We are a Canadian couple in our 40s working in the US for almost 15 years on TNs and H1s (no green cards) and 2 young children born in the US. We are now making plans to move back to Canada within the next two years and we have some flexibility in timing for tax/financial planning.
I have seen postings on this forum regarding establishing residency in Canada, the implications of this with respect to converting retirement plans to a RothIRA, and a recent reference to the timing of selling your house. But given we have some control over the situation, I am wondering what the major items are that we really need to consider and be aware of. How can we best plan for or take advantage of or even optimize our situation given this change is coming?
For example - is there any advantage to one of us moving back to Canada, to start a job in November, while the other maintains their job in the US until the following tax year and returns to Canada in January? Or is residency a 'family' thing rather than by individual?
or
Could there be an advantage to both of us stopping work in the US at the same time traveling extensively for a while outside of North America (presumably ending US tax residency?) and then return to Canada at a later date to establish residency there? Is a residency gap even possible and is there an advantage to having one?
I would be interested to hear any thoughts from the readers of these forums and I would especially like to know about any sources that might discuss these issues.
Thanks!
Longer term planning for a move back to Canada
Moderator: Mark T Serbinski CA CPA
There is no advantage to any particular residency starting date for canada. You will generally file a full year 1040 in the year you leave, excluding any Cdn wages you earn after departure.
It doesn't matter when you sell your home, so long as it is done within a year after leaving US you will haveno tax issues. 3 years for US tax.
Just make sure that you get all your US-source income paid to you before you return if possible (ie severance, etc).
You may wish to be converting any IRA/pensions you have to Roths over time (2010 is a special year to do this) to spread the tax hit.
It doesn't matter when you sell your home, so long as it is done within a year after leaving US you will haveno tax issues. 3 years for US tax.
Just make sure that you get all your US-source income paid to you before you return if possible (ie severance, etc).
You may wish to be converting any IRA/pensions you have to Roths over time (2010 is a special year to do this) to spread the tax hit.
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