MangTaxDays

Moving from Canada to US:

  • you file a dual-status return which shows that you are leaving
  • * you are an "emigrant" in year of departure
  • need to pay departure tax on non-RRSP mutual funds
  • * after leaving cannot trade in these funds
  • * can hold and sell
  • have to report US income after date of departure to CRA, but not liable for Canadian tax on it

Retirement planning:

  • 401k and IRA are evil if you will be in Canada when cashing out
  • * the 401k/IRA contribution is deductible in US but not in Canada (so effectively you pay tax on the contribution) -- NOT SURE ABOUT THIS
  • * 100% of distribution (which is growth AND principal) is taxable because it is treated as pension income
  • * so you get double-taxed by CRA
  • ROTH IRA income is taxable (little advantage after moving back to Canada)
  • RRSP withdrawals when in US are taxed at 25% by CCRA, and gains are taxed by IRS, and Canadian tax is deductible
  • can still technically contribute to RRSP after leaving, but broker likely won't take funds, and no tax advantage since no reportable income to CRA
  • Canada doesn't recognize Roth IRAs. Treats them as regular accounts (taxing gains) but may unofficial defer thread

RRSPs and US taxation

  • Only RRSP gains are taxable in US thread
  • You need to make some kind of election, but looks like the tax on gains can be deferred IRS link
  • * Need to go amend return for first year (starting with 2002) with election
  • * Each subsequent year you show balance to IRS
  • You need to file a form every year, and more forms if you take a distribution thread
  • California does not let you defer taxation on gains, but contributions and gains made before arrival to the state are not taxable more
  • It's possible that withdrawing the principle is not taxable... Need to get my brain around this thread
  • More info at this page, but it's out of date
  • Most Canadian brokerages won't let you trade inside your RRSP but TD Waterhouse might

Nelson says: "You should be looking at a tax-managed portfolio (ie. one that does not generate dividends or capital gains yearly) and then cashing these in after leaving US. In such case, you will have no tax to pay on any of the gains, nor Cdn tax on the pre-arrival gains. Or you should be investing in your US home, as you will not be taxed on the gains when you sell up."

School planning:

  • student loan interest is deductible wherever loan is held
  • loan probably doesn't have to be "official" student loan (e.g. loan against line of credit). Keep records.

Health care:

  • probably not covered by OHIP as soon as permanently leave country
  • Ontario requires 3-month waiting period before you are covered thread. Most provinces give immediate coverage.

General:

  • Canadians are always eligible to file 1040 (which may be better than 1040NR because of deductions) due to treaty

Tax preparation (just a list -- haven't tried them):

General linky:

Grasmick threads: