I am Canadian and has been US tax resident for few years (not a citizen, nor GC holder). I am planning to be NRA from May of this year.
As NRA, I will still have income in US from banks and brokerage house. I am planning to leave 401K with my former employer as well. In addition I will receive salary continuation/severance from my US employer.
I know that I can file as resident from this year, based on number of days I've been in US.
However, if I decide to file as NRA, what forms need to be completed with all institutions before I leave?
Should I pay US Soc. Security and Medicare taxes from my severances, while I am receiving it outside US? If not, what form do I need to file with my employer to avoid these taxes?
Thanks!
US NRA filing - Proper paperwork advise
Moderator: Mark T Serbinski CA CPA
Read Pub 519.
For 2008, your only choice is dula status, or full year resident. You won't be fully non-resident 'til next year. Days in US doesn't matter when leaving, this would be the case if you left in january or december.
Tip. Stay in US until you get your severance to avoid Cdn tax on it. Yes it is liable for SS taxes, regardless. It is US source employment income regardless of where you receive it.
You should be closing your brokerage account and transferring to Canada. bank account is fine. In any event, your cap gains will not be taxable in US once you no longer file 1040. Remeber to not sell your winners until after you leave (after 2008 is even better). Sell your losers before leaving.
Your 401(k) should be fine, make sure your manager allows Cdn residnts to trade. Find this out before your leave. You might also consider Rothing the whole amount before moving back to Canada too (paying the US tax), as Roth will be tax free starting this year in canada. Something to consider.
For 2008, your only choice is dula status, or full year resident. You won't be fully non-resident 'til next year. Days in US doesn't matter when leaving, this would be the case if you left in january or december.
Tip. Stay in US until you get your severance to avoid Cdn tax on it. Yes it is liable for SS taxes, regardless. It is US source employment income regardless of where you receive it.
You should be closing your brokerage account and transferring to Canada. bank account is fine. In any event, your cap gains will not be taxable in US once you no longer file 1040. Remeber to not sell your winners until after you leave (after 2008 is even better). Sell your losers before leaving.
Your 401(k) should be fine, make sure your manager allows Cdn residnts to trade. Find this out before your leave. You might also consider Rothing the whole amount before moving back to Canada too (paying the US tax), as Roth will be tax free starting this year in canada. Something to consider.
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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chipanddale
- Posts: 2
- Joined: Mon Apr 28, 2008 12:01 am
NRA brokarage accounts and lump sum severance
Thank you for reply, nelsona. Help me out with few more questions. 1) I'll be happy to get severance before I leave US, but my employer only gives salary continuation, not a lump sum. They said they are under Section 409A, that prevents them from giving a lump sum. I was trying to get some explanation from IRS, but their cust. reps seem not familiar with this regulation. I called couple of law firms and they are puzzled as well. Can you shade some lights on the issue?
2) You said, I need to close brokerage account. I call 2 of them today. Both said I can still hold my account, while NRA. One said I have to file W8BEN right after I leave US, another said nothing needs to be done, if I still have my SSN. I assume the later one was incorrect. But, I am still not sure when to file W8BEN form. Should I do it at the beginning of 2009, if I file as a resident for the whole 2008?
3) I am planning to leave my 401K with my employer - any potential problem?
Bet regards.
2) You said, I need to close brokerage account. I call 2 of them today. Both said I can still hold my account, while NRA. One said I have to file W8BEN right after I leave US, another said nothing needs to be done, if I still have my SSN. I assume the later one was incorrect. But, I am still not sure when to file W8BEN form. Should I do it at the beginning of 2009, if I file as a resident for the whole 2008?
3) I am planning to leave my 401K with my employer - any potential problem?
Bet regards.
1). Can't help you
2) the need to close you account has nothing to do with taxes. You are breaking CANADIAN securities regs by delaing wityh a broker that are not licensed in your province.
3) You have to check twith the fund managment. Your employer has nothing to do with your 401(k) manager.
2) the need to close you account has nothing to do with taxes. You are breaking CANADIAN securities regs by delaing wityh a broker that are not licensed in your province.
3) You have to check twith the fund managment. Your employer has nothing to do with your 401(k) manager.
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