much point to starting the LLP.
My opinion, it would be better for you to simply become non-resident, and, if you need the cash, take out your RRSP at the much reduced non-resident rates (since you are not woring you could pull out $10 (15K or more as a student) a year and pay little or no tax in the end (under section 217) and the money is yours.
You will have a tough time convincing CRA that, even as a student, you are non-resident, if you have no home to come back to. mainating a home in canad would wipe out any tax savings from the LLP (which are minimal anyways).
Come to US, then systematically use section 217 to whittle down your RRSP tax-free.
The keeping of anything but a house or dependants in canada is considered minor ties and can be kept. The treaty definition of residency would make all of you resident of US, except in the case where one of you would enter and stay on student visa.
Now, to the matter of the LLP. Since the LLP must be repaid at some point, I wouldn't be contorting my life just to get access to that money. Remember, the instant you would become non-residenr, you would have to pay it back or include the balance in income, so, unless you are only planning to go to US for a couple of years, there isn't much point to starting the LLP.
My opinion, it would be better for you to simply become non-resident, and, if you need the cash, take out your RRSP at the much reduced non-resident rates (since you are not woring you could pull out $10 (15K or more as a student) a year and pay little or no tax in the end (under section 217) and the money is yours.
You will have a tough time convincing CRA that, even as a student, you are non-resident, if you have no home to come back to. mainating a home in canad would wipe out any tax savings from the LLP (which are minimal anyways).
Come to US, then systematically use section 217 to whittle down your RRSP tax-free.
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
In fact, I encourage ALL non-working non-residents who accompany their spouses to US to aggressively use section 217 to withdrasw at least $8000 per year tax free, and if you have medical premiums and expenses and/or tuition expenses, even more.
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
Thank you so much for the answers. I have some more questions:
As to my RRSP, I phoned the Scotia bank. They only allow me to trade via phone after I move to NJ in US. According to the articles in this forum, I shall open a TD waterhouse Self-Directed RSP and RIF account in Canada. It seems I can't have direct trading account with TD. Is that correct?
I have a stock trading account with ETrade Canada, which has $1CDN for opening account, some USD, and some NASDAQ listed stocks. Do I have to close it? I phoned ETrade Canada. They told me that I can transfer my account to ETrade US. If I transfer, do I have to let anyone (like CRA) know about it?
It also seems that I need to get a statement or something that shows the current value/price of the funds in RRSP. Do I need to do that for the stocks in my ETrade Canada account?
Again, really appreciate any answer or suggestions
Thanks a lot.
As to my RRSP, I phoned the Scotia bank. They only allow me to trade via phone after I move to NJ in US. According to the articles in this forum, I shall open a TD waterhouse Self-Directed RSP and RIF account in Canada. It seems I can't have direct trading account with TD. Is that correct?
I have a stock trading account with ETrade Canada, which has $1CDN for opening account, some USD, and some NASDAQ listed stocks. Do I have to close it? I phoned ETrade Canada. They told me that I can transfer my account to ETrade US. If I transfer, do I have to let anyone (like CRA) know about it?
It also seems that I need to get a statement or something that shows the current value/price of the funds in RRSP. Do I need to do that for the stocks in my ETrade Canada account?
Again, really appreciate any answer or suggestions
Thanks a lot.
You will not be able to do any more online trading in your RRSP regardless of firm. This is a condition of allowing the Cdn brokerage to handle your accounts. So if Scotia will alow trading by phone (presuming you have a self-directed account) then this is as good as it will get.
Trading in RRSPs is permitted while living in US, as indicated above. However, trading is NOT permitted in non-sheltered accounts, so you will need to close these and either sell up or transfer the investments to US broker.
As you may know, you will have exit tax (deemed disposition tax) to pay in canada based on the value of your investments on the day you move (you are responsible for tracking this), so you might consider just selling off now to simplify. Again, this applies only to non-sheltered accounts.
For your RRSP, you should be bumping up the value of your assets buy moving your funds around before leaving so that any appreciation is locked in before going south. IRS rules will make the growth of your RRSP after arrival in US taxable when you withdraw funds, based on the book value, not simply the value the day you move.
By the way, in all likelihood, you will eventually elect jan 01 as the date you become US resident for tax purposes (this will not coincide with your cdn departure date which will be the true date), so you will need to know the book value of all your RRSP holdings as of december 31 2007
Trading in RRSPs is permitted while living in US, as indicated above. However, trading is NOT permitted in non-sheltered accounts, so you will need to close these and either sell up or transfer the investments to US broker.
As you may know, you will have exit tax (deemed disposition tax) to pay in canada based on the value of your investments on the day you move (you are responsible for tracking this), so you might consider just selling off now to simplify. Again, this applies only to non-sheltered accounts.
For your RRSP, you should be bumping up the value of your assets buy moving your funds around before leaving so that any appreciation is locked in before going south. IRS rules will make the growth of your RRSP after arrival in US taxable when you withdraw funds, based on the book value, not simply the value the day you move.
