Things to consider before moving to California from Toronto
Moderator: Mark T Serbinski CA CPA
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jalways747
- Posts: 31
- Joined: Thu Feb 02, 2012 3:50 pm
move from usa to canada
womanonthemove. thanks i read info. where can i access the blog you said you have written. i will be in the same situation as you so any info will be helpful based on your experiences
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WomanOnTheMove
- Posts: 6
- Joined: Mon Feb 27, 2012 8:34 pm
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blacknotebooks
- Posts: 11
- Joined: Sun Apr 22, 2012 9:33 pm
Just wanted to provide an update: I've been working in California since mid May and things are going excellent. The transition from Ontario, Canada has been well, thanks to the advice of you all. As planned previously in this thread - I am now considered a US non-resident alien for immigration purposes but a resident for tax purposes since I have spent >183 days in 2012.
Since we're approaching tax season in a couple months I just wanted to get a jump start on my situation for filing. As per nelsona's advice I only left a RSP savings account and a couple of bank checking/savings accounts open before departing to the US (no more stocks, TFSA, DPSP). I do plan to collapse the RSP to fund the purchase of a house here this summer. Would it be more beneficial to do it now or after I file 2012 taxes? Regarding the automatic 25% withholding tax, can any of that be claimed back in US tax credits if I collapse before filing 2012 taxes?
I have done my own Canadian returns for the past 5 years so I seem to think that I should attempt to file my own 2012 returns for both Canada/US - because my situation seems relatively "clean", an effect of your help and my research to minimize headaches. Would it be wiser to use the services of a cross-border specialist at Serbinski, at least for tax year 2012 with the 2 returns? My main dilemma is I don't want to miss out on any tax breaks in either system that I would omit without an expert; or more importantly, fail to report certain aspects in either return simply because I don't know the systems enough.
Thanks,
Steve
Since we're approaching tax season in a couple months I just wanted to get a jump start on my situation for filing. As per nelsona's advice I only left a RSP savings account and a couple of bank checking/savings accounts open before departing to the US (no more stocks, TFSA, DPSP). I do plan to collapse the RSP to fund the purchase of a house here this summer. Would it be more beneficial to do it now or after I file 2012 taxes? Regarding the automatic 25% withholding tax, can any of that be claimed back in US tax credits if I collapse before filing 2012 taxes?
I have done my own Canadian returns for the past 5 years so I seem to think that I should attempt to file my own 2012 returns for both Canada/US - because my situation seems relatively "clean", an effect of your help and my research to minimize headaches. Would it be wiser to use the services of a cross-border specialist at Serbinski, at least for tax year 2012 with the 2 returns? My main dilemma is I don't want to miss out on any tax breaks in either system that I would omit without an expert; or more importantly, fail to report certain aspects in either return simply because I don't know the systems enough.
Thanks,
Steve
"I am now considered a US non-resident alien for immigration purposes but a resident for tax purposes since I have spent >183 days in 2012."
Days in US doen't matter. You are resident from the first day you live in US, be it in January or Decemeber. You are still dual-status regardless for the year.
The 2012 tax year is done. So there is nothing you can claim for RRSP tax if you sell now.
Days in US doen't matter. You are resident from the first day you live in US, be it in January or Decemeber. You are still dual-status regardless for the year.
The 2012 tax year is done. So there is nothing you can claim for RRSP tax if you sell now.
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
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blacknotebooks
- Posts: 11
- Joined: Sun Apr 22, 2012 9:33 pm
Since youy will have little or no Cdn income to report (rmemebr, you are only going to report the gains made in your RRSP after moving), then you will get almost nothing in credit.
So, your best bet will be to claim the Cdn tax as a deduction, on schedule A.
This would have been the same if you did this last year, so don'y kick yourself.
So, your best bet will be to claim the Cdn tax as a deduction, on schedule A.
This would have been the same if you did this last year, so don'y kick yourself.
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
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blacknotebooks
- Posts: 11
- Joined: Sun Apr 22, 2012 9:33 pm
Keats is overly optimistic, and his stratgey relies on generating Cdn-sourced, but low-taxed, income for many years in order to eat-up the tax.
