Working in US with TN Visa

taxquestion · Post by **taxquestion** » Sat Dec 31, 2011 3:02 am

I moved to US in May (2011). I didn't declare departure till now, because I really don't know I have to do that.
My wife and child are still in Canada. I have some questions.
1. how to claim my tax in Canada and US for 2011?
2. In 2011 my income in Canada is about 40k, I have 16k RRSP amount from last year, could I use it and how to use it better?
3. After I move to US, I didn't set up 401k, can I use my RRSP? It's said I could buy IRA to deduct the tax, Can I do that?
4. What do I have to do for next year?

nelsona · Post by **nelsona** » Sat Dec 31, 2011 8:19 am

You would only declare departure to the Govt on your 2011 tax return, so there was nothing official to do until then. However, if you do indeed live in US, you must notify your RRSP manager, as they are not allowed to have US resident client, unless they specifically tell you that they can. You may need to move your RRSP to another firm, like TDWaterhouse, for example.

Now, to the question of residency. Since your family is still in canada, it would be very difficult for you to be non-resdent. You would have to NEVR visit them and establish a full-fledged home in US. If you have visited regularly, then you are still resident in canada. If you live out of a suitcase in US, you are still resident in canada.

So, assuming you are still resident in canada:

1. You report all income you made this year on your Cdn return. You will get credit fo the US tax you calculate on your US tax return.
2. You will probably be best to fund RRSP
3. see 2. there is no point funding IRA, since it will only rduce YUS tax but not Cdn tax.
4. Move your family to US.

nelsona · Post by **nelsona** » Sat Dec 31, 2011 8:26 am

Now, if you truly have moved to US, do not visit family and have a full-fledged hoem in US, you could declare your self DEEMED NON-RESIDENT, from May.

hen the answers to your questions become:

1. You will file a departure return in Canada, using your may departure date. Make sure that you are not collecting CCTB and GST credits anymore from that date. You will not have to report any US wages on that return.
2. You could still put some RRSP, but you would first neddto move the RRSP to a broker like TD waterhouse.
3. You can fund IRA, but Roth is probably better approach. If your employer has Roth401(k) consider this. You are not that concerned about lowering US tax, more concern about having to pay CDn tax later if you move back. Roth avoids the latter.
4. Move family to US.

nelsona · Post by **nelsona** » Sat Dec 31, 2011 8:26 am

Now, in either case you will ahve to file US tax return. I'll deal with questions on that later in tax season.

taxquestion · Post by **taxquestion** » Sat Dec 31, 2011 11:49 am

Thanks for your answer.
1. As you said, I have to claim US tax return first, because I have already paid tax when I got pay.
401k is not too late, is it? I will ask the company about this.
2. You suggest that I put Roth IRA, because US tax is lower than canada, but this one is like RESP.
when I claim US tax, I just need to claim my income in US, is that right?
3. How to claim the dependant?

4. Then after claim US tax, I have to claim my income from US and canada, is that right?
It wouldn't cause duplicate my tax, would it?
5. In this case, how to reduce my tax in canada using my RRSP amount?

nelsona · Post by **nelsona** » Sat Dec 31, 2011 5:25 pm

401(k) would be for next year. Whether you should fund 401(k) depends yon you being Cdn non-resident. You are Cdn resident, so RRSP should continue to be your primary focus, NOT Roth and not 401(k).

nelsona · Post by **nelsona** » Sat Dec 31, 2011 5:25 pm

Mechanical tax questions are for later in the season.

taxquestion · Post by **taxquestion** » Sat Dec 31, 2011 7:06 pm

I have 16k RRSP amount, I want to estimate how much it's better to use for reducing my tax. Before the end of Jan I have to buy RRSP, if not it will be late.
Could you give me any suggestion about how to estimate it?

If I am resident in Canada, I still can buy RESP, right?

Thanks.

nelsona · Post by **nelsona** » Sun Jan 01, 2012 9:47 am

If tou intend to continue working in US I would not start RESP.

You have until end of February to fund RRSP. Its quite simple toi figure ot: do taxes without RRSP contribution and then do taxes with successively larger RRSP contributions ($1000, $2000, $3000, etc) . This will tell you whay optimum level is.

taxquestion · Post by **taxquestion** » Sun Jan 01, 2012 12:52 pm

Thanks for your answer.
Could you introduce a tool for me to estimate both tax for Canada and for US? so I will know how much RRSP amount I should use.

Thanks

nelsona · Post by **nelsona** » Mon Jan 02, 2012 10:46 am

ufile.ca

Simply begin doing your taxes, and then make estimates.

taxquestion · Post by **taxquestion** » Mon Jan 02, 2012 11:41 am

How about US tax? I have to claim US tax first, right?
Thanks

nelsona · Post by **nelsona** » Mon Jan 02, 2012 12:30 pm

Yes, I already described this.

I'm not doing your taxes for you; I'm only describing the process.

You can read many threads here on how to file non-resident taxes.

taxquestion · Post by **taxquestion** » Mon Jan 02, 2012 2:51 pm

Sorry fro bothering you.
I just don't know do I need IRA to reduce my US income or just use RRSP to reduce my tax when I claim tax return in Canada.
I don't know what is better choice for me. I need some suggestions.
Or I can use some tool to estimate it myself.
As you mentioned, I am non resident in US, so I need file 1040NR form.

Thanks.

nelsona · Post by **nelsona** » Mon Jan 02, 2012 2:55 pm

already answered above.