I'm Canadian (Toronto) and I will be going to the US (California) for 3 years on TN visa in Jan. 2014; trying to do some financial planning before I leave.
I have read some of the other threads but still have the following questions - hoping someone would be willing to help:
- Should I close all my savings and checking accounts? If so, where is it advised to place those funds?
- Is it OK to leave my credit cards open (for my Canadian credit history) as long as they have zero balances?
- If collapsing TFSA, where should those funds go as well?
- Why is it advisable to close these accounts? (Sorry, if this has been answered before, I've searched and still am not clear about this.)
- What should I do with my RRSP Savings? I've seen somewhere that it is advisable to move it to TD Waterhouse - why is that the case?
- What are all the tax forms (Canadian and US) that I will need to file at tax time?
Any help would be greatly appreciated. Thank you in advance.
TN - finances advice
Moderator: Mark T Serbinski CA CPA
1) Put the money in any non registered account ( regular bank account in the US)
2) I do not see it as a problem
3)same as 1
4)The bank accounts are closed for perposes of showing you are not planning to remain as a resident, but these are secondary instances they will give more weight to family ties, and housing accomodation .
The TFSA has to be claose because it may be tax free in Canada but the US will tax all future growth in the plan so you get no benefit.
5)RRSP can remain in Canada but you will have to file form 8891 annually to exclude teh growth inside the plan from being taxed. You may want to transfer the RRSP to another RRSP to lock in the fair value at time of move to the US especiallyif its holding stocks to show the value at time of move.
6) Departure T1 form at date you left Canada then in the US form 1040 and all related schedules including the form 8891 for the RRSP to exclude it from being taxed while it remains tax sheltered in Canada.
2) I do not see it as a problem
3)same as 1
4)The bank accounts are closed for perposes of showing you are not planning to remain as a resident, but these are secondary instances they will give more weight to family ties, and housing accomodation .
The TFSA has to be claose because it may be tax free in Canada but the US will tax all future growth in the plan so you get no benefit.
5)RRSP can remain in Canada but you will have to file form 8891 annually to exclude teh growth inside the plan from being taxed. You may want to transfer the RRSP to another RRSP to lock in the fair value at time of move to the US especiallyif its holding stocks to show the value at time of move.
6) Departure T1 form at date you left Canada then in the US form 1040 and all related schedules including the form 8891 for the RRSP to exclude it from being taxed while it remains tax sheltered in Canada.
JG
Thank you so much for taking the time to reply to this.
Do you have a recommendation for the best way to transfer over my CAD funds to a US bank account? Certified cheque, wire transfer, etc?
Also, my RRSP funds were in just a regular savings account. I'm considering moving them into something that will "grow" more and just leaving them there while I'm gone -- Do you think that's a good idea, or just leave them alone? I was considering TD waterhouse or RBC direct, which I saw mentioned in another post.
And, I'm trying to decide between bringing my car and getting one when I get there -- if you have any thoughts or an opinion on that, I'd be interested in hearing it. I want to bring my car so I have a vehicle readily available to get around, but I believe I can only bring a vehicle for 1 year max then I have to figure out how to export it again.
Again, thank you. Apologies in advance if these questions sound trivial - have never gone through this before.
Do you have a recommendation for the best way to transfer over my CAD funds to a US bank account? Certified cheque, wire transfer, etc?
Also, my RRSP funds were in just a regular savings account. I'm considering moving them into something that will "grow" more and just leaving them there while I'm gone -- Do you think that's a good idea, or just leave them alone? I was considering TD waterhouse or RBC direct, which I saw mentioned in another post.
And, I'm trying to decide between bringing my car and getting one when I get there -- if you have any thoughts or an opinion on that, I'd be interested in hearing it. I want to bring my car so I have a vehicle readily available to get around, but I believe I can only bring a vehicle for 1 year max then I have to figure out how to export it again.
Again, thank you. Apologies in advance if these questions sound trivial - have never gone through this before.
I would make only this one or two adjustment to JCGA, in that is is not at all necessary to close your Cdn accounts (other than TFSA). These are NOT considered residential ties viewed in the light of the US/canada treaty, so I would not be going thru too much trouble to divest myself of these. You reallly need a Cdn bank account for practical purposes, as well as one Cdn credit card. THis will on no way make you a Cdn tax resident once you leave.
I would not worry about CDn credit history.
