Hello all,
First time poster here, with four quick questions. Background first:
I am born a Canadian Citizen, now a naturalized US Citizen (for 3 years now) living single, who will be making the move back to Alberta from California to start a new job on December 1st 2009. I have been living off California Unemployment Insurance the majority of 2009, and quite frankly am sick of it, and also sick of cutting into my savings. In October I decided to 'cast a wider net' in my job search, and lo and behold I got a very nice bite in Alberta. Why not go where the job is+free health care+family? :))
Q1) I find all of this tax stuff daunting. I am bad enough with a single country return, and am now dreading two returns. I am considering asking my new employer to defer paying my two December 2009 cheques, to the Jan 15th 2010 pay cycle. Does this really buy me anything? I'd really prefer to do a simple cutover Jan 1 2010 if possible, just for simplicity sake of not having to bother filing a 2009 Canadian return. It would buy me a full year of not having to worry about all of this, and time to figure all this stuff out.
Q2) All of my net worth is pretty much in the stock market. My positions are 93% green, 7% red. 75% regular brokerage, 25% IRA. Can I just leave these in my Etrade account down here in the US? Or do I need to do anything fancy like this Roth IRA rollover, or sell my red position?
Q3) I have found a friend down here that wants to sublet my apartment. I guess this maintains my US address for me. He even said he would forward important mail up to Canada for me. Besides this convenience, does maintaining my address down here buy me anything?
Q4) The last wild card in all of this, is that the Alberta winter may kill me by May/or the economy may improve in Cali, and I may just decide to pull the rip-cord and head back here. Does that statement play any role here from a tax perspective?
Q5) And more of an FYI, I will be crashing in a spare room at my brothers place while I settle in. I have not yet done any house-hunting up there yet.
Thanks for any tips. And it looks like I may need to hire someone around here professionally to help me out.
Best,
Jamie
confused dual US/CAD citizen moving back to CAD next week...
Moderator: Mark T Serbinski CA CPA
1. Well the fact that you are working in AB in december means you will be filing a return in canada, starting Dec 1, so you can't avoid this.
2. You don't need to do anything, but selling your losers before coming to Canad makes sense, since canada will not recognoze either the pre-arrival gains or losses.
3. No. you do have to make sure that your US broker is ok with you living in Canda. If not you may have to switch brokers, transferring your investemnts.
4. no
5. This was not a question.
2. You don't need to do anything, but selling your losers before coming to Canad makes sense, since canada will not recognoze either the pre-arrival gains or losses.
3. No. you do have to make sure that your US broker is ok with you living in Canda. If not you may have to switch brokers, transferring your investemnts.
4. no
5. This was not a question.
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
Nelsona, thanks for the quick reply!
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>>> Well the fact that you are working in AB in december means you will be filing a return in canada, starting Dec 1, so you can't avoid this.
A) Sure I'll be working -- but if I ask payroll to defer my cheque-deposits until Jan 2010, could I effectively not have to deal with the whole foreign income section on my US tax return?
To put it another way, do you think it would be worthwhile to ask them to defer my start date to Jan 1? Having income in December does not really matter much for me right now. I am just looking at minimizing potential tax pain over the next few months with all this two country stuff. I guess you can say I am scared sh*tless :))
--
>>> You don't need to do anything, but selling your losers before coming to Canad makes sense, since canada will not recognoze either the pre-arrival gains or losses.
B) Interesting. What do they (CAD) recognize then?
I am with you on selling my loser position before arriving in CAD. However I have no problem also taking a small US gain (now) to balance out that loss, but is this a necessary step? ie. worthwhile from a tax perspective given my whole move description?
Also, any comment on this whole Roth-IRA rollover thing? Seems a pretty popular topic on this board, I wonder if it would be recommended for me!? I would love to know this answer (See my last sentence in this post).
--
>>> No. you do have to make sure that your US broker is ok with you living in Canda. If not you may have to switch brokers, transferring your investemnts.
