Where to put savings when a J-1 research scholar

cognac · Post by **cognac** » Thu Apr 07, 2011 7:02 pm

I am under a J-1 visa as a research scholar. I have been in the US for 2.5 years. I have an income in the US but none in Canada. I fill a resident tax form in US but do not fill tax in Canada (I filled a NR73). I will probably go back to Canada in 2.5 years. In the past two years, I have invested my saving directly in stocks. My question is, is there any better option in my case?
Should I and can I contribute to an American Roth and IRA? Should I transfer some money to Canada and contribute to a TFSA. What are the consequences of doing any?
There is a lot of underlying questions beneath which probably involve timing for tax purpose of moving money from US to Canada.
Thanks a lot

nelsona · Post by **nelsona** » Fri Apr 08, 2011 6:34 am

You are noat allowed to fund a TFSA when out of canada.

Your stocks is the best idea since if you do not sell them before leaving US, all the gains made while in US wil be tax-free in both US and canada.

cognac · Post by **cognac** » Fri Apr 08, 2011 12:52 pm

I don't understand why I wont have to pay tax on the gains I`ll make. Wont I have to fill tax in US as a NR when back to Canada? If not, can I keep the money there and let it grow tax free? That seems to good to be true. Will there be other type of penalty at the time of cashing or perhaps when wire transferring to Canada.

thanks

nelsona · Post by **nelsona** » Fri Apr 08, 2011 1:32 pm

Nope. And it doesn't matter where the stocks are kept (ie. what broker).

This has long been a known advantgae for those non-US citizens moving FROM US TO canada. keep it in your back pocket.

nelsona · Post by **nelsona** » Fri Apr 08, 2011 1:33 pm

Btw, I'm surprised you wer egranted Cdn non-resdiwncy, since, by IRS regs you cannot be US tax resident whiel on J1.

cognac · Post by **cognac** » Fri Apr 08, 2011 3:02 pm

Wow! I cant believe what I am reading. So if I invest let say 25k over the course of 5 years at a rate of 7% I would be cash in 190k in 30years. Or a take some of the capital once in a while.

Now two questions:
- Will I be allowed to continue to invest in these stocks when back to Canada?
- Was I allowed to invest in these stocks when I first moved in US (when I was NR)?

For the NR73 in Canada, I should have probably clarify that I am a research scholar and not a student J-1. Apparently it does make a difference i.e. two years instead of 5.

http://www.usvisataxes.com/knowledge-ba ... -2009.html

nelsona · Post by **nelsona** » Sat Apr 09, 2011 12:02 am

I have elaborated on the procedure elsewhere so I'll let you do some research.

You will of course be on the hook for any gains incurred while resident of canada. But you will get the growth made while resident of US tax-free, which is what I wrote:

"all the gains made while in US wil be tax-free in both US and canada."

So you invest $100 now, and it is worth $200 when you move back, and $400 when you sell. You will not be taxed in US, but will owe tax on $200 cap gains in canada.

You need to pay attention to what I actually write.

This is regardless of US status by the way, as long as you do not become US citizen or GC holder, since this will make you taxable even of you return to Canada.