Canadian moving to US, TFSA question

[frostbyte]

Hi all,

I'm a Canadian studying in Canada until I graduate in April, then moving to California for work this July.

Last year I did two paid internships in California, the first from Jan-Apr 2016 and the second from Sept-Dec 2016.

I had a TFSA with several ETFs that I had been contributing to since 2014 -- I sold everything in it and closed the account during Jan 2017. I have not contributed to an RRSP, so currently the only accounts I have open are a non-registered savings account in Canada, and another in the US.

For 2017, will I be able to file income tax for Canada for Jan-July, and for the US for July-Dec (thereby not being taxed on my TFSA capital gains by the States)?

For 2016, do I need to pay income tax to the US for interest accumulated in my Canadian savings account in 2016, or for my TFSA contributions in January 2016 (I can't recall if these were made while I was in the US, but I can check if relevant)?

Lastly, are there any other important tax rules I should make sure to account for in paying my 2016 and 2017 income tax to Canada and the US?

Looking forward to your replies, and thanks!

[nelsona]

for 2016, you will be allowed to file a 1040NR, which reports only US income, so you are fine.

For 2017, because you are moving in July, you will be able to file either a 1040NR, or a dual-status return, neither of which will require reporting Cdn income from before your move, sa, again you will be fine.
What you will not be able to do, because you waited until jan 2107 to cash out your TFSA, is file a full-year 1040 without also having to include all your Cdn income.

So, you are ok.

[frostbyte]

Thanks nelsona, that's great to hear!

If I can ask a followup question, I'm wondering if I should do something with my US dollars (about 60k), which are idling in a 0% interest US checking account. From what I understand, I could open a US brokerage account, fill out a W-8BEN, and pay income tax to Canada on the gains (subject to some US withholding taxes). It seems like navigating the rules surrounding this in order to invest before becoming a US tax resident might not be worth any gains on my relatively low balance.

Do you have any suggestions for what to do with this cash without overly complicating the tax situation?

[frostbyte]

I also failed to mention that I received a US signing bonus this January, so I guess I'll need to include that in my US and Canadian forms for 2017. Would the required forms overlap with those required for investing my US dollars now?

[nelsona]

When you move, just take the money to US. You are not allowed to have a CDn brokerage account if living in US, so forget that.

[frostbyte]

Thanks, but the money is already in the US, it's in a Chase checking account, and I was wondering about opening a brokerage account in the US before moving there.

I'll probably just wait, as you suggest.

[nelsona]

Same problem. Wait until you move, then open.

[frostbyte]

Thanks!

[tony]

what about a slightly different situation?
I came to US in Nov 2016. But, there is $30 in TFSA in 2017 Jan (due to interest paid on 31 Dec 2016). So, I withdraw to completely $0 in Jan 2017.

1. Can I file tax as dual status in 2017? (When I fully satisfy SBT 180 days in April 2017) in order to avoid complicated tax of TFSA.

By dual status means, from Jan - April I will use 1040 NR, and from May - Dec, I will use 1040?

thanks

[nelsona]

1. No. when you pass SPT, you then are considered resident from the first day in the year you were present in US, so for 2017 you must file full-year 1040.

The TFSA income you mention would be for 2016, so how you file in 2017 should not affect his income, it would not be reported for 2017.