Hi All,
Looking for opinions on tax liability
I am a Canadian citizen who worked many years in US as a US resident.
Hold a brokerage account with a US firm and have some investments there
Moved back to Canada and retained the US brokerage account.
Question
If I sell stocks in the account am I liable to pay US tax ?
Can I transfer the stocks to a Canadian brokerage account with no tax implications ?
Liable to IRS ?
Moderator: Mark T Serbinski CA CPA
First off, do you have a Green Card? If you have a Green card and want to keep it, you must contuinue to file a 1040 with IRS.
However, whether ofr not you have a GC, since you are not a US citizen, by treaty, you are no longer required to report capital gains on non-real estate investments to IRS. You report these to CRA of course.
The cost basis for Canadian purposes is the value that they had when you arrived back in Canada, not the purchase price. This is part of the 'deemed acquisition' rules for newcomers to Canada, which you fell under when you returned. This can be a HUGE tax savings.
Now, it is possible that the brokerage might withhold some tax when they sell your investements (they will not if you transfer them to Canada -- this is not a taxable event). They should not, but often are unclear about treaty matters. This is not a big problem, because you would simply file a US return (a 1040NR if your don't have GC) at tax time and get the money back mentioning the treaty.
<i>nelsona non grata... and non pro</i>
However, whether ofr not you have a GC, since you are not a US citizen, by treaty, you are no longer required to report capital gains on non-real estate investments to IRS. You report these to CRA of course.
The cost basis for Canadian purposes is the value that they had when you arrived back in Canada, not the purchase price. This is part of the 'deemed acquisition' rules for newcomers to Canada, which you fell under when you returned. This can be a HUGE tax savings.
Now, it is possible that the brokerage might withhold some tax when they sell your investements (they will not if you transfer them to Canada -- this is not a taxable event). They should not, but often are unclear about treaty matters. This is not a big problem, because you would simply file a US return (a 1040NR if your don't have GC) at tax time and get the money back mentioning the treaty.
<i>nelsona non grata... and non pro</i>