I got my TN status will move to the States to work this week for 3 years (possible extension) and I don't know If I should keep the Canadian residence (Tax Purposes) or cut all the ties to be taxed in USA as non Canadian resident
I will move along with my wife an daughter and we don't have a house here in Canada (we rent)
My attachments to Canada are: child tax benefits, health card , Car Loan, Credit Cards, Bank account, cellphone contract and my daughter's RESP.
The following is what I am assuming based on what I read, I need to know if I am right or I need more advise. PLEASE HELP
To close my attachments with Canada will cost me (credit cards, phones and loan full payment) : $17000
Benefits to close everything: Taxed in USA as non Canadian resident / could save up to 15-20% in a 60k a year income
Cons: My savings need to be use to pay accounts.
-Benefits to stay : extended health card, child tax benefits, keep RESP open with government grants, move and worry about this next year tax season (5 month to finish this year)
-Cons : I will be taxed as Canadian in USA
WHAT SHOULD I DO?
PLEASE HELP! Thank you very much.
TN status -Canadian residency Taxes
Moderator: Mark T Serbinski CA CPA
TN status -Canadian residency Taxes
Thanks for your help in advance.
In my opinion you don’t really have a choice here. As soon as you and your family move to the US, the treaty will consider you deemed non-residents of Canada on the day you leave; subjecting you to CRA’s departure rules (which by the sounds of it, will be limited in your circumstances).
Your car loan, credit cards, bank account and cell phone are only considered secondary ties and don’t hold much weight unless you move to a country that does NOT have a tax treaty with Canada. You will likely be able to keep them all in place. The important factors is all of your primary ties will now be in the US (wife, child, home and employment); which is why you can’t maintain your Canadian residency status.
You will need to notify service Canada when you leave so they stop paying you the Child Tax Benefit; you will no longer be entitled to these benefits.
In general US tax rates are less than Canadian rates, so yes you will likely pay less tax in the US on your employment income and will have the added benefit of not having to report this income in Canada.
In general you lose your OHIP coverage after you have been out of the province for 6-7 months (depending on the province); so you would lose this benefit regardless of your residency status.
You should transfer the ownership of your RESP to a relative BEFORE you leave Canada. There are negative consequences associated with this account as a resident of the US (growth subject to annual taxation, considered a trust for US tax purposes, etc).
Hope this helps.
Your car loan, credit cards, bank account and cell phone are only considered secondary ties and don’t hold much weight unless you move to a country that does NOT have a tax treaty with Canada. You will likely be able to keep them all in place. The important factors is all of your primary ties will now be in the US (wife, child, home and employment); which is why you can’t maintain your Canadian residency status.
You will need to notify service Canada when you leave so they stop paying you the Child Tax Benefit; you will no longer be entitled to these benefits.
In general US tax rates are less than Canadian rates, so yes you will likely pay less tax in the US on your employment income and will have the added benefit of not having to report this income in Canada.
In general you lose your OHIP coverage after you have been out of the province for 6-7 months (depending on the province); so you would lose this benefit regardless of your residency status.
You should transfer the ownership of your RESP to a relative BEFORE you leave Canada. There are negative consequences associated with this account as a resident of the US (growth subject to annual taxation, considered a trust for US tax purposes, etc).
Hope this helps.