Hello
I have a question about my taxation status, as I will be moving
to the USA (California) on a TN work visa starting January 2012
(I am a Canadian citizen, currently residing in Canada).
I will stay in the USA for the whole year and I will be working full
time on a TN Visa. I might end up working for more than a year in
the USA, but at this point I cannot be sure.
My concern is with regards to my taxation status in the US and
Canada. Will I be considered a resident alien for tax purposes
in the USA? And how about in Canada? What will I be considered?
I will maintain my Canadian bank accounts, credit cards, RRSP,
and health card.
Would it make a difference if I owned a condominium here in
Canada?
Is it correct to assume that I will pay US taxes on my US income,
and I will only have to pay Canadian taxes on interest from
my bank account?
I would appreciate it if someone could help me out.
Thanks a lot
TN Visa and Taxation/residency status
Moderator: Mark T Serbinski CA CPA
As soon as you move to US to live and work legally, you will be considered US tax residdnt and Cdn non-resident.
You can keep all your Cdn financila accounts, except that you MUST move any RRSP accounts to broker that allows US residnet (TD waterhouse in one).
Your helth card will lapse, but who cares, it is worthless in US, you have US coverage thru your job, and you wil get it back when you come back. But ,if it makes you uncomfortable, you can contact your province BEFORE you leave and ask permission to keep your card alive while you are gone. This won't impact your tax residency.
You won;t pay Cdn tax on bank, because non-residents don't pay tax on intrest. You will report al your income in US.
If you have a condo rented oyr, you would pay tax in Canada fisrt and US second. If you don't rent it out or sell it, there are no tax issues.
You can keep all your Cdn financila accounts, except that you MUST move any RRSP accounts to broker that allows US residnet (TD waterhouse in one).
Your helth card will lapse, but who cares, it is worthless in US, you have US coverage thru your job, and you wil get it back when you come back. But ,if it makes you uncomfortable, you can contact your province BEFORE you leave and ask permission to keep your card alive while you are gone. This won't impact your tax residency.
You won;t pay Cdn tax on bank, because non-residents don't pay tax on intrest. You will report al your income in US.
If you have a condo rented oyr, you would pay tax in Canada fisrt and US second. If you don't rent it out or sell it, there are no tax issues.
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
-
ConfusedCNDN
- Posts: 2
- Joined: Sun Dec 18, 2011 1:03 am
Hello nelsona
Thank you for your reply. Could you please clarify something else?
So if I am considered a non-resident in Canada, do I have to file
a Canadian tax return every year? There also will be some Canadian bank
accounts in my name. Will I have to pay the Canadian government tax
on my US income? In other words, if I have to submit a Canadian tax
return, do I need to report to Canada my US income, or I only need to
report my Canadian bank account, RRSP, TFSA, in my Canadian tax return?
Also could my canadian status as a non-resident be affected if I
have a non-rented out condominium in Canada? (my elder parents will
live in the condo, as they cannot afford a place of their own).
If 2 years down the line I decide to sell the condo because I might
have decided that I won't be coming back to Canada will there be any
tax implications (as I will not be at that time a Canadian resident)?
I thank you very much. Have a Merry Christmas.
Thank you for your reply. Could you please clarify something else?
So if I am considered a non-resident in Canada, do I have to file
a Canadian tax return every year? There also will be some Canadian bank
accounts in my name. Will I have to pay the Canadian government tax
on my US income? In other words, if I have to submit a Canadian tax
return, do I need to report to Canada my US income, or I only need to
report my Canadian bank account, RRSP, TFSA, in my Canadian tax return?
Also could my canadian status as a non-resident be affected if I
have a non-rented out condominium in Canada? (my elder parents will
live in the condo, as they cannot afford a place of their own).
If 2 years down the line I decide to sell the condo because I might
have decided that I won't be coming back to Canada will there be any
tax implications (as I will not be at that time a Canadian resident)?
I thank you very much. Have a Merry Christmas.
You file a departure return, and that would be it until you sell your condo. Read the "emigrants" guide on the CRA wbsite, it will descrbe the things you need to do when you leave canada.
As, I sais, once you move to live and work in US, you are Considered US tax resident and Cdn non-resident, this is because the treaty overrides any CRA regulations on this. That is why I said owning the condo is not tax issue, unles you rent it out or sell it.
As, I sais, once you move to live and work in US, you are Considered US tax resident and Cdn non-resident, this is because the treaty overrides any CRA regulations on this. That is why I said owning the condo is not tax issue, unles you rent it out or sell it.
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
Your condo sale may trigger some income tax if you were to sell it in 2 yrs after departure. I am assuming it was your principle residence all this time before when your parents were occupying it, having left 2 yrs prior the gain would be exempt till the yr of departure plus one bonus yr, theh if you sell it subsequently you will be taxed on the gain at say
number of yrs held / number of yrs as principle residence + 1 * gain
the gain is the proceeds less the FMW of condo when you left Canada not your original cost.
The longer you wait teh more tax you pay on gain if any gain arises.
number of yrs held / number of yrs as principle residence + 1 * gain
the gain is the proceeds less the FMW of condo when you left Canada not your original cost.
The longer you wait teh more tax you pay on gain if any gain arises.
JG
Just so we are clear, tax on former principal residence is detrmined by months of residency vs. months of non-residency, so 12 months after departure is the trigger, not portions of 2 years.
You leave in December 2011, the trigger point is december 2012, if you leave in jan 2012, the trigger point is jan 2012. there is no timing strategy that gets you extra time.
You leave in December 2011, the trigger point is december 2012, if you leave in jan 2012, the trigger point is jan 2012. there is no timing strategy that gets you extra 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
Yes. Just wanted to clarify that the calendar year was not the factor.
Some could interpret leaving in Jan 2012 as meaning that 2012 counted as principal residence, and 2013 was the extra year. Not so.
Some could interpret leaving in Jan 2012 as meaning that 2012 counted as principal residence, and 2013 was the extra year. Not so.
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