Intra-company move tax implication

[sdhou]

I am a US resident for tax purpose (non citizen or PR holder). I will be moving to Canada later this year on an intra-company transfer. Company will be paying a lump sum amount for my relocation. From tax perspective, is it better to receive that amount on my US or Canada paycheck or it doesnt matter?

Also, will I be filling taxes as a resident or deemed resident in Canada for 2017?

Thanks in advance!!

[nelsona]

It doesn't really matter, if they pay you after you move. But it would be best if they pay you before you move, as it will avoid Cdn taxation. Try to get all income owed to you paid before you leave US.


For 2017, you will be taxed in Canada as a "newcomer", meaning you file at year end as a resident of whatever province you live in, but with an arrival date which you show on page 1. Any investments you have are given a new basis on that date. From that date forward you pay Cdn/Prov tax on ALL world income.

For US taxes, you will file either as a part-year resident, or have the option to file full yeaer, which can be helpful if married. More info on that is in other posts.

[sdhou]

Thanks nelsona, appreciate your help. I will search for the forum regarding the full year filling benefits.

[sdhou]

Hi Nelsona -
Slight changes in my plan. Move date has been postponed to early next year (Jan 2018). So for 2017, I just need to file taxes in US only. Since I will not be closing my bank and brokerage accounts, I will continue to recieve US income in form of interest/dividend and capital gains. Also, I will be vested in a company restricted stock plan, and will be paid out middle of next year by the US entity. So little over 10% of total income will be from US. I am not a citizen or PR holder of either country. Questions:

1. Is it better to leave my IRA/401k/HSA accounts here? I am planning to return back in few years.

2. for 2018 and onwards, is it better to file 1040 (married jointly filing) using the non-discrimation clause or 1040NR. I will fail SPT for 2018. Read 1040NR taxes some income at 30% rate, also there is no standard deduction.

3. If filing 1040, I need to report my worldwide income and then claim foreign tax credit on the canadian side, right? So I need to file my US taxes first? Will it be benificial to use FEIE?

4. Is there any treaty benefit for interest/cap gain income? Also, do I need to cost-basis adjust US capital gains when reporting on the Canadian side?

5. I prefer to do my own taxes, but do you recommend using an tax accountant for 2018? Not sure how complex my filing will be.


Thansk again.

[nelsona]

1. there is no reason to divest your RETIREMENT account. However, regular investment US accounts should not be held by Cdn residents, which is what you will become in January.

2. It is doubtful that your US taxrate regardless of which form is used will be greater than your Cdn tax, so simply file whichever way is easiest. Filing a1040 vs. a 1040NR has other reporting implication (PFIC, trusts, etc) that are not required for 1040NR filers, so that will be your best bet. 1040NR allows you to use treaty rate, btw. Whaty US income are you thinking will be 30% taxed?

[nelsona]

3. See 2.
4. all assets are re-zeroed for Cdn purposes when you arrive, and if done properly, you will not have to pay US tax on the gains either, if you wait until you leave US.

5. It will be complex. This site is run by such a firm; it would be improper, and impolite to suggest anyone else. But it is easier to file 1040NR and Cdn taxes, that 1040 and Cdn taxes.

[nelsona]

There is no "order: that needs to be followed. The return are prepared simultaneously before FTC, and the FTC is applied once on each (probably only on 1040 if you file that).

[sdhou]

Thanks again, this was helpful.