Check list before leaving Canada

[scubalantern]

Hi,

I have been coming up with a checklist before I physically and as well what to do with after for 2025 tax year. I would like to check if it make sense or if some of the items are either wrong or overkill. I will be going to California in August. Unfortunately, I will be leaving behind in Canada my wife, most of my belongings, including a house and a rental. Therefore, I will be most likely deemed a factual resident in Canada.

Before Physically leaving Canada:
1. liquidate TFSA and non-registered account
2. I have a home buyer plan. I will pay it off using the money in the previous step. Leftover money will go towards any RRSP contribution room I have left.

After arriving in the USA
3. File a NR73
4. Notify my bank and broker in canada that I left the country. What happens to any joint account?

For Filing Tax
CRA : I left Canada in August, therefore I file as jointly married and declare my canadian income up to that point. I declare my american income but will request the Foreign tax credit.
IRS : I file as a married but filling separately. I will declare my american income that I earned. Do I need to declare my canadian income that I earned before becoming an American Resident?

Anything that I missed?

[scubalantern]

Also off topic, but if I plan to come back. Is it worth to max out your 401K generally? My company contributes a fixed amount regardless if I match or not.

[nelsona]

Despite having a house and spouse in canada, it is possible to become a "deemed" or "treaty non-resident", but only if you minimize/restrict your visits back to Canada, and rather have your spouse visit you. Barring that, you will be considered as having never left Canada, remaining a tax resident.

If you do remain a Cdn tax resident, there is really nothing to do in terms of changes to your investments, accounts, etc.

However, you may have to make modifications depending on how California will treat you. Although the IRS will likely accept that you are non-resident of US, requiring to report only US-sourced income (you would file a 1040NR) , California aggressively ignores the treaty, and expects its residents (which you would almost surely become by their rules) to report all income, including - for Cdns -- TFSA and RRSP internal income year-by-year, as well as any other Cdn income you may earn. CRA would continue to tax you on world income.

So, either way, it would seem appropriate to close your TFSA, since it will essentially lose its tax-free status. And it would be wise to bump up the value of your RRSP holding by crystalizing any gains made, just before you leave. It is NEVER advisable to submit an NR73 unless CRA would ask for it.

[MitchellMedhurst]

nelsona wrote:
> Despite having a house and spouse in canada, it is possible to become a
> "deemed" or "treaty non-resident", but only if you
> minimize/restrict your visits back to Canada, and rather have your spouse
> visit you. Barring that, you will be considered as having never left
> Canada, remaining a tax resident.
>
> If you do remain a Cdn tax resident, there is really nothing to do in terms
> of changes to your investments, accounts, etc.
>
> However, you may have to make modifications depending on how California
> will treat you. Although the IRS will likely accept that you are
> non-resident of US, requiring to report only US-sourced income (you would
> file a 1040NR) , California aggressively ignores the treaty, and expects
> its residents (which you would almost surely become by their rules) to
> report all income, including - for Cdns -- TFSA and RRSP internal income
> year-by-year, as well as any other Cdn income you may earn. CRA would
> continue to tax you on world income.
>
> So, either way, it would seem appropriate to close your TFSA, since it will
> essentially lose its tax-free status. And it would be wise to bump up the
> value of your RRSP holding by crystalizing any gains made, just before you
> leave. It is NEVER advisable to submit an NR73 unless CRA would ask for it.
Thanks for the answer.