C) Wow! Somewhat surprised on this one, as I can easily maintain a mailing address down here via my vast network of friends (translation: I have a room (plus mailing address permanently)). I find it hard to believe that all the US citizens that decide to spend 8 months of the year in Kelowna or Pickering as their alternate residences, shut down their ETrade accounts. Not trying to be a smartas* here, merely trying to understand.
Guess I will be calling Etrade and Fidelity tomorrow -- so what do I tell them? I am moving to Canada to work? I suppose I can offer them my brother's Canadian mailing address, but I bet they would be plenty happy knowing that I still have a US address. We'll see what they say after I call them.
Honestly, I'm surprised this question has not been answered before. I am sure I am not the only one that has gone through this transition. I mean no offense by this :))
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>>> no
D) Fair enough, but if I am not 100% sure that I will be living in CAD 7 months from now, it would be nice to know that I do not have to make drastic decisions such as converting my IRAs to Roth-IRAS.
--
>>> This was not a question.
True. However I've read a few posts on this board saying things like "although you can work in CAN, it may be wise to not claim perm. residency until later" -- in other words, even if you are working there, claim a temporary residence in CAD, for some kind of tax benefit. Maybe this was for Roth IRA conversion purposes in 2010.
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>>> h, and you do realize that you will continue to file a US return. Leaving cali for AB will mean a tax cut.
E) This may be the happiest bit of information I've read so far :) Yes, I have no problem filing the 1040NR for the rest of my life. I realize these tax treaties in place should protect me. But what do you mean by the comment above? The way you wrote it almost sounds favorable to me -- is there a chance i may get some random refund from one of the two countries?
--
Nelsona, sorry if I am being aggressive or offensive with my questions -- the good news is that I am assuming you are an employee of this Serbinski group? I would be up for a paid-advice interview, if you indeed work for these guys.
Again, thanks for all the advice
Best, J
--
>>> Well the fact that you are working in AB in december means you will be filing a return in canada, starting Dec 1, so you can't avoid this.
A) Sure I'll be working -- but if I ask payroll to defer my cheque-deposits until Jan 2010, could I effectively not have to deal with the whole foreign income section on my US tax return?
To put it another way, do you think it would be worthwhile to ask them to defer my start date to Jan 1? Having income in December does not really matter much for me right now. I am just looking at minimizing potential tax pain over the next few months with all this two country stuff. I guess you can say I am scared sh*tless :))
--
>>> You don't need to do anything, but selling your losers before coming to Canad makes sense, since canada will not recognoze either the pre-arrival gains or losses.
B) Interesting. What do they (CAD) recognize then?
I am with you on selling my loser position before arriving in CAD. However I have no problem also taking a small US gain (now) to balance out that loss, but is this a necessary step? ie. worthwhile from a tax perspective given my whole move description?
Also, any comment on this whole Roth-IRA rollover thing? Seems a pretty popular topic on this board, I wonder if it would be recommended for me!? I would love to know this answer (See my last sentence in this post).
--
>>> No. you do have to make sure that your US broker is ok with you living in Canda. If not you may have to switch brokers, transferring your investemnts.
C) Wow! Somewhat surprised on this one, as I can easily maintain a mailing address down here via my vast network of friends (translation: I have a room (plus mailing address permanently)). I find it hard to believe that all the US citizens that decide to spend 8 months of the year in Kelowna or Pickering as their alternate residences, shut down their ETrade accounts. Not trying to be a smartas* here, merely trying to understand.
Guess I will be calling Etrade and Fidelity tomorrow -- so what do I tell them? I am moving to Canada to work? I suppose I can offer them my brother's Canadian mailing address, but I bet they would be plenty happy knowing that I still have a US address. We'll see what they say after I call them.
Honestly, I'm surprised this question has not been answered before. I am sure I am not the only one that has gone through this transition. I mean no offense by this :))
--
>>> no
D) Fair enough, but if I am not 100% sure that I will be living in CAD 7 months from now, it would be nice to know that I do not have to make drastic decisions such as converting my IRAs to Roth-IRAS.
--
>>> This was not a question.
