Tax Considerations for Canadian Banks Accounts - US Citizen

[Don M.]

I am a retired U.S. citizen, who is very leery of the safety of U.S. banks. In October, I will be going to Canada and purchasing a small cabin, and ultimately will be considered a part-year resident. It is my intention to open some Canadian bank accounts while there and transfer a fair amount of cash to them (due to the relative safety of Canadian banks and the Canadian dollar). The bank accounts and bank investments will return investment interest.

I of course understand that I will remain an American citizen, and I am therefore obligated to pay US taxes on my worldwide income. Nevertheless, what are the tax implications (on both sides) of the bank-paid interest? Will there be 25% with-holding by the Canadian bank?

Many thanks for everyone's time and consideration.

Don M.

[nelsona]

There is no such "part-year" resident of Canada, so you will be remaining US resident and a Cdn non-resident.

You may open a bank account, if the institution alloews it (since you will have no Cdn SS number). Non-residents are no longer subject to NR withholding tax on interest, so you will merely have to report your income on your 1040 as usual.

[Don M.]

Thanks for the response, but the info. is not quite correct. According to CIC Canada, there is very much such a thing as as a part-year resident. With the correct passport / visa or immigration process in play, foreign nationals are very much able to stay in the country for significant parts of a year, with no otherwise regard to legal status.

[nelsona]

Then they are not considered resident.