He also, mistakenly in my opinion, treats RRSP income as passive income for foreign tax credit purposes. It is pension income, thus general limit income. That is where the investment income comes into play.
It doesn't really work, unless you spend some time working in canad for a Cdn/US employer.
You will likely get the best bang from a deduction, but you are free to carryover all the extra tax until you can use it.
He also, mistakenly in my opinion, treats RRSP income as passive income for foreign tax credit purposes. It is pension income, thus general limit income. That is where the investment income comes into play.
It doesn't really work, unless you spend some time working in canad for a Cdn/US employer.
You will likely get the best bang from a deduction, but you are free to carryover all the extra tax until you can use it.
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
Hi Nelson (and others),
I am in a somewhat similar position so thought I would post here.
I started a job in the US (California) on a TN visa at the beginning of August, 2012. In Canada, I have a modest RRSP (~$13K in mutual funds) that I had planned to use for the HBP as well a few bank accounts and loans currently under repayment (OSAP and personal).
My girlfriend has been listed as my common law spouse in Canada for the last 2 years for tax purposes. She did not accompany me to California.
The pressing issue for me is that I have not yet decided whether I will stay in the US. I have the opportunity to return to my Canadian job in August 2013 (I am currently on a 1-year unpaid leave of absence).
As a result, I have not collapsed my RRSP but have made no contributions since leaving for the US. If I return to Canada, I will likely use the RRSP for the HBP within the next 1-2 years.
1) Can I file a departure from Canada? I understand that I am working and residing in the U.S. but does having a common law spouse in Canada or does being on a leave of absence from my Canadian job change this? Should I change my spousal status with the CRA to single (after all, my girlfriend and I no longer live together; is it even possible to retroactive this spousal change to the date of my departure)? Is it worth filing for a departure if I end up returning to Canada in August 2013?
2) If I collapse my RRSP in 2013, today for example (I could really use the income to repay some loans), how would I be taxed if I return to work in Canada in August (assuming I successfully file departure on my 2012 return)? Would the 4 months (Aug - Dec) of Canadian income raise my taxation level above 25%?
3) Do I have to claim my RRSP interest gains on my US tax return?
Thank you kindly for your help!
I am in a somewhat similar position so thought I would post here.
I started a job in the US (California) on a TN visa at the beginning of August, 2012. In Canada, I have a modest RRSP (~$13K in mutual funds) that I had planned to use for the HBP as well a few bank accounts and loans currently under repayment (OSAP and personal).
My girlfriend has been listed as my common law spouse in Canada for the last 2 years for tax purposes. She did not accompany me to California.
The pressing issue for me is that I have not yet decided whether I will stay in the US. I have the opportunity to return to my Canadian job in August 2013 (I am currently on a 1-year unpaid leave of absence).
As a result, I have not collapsed my RRSP but have made no contributions since leaving for the US. If I return to Canada, I will likely use the RRSP for the HBP within the next 1-2 years.
1) Can I file a departure from Canada? I understand that I am working and residing in the U.S. but does having a common law spouse in Canada or does being on a leave of absence from my Canadian job change this? Should I change my spousal status with the CRA to single (after all, my girlfriend and I no longer live together; is it even possible to retroactive this spousal change to the date of my departure)? Is it worth filing for a departure if I end up returning to Canada in August 2013?
2) If I collapse my RRSP in 2013, today for example (I could really use the income to repay some loans), how would I be taxed if I return to work in Canada in August (assuming I successfully file departure on my 2012 return)? Would the 4 months (Aug - Dec) of Canadian income raise my taxation level above 25%?
3) Do I have to claim my RRSP interest gains on my US tax return?
Thank you kindly for your help!
You *could*, for 2012 claim that you are still Cdn resident, because of your spoue. The leave of absence is not so important.
The problem becomes if you DO decide to remain in US: then what becomes your deparure date? You will have a 2012 return where you said you lived in canada because of your spouse, and then at somepoint in 2013 that spouse no longer existed? hard case to make.
For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved.