True. However I've read a few posts on this board saying things like "although you can work in CAN, it may be wise to not claim perm. residency until later" -- in other words, even if you are working there, claim a temporary residence in CAD, for some kind of tax benefit. Maybe this was for Roth IRA conversion purposes in 2010.
--
>>> h, and you do realize that you will continue to file a US return. Leaving cali for AB will mean a tax cut.
E) This may be the happiest bit of information I've read so far :) Yes, I have no problem filing the 1040NR for the rest of my life. I realize these tax treaties in place should protect me. But what do you mean by the comment above? The way you wrote it almost sounds favorable to me -- is there a chance i may get some random refund from one of the two countries?
--
Nelsona, sorry if I am being aggressive or offensive with my questions -- the good news is that I am assuming you are an employee of this Serbinski group? I would be up for a paid-advice interview, if you indeed work for these guys.
Again, thanks for all the advice
Best, J
Yeah, easy on the tone there; I am not a serbinski employee. He doesn't participate much on this board. Your opening line of gratitude, was pretty much eroded by the time you finished your second overly long post
You will be filing a 1040 the rest of your life, not 1040NR: you are a citizen.
I have answered the US broker question dozens of times: The answer depends on your broker. Thus you need to talk to your broker.
The situation as you described it would make you a resident Dec. 1. If ypou want to change the situation, then go ahead.
The tax rate in AB is probably lower than cali. But If you continue to live in cali,, while working in AB, you will in essence pay Cdn, AB, and Cali tax on your wages.
If you were to decide to 'stay in US' pending a final decision, then I would be 'moving' to Washington, where there is no state income tax. That would make my Roth decison much simpler.
You will be filing a 1040 the rest of your life, not 1040NR: you are a citizen.
I have answered the US broker question dozens of times: The answer depends on your broker. Thus you need to talk to your broker.
The situation as you described it would make you a resident Dec. 1. If ypou want to change the situation, then go ahead.
The tax rate in AB is probably lower than cali. But If you continue to live in cali,, while working in AB, you will in essence pay Cdn, AB, and Cali tax on your wages.
If you were to decide to 'stay in US' pending a final decision, then I would be 'moving' to Washington, where there is no state income tax. That would make my Roth decison much simpler.
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
Hi Nelson, your advice has been very helpful so far. I was hoping you could help answer me one last question. Ive decided to make my 'move' in the 2010 tax year for Roth IRA purposes. I also called TD-Ameritrade, and they said I can hold all of my accounts there (USA with my new CAD address). They even said I could trade regular stocks!
My question is I have long term capital gains of stocks in my taxable brokerage account here. Would there be an advantage to selling those here in the US before I make my 'move'? I was thinking I could take advantage of the 15% tax rate if I do this here. I do not think Canada has this advantage. This would help me immensely in paying my ROTH-IRA tax bill over the next couple of years.
Hope you can help me here. Thanks again!
My question is I have long term capital gains of stocks in my taxable brokerage account here. Would there be an advantage to selling those here in the US before I make my 'move'? I was thinking I could take advantage of the 15% tax rate if I do this here. I do not think Canada has this advantage. This would help me immensely in paying my ROTH-IRA tax bill over the next couple of years.
Hope you can help me here. Thanks again!
Remember that for Cdn purposes, all your investments will have fresh value when you move, so while you may owe 15% US tax on the gains you hold now, you will not owe much tax in canada for quite a while. You may have an opportunity, buy holding these long enough after moving to 'even out' the taxation in both countries.
But in terms of any damage you may cause by selling now rather than waiting, I don't see any problem. But I don't see a need to rush either. So take out the funds when you need them.
But in terms of any damage you may cause by selling now rather than waiting, I don't see any problem. But I don't see a need to rush either. So take out the funds when you need them.
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
let me see if I follow this. if I move feb 1 2010, with a $10,000 USD long term gain (I would only owe $1500 in taxes), but your saying my cost basis gets reset in canada to the higher price?
in other words if I sell a week after arriving in Canada my gain could substantially be substantially less, or even negative! this to me is really good news.
so when i file my 1040 next year, would I still owe that $1500 USD, if I sold them after my move date?
in other words if I sell a week after arriving in Canada my gain could substantially be substantially less, or even negative! this to me is really good news.
so when i file my 1040 next year, would I still owe that $1500 USD, if I sold them after my move date?
