state taxs on IRA distributions for non US resident

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coco1106
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Joined: Sun Jan 20, 2019 3:40 pm

state taxs on IRA distributions for non US resident

Post by coco1106 » Fri May 17, 2019 3:45 pm

Hi all,

I would like to ask about state taxs on IRA distributions for NON US residents.

Planning on moving to Ontario next yr, we plan on taking distributions from IRAs when we are 60...we are both 54.

We live in OHIO at the moment, this may seem a crazy question but I need to ask, do we have to pay state taxs when we eventually take money from our IRA ????
Even though at that time we would have been in Ontario for 6 yrs, we will have no ties to ohio, our new home will be in Ontario,

I know we have to pay fed taxs and file 1040 each year, but do we pay state taxs on our IRA withdrawals.
Please forgive me if this is a stupid question.
thank you for any input

nelsona
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Re: state taxs on IRA distributions for non US resident

Post by nelsona » Fri May 17, 2019 3:48 pm

IRA income is not considered a state-sourced, so, since you will not be residing in any state, you will not be reporting any IRA income to any state.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

coco1106
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Joined: Sun Jan 20, 2019 3:40 pm

Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Fri May 17, 2019 4:09 pm

Thank you Nelsona,

We had our meeting with Fidelity today, it went good.

We have a email from them stating we are able to maintain all our retirement accounts with them when we relocate to Canada , however we are not able to maintain the after tax account, which is what we were expecting.

Also, they told us that our HSA can be used for medical cost, such as dental, drugs, vision when we are in Canada , just keep all the receipts for record keeping.
I think we are going to keep all retirement accts with Fidelity, the after tax acct we will liquidate and move to TDA .

Thank you very much for all the tips , I was able to ask the correct questions.

nelsona
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Re: state taxs on IRA distributions for non US resident

Post by nelsona » Fri May 17, 2019 4:47 pm

I suspect that this "after tax account" will not be eligible for US maintenance either, since it is not a true retirement account. If that is the case TDA may not be able to help you.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

coco1106
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Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Fri May 17, 2019 5:59 pm

Nelsona,

we are just converting to cash and keeping it as a regular bank account, hoping we are able to do that with TDA.
When we move to Canada we are going to open a TD acct, the person I spoke to said transfers would be ok to do...hope this is the case !

coco1106
Posts: 80
Joined: Sun Jan 20, 2019 3:40 pm

Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Fri May 17, 2019 6:05 pm

can we maintain a regular bank acct in USA as a NON resident ? I have not really researched this , I just assumed we could keep a regular bank account..

nelsona
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Re: state taxs on IRA distributions for non US resident

Post by nelsona » Fri May 17, 2019 7:07 pm

Sure you can. Recently there may be a problem opening an account if you don't have an SSN, but you are obviously fine.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

coco1106
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Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Fri May 17, 2019 7:21 pm

Thanks Nelsona, much appreciated your knowledge and replies .

I am just tring to figure out the best way to handle our funds when we move, we have a high 6 figure acct, in cash and brokerage acct
leaving all that $$ in a savings acct state side is probably the easiest thing to do, planning on transferring our monthly expenses to our TD acct in Ontario.


Since we cant have a brokerage acct once we move, do most people just leave funds in a savings account ??? Using this as our living expenses.
A friend of mine said that is just like putting our money under the mattress !!!!

We want to keep things easy, ............probably need to ask the cross boarder accountant who we shall meet with in June.

nelsona
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Re: state taxs on IRA distributions for non US resident

Post by nelsona » Sat May 18, 2019 4:08 pm

Why leave it in US, or even in cash? Bring it to Canada and invest (in US things if you wish). Investing in stocks will not cause any PFIC issues.
You shouldn't leave it in cash. It needs to grow.
You can't have a US brokerage, but you can certainly have a CDn one. Keep only what you need for 2-3 years "safe" (bonds etc), invest the rest. And Bank interest rates are higher in Canada right now.

Besides the USD is riding high these days, I would be getting a good chunk of it into CAD.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

coco1106
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Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Sat May 18, 2019 11:24 pm

Hi , thanks for the information, I will be doing more research , many thanks.

coco1106
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Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Sat May 18, 2019 11:44 pm

I was concerned about PFIC issues...not that I know much about them, only that they are toxic for USA citizens !

I was not aware that we could have a brokerage account in Canada, I will certainly research that for sure.
thank you

nelsona
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Re: state taxs on IRA distributions for non US resident

Post by nelsona » Sun May 19, 2019 9:33 am

The PFIC issue applies only to mutual funds and ETF's. No offense, but two heads are better than one. What "research" is your spouse doing on this?
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

coco1106
Posts: 80
Joined: Sun Jan 20, 2019 3:40 pm

Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Mon May 20, 2019 12:06 pm

Nelsona..

Unfortunately only me at the moment,
he is a great guy who works really hard at his job, but alot of things are left to me, when I research something ,then I will discuss it with him.........yep, this has caused me alot of stress and anxiety, but I Feel like I dont want to burden him with anything, I know everyone will say its a partnership, but I have always taken care of alot of things, I think he is kinda use to me taking care of everything.

Dont get me wrong, he works very hard at work and make alot $$, and I have a great life, but everything else is me.

That is why I love this site, I can ask questions and get get tips which lead me in right direction.

coco1106
Posts: 80
Joined: Sun Jan 20, 2019 3:40 pm

Re: state taxs on IRA distributions for non US resident

Post by coco1106 » Mon May 20, 2019 12:13 pm

Nelsona,
even when I look at new homes when we move, I will say look at this one...his reply will be, we will buy whatever house you want, you pick what you want........its to have the freedom to do that, but at the same time its not !!!
sorry to get all personal and stuff, but you have kinda got me thinking, why am I the only one doing all this.

So I guess I will get whatever new home I like!

Bumble
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Re: state taxs on IRA distributions for non US resident

Post by Bumble » Mon May 20, 2019 9:41 pm

coco1106 wrote:
> I was concerned about PFIC issues...not that I know much about them, only
> that they are toxic for USA citizens !
>
> I was not aware that we could have a brokerage account in Canada, I will
> certainly research that for sure.
> thank you

You can certainly have a non-retirement brokerage account in Canada - just avoid investing in non-U.S. PFICs, such as Canadian ETFs or mutual funds to keep life simple. You can invest in U.S. ETFs (such as VOO) in your Canadian brokerage account without any issues.

Also, there is no need to liquidate your U.S. non-retirement account. You should be able to transfer the assets to a Canadian broker (such as TD Direct Investing or Interactive Brokers Canada) once you settle in Canada. If you liquidate your assets prior to moving to Canada, you'd trigger a capital gain or capital loss for your U.S. tax return in 2019. A capital gain would mean a higher tax bill, which may not be very desirable...

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