Working in USA under TN, spouse back in Canada

hyperbling · Post by **hyperbling** » Thu Jan 27, 2011 6:19 pm

hello,

my initial post was at http://www.canuckabroad.com/forums/work ... t9667.html, and i was recommended to continue here.

cliff notes:
- canadian citizen, living in canada
- got bank accounts, investments accounts, RRSP, TFSA
- in 2.5 weeks, i'm moving to USA to work under the TN visa
- my spouse will remain in canada until the summer. during this time we'll still have a lease for an apartment, my car is still in canada, etc. we will visit each other on weekends from time to time
- once summer comes, my spouse will join me in USA, and we will sell everything in canada.

the question is what is the optimal thing to do with all of my bank/investment accounts? i'm pretty confused on my residency status according to the CRA/IRS because so far i've found conflicting information that i'm both a resident and non-resident depending on the source. i've even read that if i'm deemed non-resident of canada i have to close all my investment accounts!

the answer i got on canuckabroad is that i have a choice, which makes it more confusing! if someone can explain in a little more detail it'd be greatly appreciated. thanks.

nelsona · Post by **nelsona** » Fri Jan 28, 2011 2:53 pm

Well, you have a choice up until your spouse moves to US with you (you didin't mention this on your other post, did you).

hyperbling · Post by **hyperbling** » Fri Jan 28, 2011 8:51 pm

as in the option to become a resident alien vs a non-resident alien?

nelsona · Post by **nelsona** » Sat Jan 29, 2011 7:23 am

No.
For canada, since you have a tie until June, but you will be living in US, there is a little wiggle room between the time you go and the time she goes. It depends mostly on whether you stay in US and she vists you, or you vou vist canada. Its a treaty issue, not simply a reading on Cdn tax regs, which become superceded.

From June on though, you are Cdn non-resident.

For US, residency doesn't really matter, but for tax purposes, you will be considered to be US resident from 1st day you went in the year. So, you might as well consider yourself full-time resident right now. There is an advantage of being full-year resident instead of part-year. Besides you will be earning all your income in US -- which makes it taxable there regardless of your residence.

Why the Cdn residency matters is that, until you are non-resident you need
to include your US income on your Cdn return, which will mean more taxes.

hyperbling · Post by **hyperbling** » Sat Jan 29, 2011 2:29 pm

thanks for the detailed response. so because my spouse is back in canada, i can remain a canadian resident until she leaves.

please let me know if the following assumptions are incorrect:

prior to her leaving canada, since i'll still be a resident, i'll be able to:
- contribute to my RRSP/TFSA
- buy stocks/options/etc in my brokerage account
- i should max out my RRSP contribution room

once she leaves, i'll be a canadian non-resident, which means:
- tell all my banks that i'll be a non-resident
- i cannot contribute to my RRSP anymore
- i cannot make any trades in my brokerage account
- i should close my TFSA account
- cancel all my phone/internet/healthcare/drivers license/etc.
- file a departure return

i'll be a resident alient the moment i start working in US in a couple weeks, so i can
- open US bank accounts, credit cards
- brokerage accounts?
- contribute to 401k/IRA

please let me know if i got the general idea correct or not. thanks again.

nelsona · Post by **nelsona** » Sun Jan 30, 2011 6:02 am

Prior to leacing, you can do what you want.
But as long as you are still considered resident, you will be reporting your US income to canada.

After leaving, regardless of Cdn residency, you can't trade in your Cdn brokerage. You have to be in canada to trade. You will need to transfer or sell all Cdn brokerage accounts when yopu leave. or leave dormant if the brokr agrees.

You can always contribute to an RRSP, but only a few brokers will accept contributions by a non-resident (you won't want to anyways). If you feel like loading up your RRSP, just maximize the 2010 contribution. Obly put RRSP contributions for 2011 if you remain Cdn resident until June, but realize that your contributions will not be deductible in US.

And you will need to shift your RRSP to a firm that complies with US regs. Only TD Waterhouse does this currently.

Forget TFSA. You will be closing it before you leave.

Once you are in US, you can participate fully in US investments.

Your deprture return will nly be filed in 2012 spring. in the meantime you do have to tell your broker, RRSP, bank etc, that you have left canada. You don;t reallly need to do anything else for non-residency, since US has a treaty with canada and US will clearly be your residnce. Keep in mind that your provincial DL and health coverage will lapse, so you won;t be able to keep these regardless of whether you want to or not.

hyperbling · Post by **hyperbling** » Sun Jan 30, 2011 5:29 pm

thank you so much! it's greatly appreciated.