Thanks Nelson. So February 1 2010, I owe $1500 on my 1040 next year. And I owe a higher amount on my Canadian return since long term capital gains rates are higher. Do I owe each of the governments these respective amounts, or do i pay the lesser or higher to one only? Or am I somehow covered by the US/CAN treaty? I am trying to google for these answers but cannot find anything, hence my asking you all of these questions. Your help has been great.
I think you are missing the point:
Lets say you bought ABC for $10K.
1. you sell it now for $20K:
You owe US $1500, you owe your state tax, you owe canada nothing
2. You move to canada Feb 1 and the stock is worth $20K and you sell it the Feb 2 for same price:
You owe IRS $1500, you owe nothing to your former state, you owe canada NOTHING, since you made no gain between day you entered canada and day you sold.
3. same as 2 except you sell in July 2010 for $21K.
You owe IRS $1650 on gain of $11K. You owe canada tax on cap gain of only $1000 (21k -20k). Lets say its $200. US will credit you the $200 when you file your taxes (not as simple as that but that's the result).
So, as I said earlier, there is no harm in witing iuntil after you move to sell winning stocks (you should sell losers though) until after you move. If you have state cap gains tax, it may even be better to wait.
Btw as a US citizen living in canada, you will basically report all your income to BOTH countries, and then use a series of exemptions and credits to reduce your US tax.
Lets say you bought ABC for $10K.
1. you sell it now for $20K:
You owe US $1500, you owe your state tax, you owe canada nothing
2. You move to canada Feb 1 and the stock is worth $20K and you sell it the Feb 2 for same price:
You owe IRS $1500, you owe nothing to your former state, you owe canada NOTHING, since you made no gain between day you entered canada and day you sold.
3. same as 2 except you sell in July 2010 for $21K.
You owe IRS $1650 on gain of $11K. You owe canada tax on cap gain of only $1000 (21k -20k). Lets say its $200. US will credit you the $200 when you file your taxes (not as simple as that but that's the result).
So, as I said earlier, there is no harm in witing iuntil after you move to sell winning stocks (you should sell losers though) until after you move. If you have state cap gains tax, it may even be better to wait.
Btw as a US citizen living in canada, you will basically report all your income to BOTH countries, and then use a series of exemptions and credits to reduce your US tax.
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
If you live in cali, I would DEFINITELY wait to sell my winners.
I would also, be looking at 'moving' to another state before doing the Roth conversion, like washington. You have some time.
I would also, be looking at 'moving' to another state before doing the Roth conversion, like washington. You have some time.
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
Well, I did literally defer my 'move' to Canada to Feb 1 2010. So why not go all the way right?
Well, after crunching some numbers, I think I get it -- I need to 'move' to Washington for my ROTH conversion, as it is substantial. I'm thinking that I should 'move' to Spokane, close to Alberta.
But how can I possibly pull this off? Would IRS buy that I moved to Washington for 1 month in Dec 09 or Jan 10 -- do they really research this stuff, since I'm sure WA is a well known tax haven? Unfortunately I do not have any friends in WA to borrow a mailing address. But I did go to UPS.com, and can actually get a new mailing address. Sounds official enough. I may just do this.
This whole post sounds illegal, and may get deleted :))
Well, after crunching some numbers, I think I get it -- I need to 'move' to Washington for my ROTH conversion, as it is substantial. I'm thinking that I should 'move' to Spokane, close to Alberta.
But how can I possibly pull this off? Would IRS buy that I moved to Washington for 1 month in Dec 09 or Jan 10 -- do they really research this stuff, since I'm sure WA is a well known tax haven? Unfortunately I do not have any friends in WA to borrow a mailing address. But I did go to UPS.com, and can actually get a new mailing address. Sounds official enough. I may just do this.
This whole post sounds illegal, and may get deleted :))