Taxes after moving to US

murloc · Post by **murloc** » Tue Jan 31, 2012 2:06 am

I and my wife (canadian citizens) moved to US(California) in 2011 (H1-B).
- I have worked in Canada until Jan 21, 2011 (I earned about 3.5k and payed 1k taxes).
- We owned a house in Canada. We have signed the sale contract on Jan 8.
- We moved to US on Jan 24.
- I started to work in US on Jan 31.
- The house deal closed on Feb 18. The lawer put remaining money into my checking account.
- We had saving/checking bank accounts + credit cards when we left. Before leaving I have opened bank account in USA and got credit card (thought RBC USA). Soon after we left I transfered all money into US account and we stopped using canadian credit card. The canadian credit card/bank accounts are still open, but inactive.
- We canceled OHIP/driver license
- I have money left in RRSP (mutual funds). I maxxed it out using the money from house. I am planning to withdraw RRSP using non-resident tax rate (25%) and move all money to US.
- My wife has never worked in 2011 (Canada+US).

- Assuming I don't owe taxes, is it in my interest to file canadian tax return? My understanding it is optional if they owe money to me.
- If I file the canadian return what date shall I choose for departure date? Can/shall I choose Feb 15 to avoid the deemed disposition, or it does not apply here?
- am I corect that I don't need to mention my US income on canadian return whatsoever?
- while filing my US return do I need mention anything about canada income? I know I need to file something extra about RRSP.
- Do I file 1040 NR, full or dual?
- What is the best approach for the RRSP money?

Thank you

nelsona · Post by **nelsona** » Tue Jan 31, 2012 7:31 am

Ypu really need to file ypur departure return, as this serves as notification that you left, and you may have departure tax to pay.

You will fiel a full 1040 reporting all your income for the year, including Cdn income. You will exclude your Cdn wages by form 2555.

murloc · Post by **murloc** » Tue Jan 31, 2012 12:47 pm

Thanks for replying nelsona.

So what shall I choose as my departure date? If I choose Jan 24 will it make me pay taxes on the house? I have read somewhere that RRSP and house are excluded from deemed disposition.

nelsona · Post by **nelsona** » Tue Jan 31, 2012 12:54 pm

You won't pay tax on your house regardless of when you sold it; it was your principal residence.

You left on Jan 24.

murloc · Post by **murloc** » Tue Jan 31, 2012 1:45 pm

I see. So if I set my departure date to Jan 24, do I need to file T1161 and list the house there? RRSP is excluded from T1161 list and I did not own anything else.

Also I read CRA emigrant guide and it does not have term' departure tax'. My understanding that 'departure return' is my last tax return where I fill in my departure date, is it correct? Is departure tax the result of that return, or is something that result of deemed disposition?

nelsona · Post by **nelsona** » Tue Jan 31, 2012 2:55 pm

The correct term is tax on "deemed disposition upon departure from canada".

Your departure return, is the return you file, with a departure date, and fulfilling all the requirements listed in the Emigrant guide.

I would simply file a T2091 to make the sale of your house offcially a principal residence, and not include it on T1161, since your sale was pending at the time of your move.

T1243 would not list the house in any event, as it would be excluded.

murloc · Post by **murloc** » Thu Feb 02, 2012 2:08 am

Thanks nelsona.

So I will need to file T2091, T1161 (and T1243?) in addition to usual tax forms. Are there any other forms I missing here that will need to be filed? Or reading and doing emigrant guide should be sufficient?

Thank you.