The problem becomes if you DO decide to remain in US: then what becomes your deparure date? You will have a 2012 return where you said you lived in canada because of your spouse, and then at somepoint in 2013 that spouse no longer existed? hard case to make.
For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved.
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
[quote="nelsona"]You *could*, for 2012 claim that you are still Cdn resident, because of your spoue. The leave of absence is not so important.
The problem becomes if you DO decide to remain in US: then what becomes your deparure date? You will have a 2012 return where you said you lived in canada because of your spouse, and then at somepoint in 2013 that spouse no longer existed? hard case to make.
For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved.[/quote]
Great, thanks Nelson!
One quick followup question: Would declaring a departure from Canada in any way affect my leave of absence? E.g., would this affect my pension (it is currently frozen until my return) in some way or are there any other potential HR-related issues with my Canadian job?
The problem becomes if you DO decide to remain in US: then what becomes your deparure date? You will have a 2012 return where you said you lived in canada because of your spouse, and then at somepoint in 2013 that spouse no longer existed? hard case to make.
For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved.[/quote]
Great, thanks Nelson!
One quick followup question: Would declaring a departure from Canada in any way affect my leave of absence? E.g., would this affect my pension (it is currently frozen until my return) in some way or are there any other potential HR-related issues with my Canadian job?
Thanks again. Lightning quick replies!
One more follow-up (I lied before about no more questions):
You mentioned: "For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved."
How do I elect to not have my RRSP taxed?
I'm assuming I check the box on line 6c: "If you have not previously made the election described on line 6a above, you can make an irrevocable election for this year and subsequent years by checking this box."
And what happens in 2013? Is this tax deferral only for one year (i.e., I'll have to pay tax on interest earnings)?
The IRS also suggests literally writing "DUAL STATUS ALIEN" on the top of the 1040. Seems rather ridiculous as I would like to e-file but Turbo Tax doesn't seem to have a way to indicate dual status... Is it still possible to e-file?
Thanks again!
One more follow-up (I lied before about no more questions):
You mentioned: "For US, you are dual-status for 2012, and must file 8891 for your RRSP, on which you elect to not have your RRSP taxed. Problem solved."
How do I elect to not have my RRSP taxed?
I'm assuming I check the box on line 6c: "If you have not previously made the election described on line 6a above, you can make an irrevocable election for this year and subsequent years by checking this box."
And what happens in 2013? Is this tax deferral only for one year (i.e., I'll have to pay tax on interest earnings)?
The IRS also suggests literally writing "DUAL STATUS ALIEN" on the top of the 1040. Seems rather ridiculous as I would like to e-file but Turbo Tax doesn't seem to have a way to indicate dual status... Is it still possible to e-file?
Thanks again!
You won't be able to e-file, but if you do file dual-status (you have other choices), then the software will write dual-status on the top of 1040. you will have to mail this because you would also be sending a 1040NR, and because you are not in the system yet.
Once you elect on 8891, you simplt repeat it every year, refering back to 2012 as your initial election year.
Once you elect on 8891, you simplt repeat it every year, refering back to 2012 as your initial election year.
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
You are a lifesaver by the way...
You mentioned there are other options than filing dual status. What are those? I do not qualify to choose full year resident alien status and since I work in the U.S. and live here now, according to the treaty, I am a resident alien so I cannot file as a non-resident. It seems my only option is dual status.
In terms of what forms to mail, publication 519 states that I need to attach a statement to my return to show the income for the part of the year that I was a non-resident. It says I can use the 1040NR or 1040NR-EZ as the statement but it isn't very explicit. Can I not just attach my Canadian T4 slip?
Thanks again!
You mentioned there are other options than filing dual status. What are those? I do not qualify to choose full year resident alien status and since I work in the U.S. and live here now, according to the treaty, I am a resident alien so I cannot file as a non-resident. It seems my only option is dual status.
In terms of what forms to mail, publication 519 states that I need to attach a statement to my return to show the income for the part of the year that I was a non-resident. It says I can use the 1040NR or 1040NR-EZ as the statement but it isn't very explicit. Can I not just attach my Canadian T4 slip?
Thanks again!