Canadian in California first time

[booleanDog]

Hello All,

Found this forum a few weeks ago and it is very informative. My wife and I recently moved from British Columbia to California and it will be our first time filing tax here. Not to become too wordy, I thought I would list in bullet points on our situation and our questions. Thanks again for any answers or pointing to the resources.

1. We arrived here August 2012. We both are on TN visa.
2. We own a house in Canada and rented out after we left.
3. We still have RRSP & TFSA there. Looks like I should be dumping my TFSA
4. We still have our DL and all of our bank accounts there.

Questions:

1. If I sell my TFSA now (Jan 2013), do I still need to file for that in 2014?
2. If we wish to keep our RRSP as it is, can we? Any implication?
3. Can I still contribute my existing RRSP contributing room?
4. If we wish to sell our place in 2013, do we need to pay our capital gain? It was our primary residence until Aug 2012.
5. Other than closing our DL, TFSA, what do we need to do to cut our tie to Canada?
6. Any recommended tax professional in Bay Area who have experience with Canada & US?

[nelsona]

1. Yes, and the money the TFSA has earned since at least August is taxable in US.
2. No problem, but you need to move it to a broker who will work with Cali residence, which would be TD waterhouse. Your Cdn bank won't.
3. There is no point after this march, since you will not get any future tax deduction. You might benefit for the 2012 tax year, but that supposes that your bank will allow it, most won't, see #2 above.
4. No. The worst you would do is pay some gains from aug 2012 until you sell.
5. Nothing. You live and work in US, and thus by treaty are Cdn non-resident. Your DL is no good becuae you don't live in the province anymore, same with medical, so why keep it.
6. There is no need in this age to deal locally. There are only about a dozen cross-border tax pros in N america.

Remeber that your Cdn taxes is one thisg, but you also have many many filing requirements and options for US taxes for 2012 and 2013.

[booleanDog]

Thanks for the quick reply Nelsona! Just curious, do you work for the serbinski firm? I am thinking of setting up the consultation with the firm, but if there is a choice I still like the feeling of working locally, but doesn't look like it :)

I have self-directed RRSP account at Questrade as well, let me find out if they allow me to contribute from here. Regarding the RRSP, is there any benefit to take it out by paying 25% tax vs keep it til we retire (assuming we don't need that money yet)?

Thanks!

[nelsona]

There are 2 issues. The ability to contribute for 2012 since you left canada already, and the ability to mange your account while living in US. The answer will probably be NO to both questions, but let us know.

I do not work fpr serbinski.

On the question of collapse of RRSP. 25% is alot of tax to pay on retirement funds, but if you do decide to do this, I would do it sooner rather than later.
The 25% tax can be used as a deduction rather than a credit.

If your spouse is not going to work, she can take about 12K a year from her RRSP and not pay any Cdn tax, using a 217 election, which I have described in detail elsewhere. That would be best solution for her RRSP.

The other way (once you are sure you will live in US for many years -- after you get GC) is to convert your RRSP to RRIF (you can do this at any age) and begin taking 10% of the value per year, taxed only at 15%.

[booleanDog]

Thanks for the information about RRIF, an option to think about when we know if we are staying here for longer term.

I called my bank (RBC), they said I can still contribute to my RRSP, but I can only buy GIC or RRSP Saving. Also talked with Questrade, and they allow you to trade from US. So maybe I'll contribute to that account to maximize my RRSP room to maximize my last tax break.

@nelsona, if you have a practice somewhere, I would like to contact you, please shoot me an email at my7884 {at} gmail {dot} com.

[nelsona]

you will need to move your rbc account.

[booleanDog]

If I am not planning to change anything, can I not keep RBC RRSP account as it is?

[nelsona]

No. They will ssoon ask you to move it, so you should be pro-active. Move it to tyour questrade account., or another self-directed account.