tax residency

dana · Post by **dana** » Tue Feb 14, 2017 10:25 pm

my husband and I are moving back to Canada this august after staying many years in usa on tn visas. For 2017 we will have to pay usa taxes to the irs. When we move into canada we will NOT be working for 2017 and no taxable Canadian income (no bank accounts interest, investments, work income, nothing). will buy a home, 2 children under 18 attending school, one child to start university in September, but no Canadian income. will we need to pay the cra taxes on our world (ie usa)income for 2017 and file with the cra? or just be liable to the irs?

nelsona · Post by **nelsona** » Wed Feb 15, 2017 10:28 am

You will file a full year 1040 with IRS, as is your right, reporting world income for entire year. Be aware that even as TN, your presence in US "for many years" could result in some expatriation tax (or at least a special filing). see IRS Pub 519 on that.

For Canada, even though you may not have any taxable world income after you arrive (you will obviously have some, but not enough to have to file perhaps), it would always be a good idea to file a "newcomer" return, with an arrival date. This gets you back in the system, and establishes an arrival date for any deemed acquisition rules. It ialso gets you in line for any GST/CCTB etc govt handouts that you may be entitled to based on you filing.

dana · Post by **dana** » Wed Feb 15, 2017 10:22 pm

i appreciate the reply. i fully understand the irs/usa reporting . however, we will be working full time in the usa until july 2017, taxable income around 100k. will we still be responsible to the cra for that (isn't that considered world income to the cra)? Very little (<2K) to no income will be generated in canada from august to dec 2017 after we establish residency. we do have usa mutual funds that we will sell as a gain in 2018 after we are no longer usa residents.

nelsona · Post by **nelsona** » Thu Feb 16, 2017 6:26 am

How does this change my answer? You will only be taxed on world income for the period AFTER you arrive in Canada.

And I'm not sure you are aware of expatriation tax, given your question.

dana · Post by **dana** » Thu Feb 16, 2017 9:03 pm

OK, got it. I was thinking in terms of the entire 2017 tax year (ie because I arrived in Canada during the 2017 year, I would be responsible for the entire year of income no matter where I got it). Obviously now, the cra can only tax me on the days after I arrive, not on money earned before. I have been looking into pub 519, but I am not a green card holder, us citizen, have been faithfully filing and paying taxes to the irs and have average of 30K a year of taxes we pay. at this point in my study, i am not sure if we are responsible for the expatriate tax.

nelsona · Post by **nelsona** » Fri Feb 17, 2017 4:28 pm

You are at least responsible to file expatriation papers, because you are an LTR.

dana · Post by **dana** » Sun Feb 19, 2017 1:50 pm

thanks, the filing will be needed. so far i don't think we will have to pay exit or expatriate taxes (even with after the sale of our home and having over 2 million net worth) as our income in canada in the following years will stay under $97000. my concern is if we are liable for pay expatriate taxes, we want to sell our mutual funds in the following year after we depart from the usa to take advantage of the non-resident capital gains the irs.(of course sell loses before we enter canada for that year also). do you see any problem with this ?

nelsona · Post by **nelsona** » Sun Feb 19, 2017 8:43 pm

I don't see a problem.