By the way, in all likelihood, you will eventually elect jan 01 as the date you become US resident for tax purposes (this will not coincide with your cdn departure date which will be the true date), so you will need to know the book value of all your RRSP holdings as of december 31 2007
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
Just one more thing on selling before mover. If you do hold positions in your non-sheltered accounts which have lost money, wait until after leaving canada to sell. This will allow you to claim the full capital loss on your US return as well as Canada.
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
[quote="nice"]Thank you so much for the answers. I have some more questions:
........
I have a stock trading account with ETrade Canada, which has $1CDN for opening account, some USD, and some NASDAQ listed stocks. Do I have to close it? I phoned ETrade Canada. They told me that I can transfer my account to ETrade US. If I transfer, do I have to let anyone (like CRA) know about it?
........
Thanks a lot.[/quote]
I'm considering doing the reverse and becoming resident of Canada (after 15yrs in US) but maintaining US home and accounts. Did Etrade Can say anything about Etrade US accounts can be transferred to them? (For when you go back, say).
........
I have a stock trading account with ETrade Canada, which has $1CDN for opening account, some USD, and some NASDAQ listed stocks. Do I have to close it? I phoned ETrade Canada. They told me that I can transfer my account to ETrade US. If I transfer, do I have to let anyone (like CRA) know about it?
........
Thanks a lot.[/quote]
I'm considering doing the reverse and becoming resident of Canada (after 15yrs in US) but maintaining US home and accounts. Did Etrade Can say anything about Etrade US accounts can be transferred to them? (For when you go back, say).
To parravan:
i didn't ask the ETrade Canada about transferring account from US. So, I don't know the answer. But I am sure you can ETrade Canada's toll free number to ask.
To nelsona:
There is another interesting situation regarding the stocks in my ETrade account.
1. Some of the stocks are purchased in ESPP a couple years ago. The money is deducted from the pay check in CAD every month and then twice a year the money is converted into USD to buy the company stock. A couple of years ago. the USD was worth 1.4 CAD. So, in the deemed disposition form, can I use the CAD price when the stocks are bought as the 'adjusted cost base' and the current market value in CAD as 'fair market value'?
2. Are the stocks bought via ESPP normally considered as wages? Shall I contact my old company to find out?
I saw in a previous post "If your espp is wages, then the portion 'earned' before arrival in US can be exempted by 2555, just like your wages are. "
Can you confirm that I don't need to claim the ESPP stocks in the T1243 if they are wages?
3. I have some other stocks that were given by the company and are not under my ESPP account in ETrade. How shall put them into T1243?
Thanks again in advance
i didn't ask the ETrade Canada about transferring account from US. So, I don't know the answer. But I am sure you can ETrade Canada's toll free number to ask.
To nelsona:
There is another interesting situation regarding the stocks in my ETrade account.
1. Some of the stocks are purchased in ESPP a couple years ago. The money is deducted from the pay check in CAD every month and then twice a year the money is converted into USD to buy the company stock. A couple of years ago. the USD was worth 1.4 CAD. So, in the deemed disposition form, can I use the CAD price when the stocks are bought as the 'adjusted cost base' and the current market value in CAD as 'fair market value'?
2. Are the stocks bought via ESPP normally considered as wages? Shall I contact my old company to find out?
I saw in a previous post "If your espp is wages, then the portion 'earned' before arrival in US can be exempted by 2555, just like your wages are. "
Can you confirm that I don't need to claim the ESPP stocks in the T1243 if they are wages?
3. I have some other stocks that were given by the company and are not under my ESPP account in ETrade. How shall put them into T1243?
Thanks again in advance
nice
Thanks for response. I'm still 8 months away from pulling trigger and didn't want to give away plans to soon. I'm still intrviewing various firms re: moving back to Canada , I'll open an Etrade CAN account anyway in case it helps for a transfer. Were they any fees associated with your transfer?
Thanks
Thanks for response. I'm still 8 months away from pulling trigger and didn't want to give away plans to soon. I'm still intrviewing various firms re: moving back to Canada , I'll open an Etrade CAN account anyway in case it helps for a transfer. Were they any fees associated with your transfer?
Thanks
If the staocks are yours, and not options, then there are no longer any 'wages' associated with them, your have exercised the option of taking them. Thus they need to be reported and deemed gains need to be determined in the normal manner. The cost basis of any foreign stocks you buy need to be tracked in the Cdn value at each time you bought them, so those bought 4 years ago and sold now at the same USD price would in fact be a 40% loser.
As to transferring stocks between a US and Cdn broker this is easily done between ANY two brokers, not simply two 'sister' firms. The 'destination' brokr will gladly accept transferred stock from any foreign broker.
Note that once you leave canada, any mutual funds you have outside your RRSP can only sold, not traded or bought, so you would want to get rid of these.
As to transferring stocks between a US and Cdn broker this is easily done between ANY two brokers, not simply two 'sister' firms. The 'destination' brokr will gladly accept transferred stock from any foreign broker.
Note that once you leave canada, any mutual funds you have outside your RRSP can only sold, not traded or bought, so you would want to get rid of these.
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