Residency and taxes question

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rentappt
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Joined: Mon Nov 28, 2016 8:59 pm

Residency and taxes question

Post by rentappt »

Hi,
I have specific question in my particular residency situation please advise
Will be working in US from Jan 2017, leaving my family and house in Canada and visit occasionally.
1. for entire 2017 will I considered NR of US based on family ties or resident of US based on 183 day rule.
2. For 2016 taxes will just file regular Canada taxes for me and my family as there is no US income. but for 2017 since I start working from Jan 2017, do I file 1040 or 1040 NR, and do I file Canada taxes for 2017 and how does my family file taxes for 2017, my wife is working.
3. The reason I am asking if I decide to move my family to US say middle of 2017 year will that affect my tax filing then I can decide now and end of year.
Thank you

VA
nelsona
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Post by nelsona »

1/2. There is no "183 day rule" in US. There is the SPT, and there is the treaty. You will remain a Cdn tax resident. You woul, as any Cdn, be allowed to file a 1040NR (by treaty) under the situation. You could also choose to file a 1040. You would file Cdn taxes, including world income, until your family left Canada.
3. The longer your family stays in casnada, the longer you will have to report US income on your Cdn return. Your choice.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rentappt
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Joined: Mon Nov 28, 2016 8:59 pm

Post by rentappt »

Thanks Nelsona for quick response,
if I decide to move my family early or middle of 2017, if I leave Jan 2017.
I read some post that for RRSP we need to withdraw and reinvest if I have MFs and GIC's.
RESP need to close them before my family moves to avoid paperwork
TFSA need to be closed as it is trust need to file them or close them
my specific questions are since I leave first week of Jan, the above RRSP withdraw and reinvest do I need to do now before end of this year or just before my family leaves, if I do it just before they leave I am still Canada resident till then, is there any tax implications.
Same with TFSA can I leave them as it is and withdraw just before they leave or do I need to withdraw before I leave end of this year is there any tax implications if I do it later.
For RESP same should I do it know or do it before my family leave.
The reason for these questions is that I do not want to find something which I need to do before I leave Canada please advise.
Also finally if I transfer TFSA, RESP into my CAD savings account is there a max limit for not getting taxed in US as I read that I will not pay taxes for CAD sav acct if US NR and file FBar for US Res, correct me if I am wrong.
nelsona
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Post by nelsona »

Just so we are clear, all you need to do with your RRSP is swap any shares that have grown into some other investment. No need to "withdraw and reinvest" other than what I said.

Since your self you will likely want to file a full-year 1040, you should be handling all TFSA and RRSP related issues BEFORE January 1, 2017, regardless of when during the year you move your family. At this point it is impossible for you to be considered US resident for any part of 2016.

US, like Canada, doesn't tax value of accounts, they tax income, so how much money you have in an account is unimportant.

All other questions have been dealt with previously
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rentappt
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Joined: Mon Nov 28, 2016 8:59 pm

Post by rentappt »

Thanks Nelsona,
If I understand correctly I need to file 1040 for 2017 if my family moves to US at some point in 2017, if they do not move 2017 then I shall still be considered Canada resident and file 1040 NR?
which way tax filing will save on taxes 1040 or 1040 NR.
I will follow what you said for RRSP, you mentioned swap any shares that have grown into some other investment, just to clarify I have Mutual funds and GICs in RRSP, does swap apply to MFs and GIC. Do I need to sell existing MF and buy other MF's. Can I leave RRSP GIC and cash in RRSP saving acct as it is.
nelsona
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Post by nelsona »

GICs (and cash) only have a cash value, so there is no point swapping. We are discussing shares or units that have increased in value since they were purchased.

Right now, how you file in spring 2018 is not critical. All you need to know was what I already answered to you, and what you can read in the 100's of other posts on this topic over the next 18 months.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rentappt
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Joined: Mon Nov 28, 2016 8:59 pm

Post by rentappt »

Thanks Nelsona for clarification.
another question is if I still have RRSP contribution room left for 2016 available if I leave to US Jan 2017, can I contribute before end of 2016 and can I contribute in 2017 if I am still Canada resident based on family in Canada but I will not have income in Canada.
Also say after moving to US and decide to convert RRSP to RRIF and convert to US will the withdrawn RRSP will that withdrawn RRSP added to contribution room or it is lost once trasferred to RRIF or withdrawn.
Say if I do not use complete contribution room till 2016 will this be carry forward when I return say after 4-5 years for me to contribute.
nelsona
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Post by nelsona »

Not sure you know how this works.
You wouldn't bother converting to RRIF if you are going to withdraw the money, it will be taxed at 25% in Canada either way. You would only convert to RRIF if you are inyour 50's, otherwise just take the lumps sum after you are no longer Cdn tax resident.
You may, if the broker you are dealing with allows it, contribute to your RRSP after you leave Canada. It would only be beneficial to do this if it counts toward your 2016 taxes (ie before march 2017), other wise there is no point contributing to an RRSP if you have no Cdn income.

You also need to finds a broker that will accept you as an RRSP client after you move to US. Only a handful of Cdn brokerages do.

Your RRSP contribution room remains intact forever. Withdrawing funds from your RRSP does not increase your room. For a TFSA, your collapse/withdrawal DOES restore contribution room, should you ever return to Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rentappt
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Joined: Mon Nov 28, 2016 8:59 pm

Post by rentappt »

Thanks Nelsona,
also if I have HBP and will be completing the final remaining payment in my next filing Canada taxes in Apr 2017. If I am leaving Jan 2017 and still be considered Canada resident with my family ties in Canada can I payback HBP in Apr 2017 during tax filing.
Also you mentioned to do swap RRSP mutual funds just before I leave, if I travel say 2 Jan 2017 can I make this swap last week of Dec 2016 is this good and if I do the changes and it takes to swap into new year to settle will it still considered transaction in 2017 but my authorization is before Dec 31, just want to make sure if it need to be settled completely before I leave.
nelsona
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Post by nelsona »

You are asking far too detailed questions on minutia. If you are taking my advice to swap funds, then do it as sson as you can. The idea is not to swap the day you leave, but to swap *sometime* before you become taxable in US to wash away any large gains that you might have had locked in to those funds. Its not a timing issue, it is a fund cost issue.

As to HBP, you are to pay it back 60 days after your departure date or include it in income in the year you leave. Since you are nowhere near becoming a non-resident. you can pay this whenever you wish, up until 60 dauys after your family has left.

Please, I believe I've answered enough questions for you, Do some research here and on CRA website.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rentappt
Posts: 10
Joined: Mon Nov 28, 2016 8:59 pm

Post by rentappt »

Thanks Nelsona,
one quick clarification if I happen to obtain TN visa and enter US third or last week of Dec 2016 and I get paid on in Jan 2017 for few days worked in Dec 2016, when filing 2016 taxes, I do not need to file US taxes as NR as I haven't received any income in 2016 or I need to since I worked for few days.
Please advise so I adjust dates if need to enter next year. or I can get visa stamped last week of Dec and start working first week of Jan will this be problem.
is it the entry date or start date is used for taxes and can start date few days later then day I enter US.

Regards
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

if you get a W-2 from your employer, you will include it on a 2016 1040NR. There will be no tax, so not a big deal.
You will also include it on your Cdn tax return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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