On "transferring" RRSPs. You need to transfer your RRSP to a a firm that will alllow US clients (TD waterhouse is one of the few). When JCGA mentions transferring to establish a higher cost basis, that does not really work if you do not actaully sell/trade the item (whichh you should do before moving). Transferring a stock or mutual fund from one brokr to another without changing/swapping it for another investment, does noy change its cost basis for US taxation purposes.
So the transfer is really because (a) you want to be able to actively manage your portfolio in future and (B) 95% of Cdn RRSP trustees refuse to deal with US residents, and will ask you to close your account in short order.
I would not worry about CDn credit history.
On "transferring" RRSPs. You need to transfer your RRSP to a a firm that will alllow US clients (TD waterhouse is one of the few). When JCGA mentions transferring to establish a higher cost basis, that does not really work if you do not actaully sell/trade the item (whichh you should do before moving). Transferring a stock or mutual fund from one brokr to another without changing/swapping it for another investment, does noy change its cost basis for US taxation purposes.
So the transfer is really because (a) you want to be able to actively manage your portfolio in future and (B) 95% of Cdn RRSP trustees refuse to deal with US residents, and will ask you to close your account in short order.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks nelsona.
Given my situation, what would you advise that I do with my RRSP? I want to keep the RRSP because it's meant to be withdrawn when I retire (and if that's the case I want to move it from a savings to a mutual fund where it might have the potential to "grow" a bit until I retire), but, considering I'm moving to the US now, if moving it over to a mutual fund is too much of a headache or will just cost me more (tax-wise) in the end, then I won't go that route.
I've collapsed my TFSA and all other savings accounts and moved them over to a checking account now.
With regards to residency, I read that the CRA says I become a non-resident the latest of:
- the date I physically leave
- the date my spouse/dependants leave (N/A)
- the date I become a resident of new country
Would the date I become a resident of the new country the date I establish a residence (i.e., a place to rent, get a DL, etc.)? Or is the same as the date I physically leave?
Given my situation, what would you advise that I do with my RRSP? I want to keep the RRSP because it's meant to be withdrawn when I retire (and if that's the case I want to move it from a savings to a mutual fund where it might have the potential to "grow" a bit until I retire), but, considering I'm moving to the US now, if moving it over to a mutual fund is too much of a headache or will just cost me more (tax-wise) in the end, then I won't go that route.
I've collapsed my TFSA and all other savings accounts and moved them over to a checking account now.
With regards to residency, I read that the CRA says I become a non-resident the latest of:
- the date I physically leave
- the date my spouse/dependants leave (N/A)
- the date I become a resident of new country
Would the date I become a resident of the new country the date I establish a residence (i.e., a place to rent, get a DL, etc.)? Or is the same as the date I physically leave?
It is the date you physically leave, presuming this is part of a continuous attempt to edstablish a home in US.
AS to RRSP, I would collapse due to the complexities involved in maintaining while in US -- BUT only after you are US resident -- and pay the 25% NR tax.
AS to RRSP, I would collapse due to the complexities involved in maintaining while in US -- BUT only after you are US resident -- and pay the 25% NR tax.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
The bank accounts are closed for perposes of showing you are not planning to remain as a resident, but these are secondary instances they will give more weight to family ties, and housing accomodation .
The TFSA has to be claose because it may be tax free in Canada but the US will tax all future growth in the plan so you get no benefit.
5)RRSP can remain in Canada but you will have to file form 8891 annually to exclude teh growth inside the plan from being taxed. You may want to transfer the RRSP to another RRSP to lock in the fair value at time of move to the US especiallyif its holding stocks to show the value at time of move.
6) Departure T1 form at date you left Canada then in the US form 1040 and all related schedules including the form 8891 for the RRSP to exclude it from being taxed while it remains tax sheltered in Canada.
The TFSA has to be claose because it may be tax free in Canada but the US will tax all future growth in the plan so you get no benefit.
5)RRSP can remain in Canada but you will have to file form 8891 annually to exclude teh growth inside the plan from being taxed. You may want to transfer the RRSP to another RRSP to lock in the fair value at time of move to the US especiallyif its holding stocks to show the value at time of move.
6) Departure T1 form at date you left Canada then in the US form 1040 and all related schedules including the form 8891 for the RRSP to exclude it from being taxed while it remains tax sheltered in Canada.
GuL