Being a deemed non-resident for canadian Tax purposes

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cmulaishoNew Member
Topic author
Posts: 3
Joined: 29 Apr 2007
Location: Toronto

Being a deemed non-resident for canadian Tax purposes

Post Mon Jun 04, 2007 1:17 pm

Hi,

I am presently moving to Seattle from Toronto in about 2 weeks.

I do not own any property and would like to be a deemed non-resident for tax purposes. I'd like to keep my Investment accounts so since I'm not completely severing ties I think that I am best suited as a deemed non-resident for tax purposes. I am planning to do the following

1) Cancel my ohip benefits
2) Change all my bank accounts to be non-resident accounts. (Checking investment e.t.c)
3) Currently on a month to month lease with landlord. The person I am sharing the place with is staying so I'd like to switch the lease over to their name so revenue canada doesn't think I live here.
4) Cancel phone, cable , internet, other cards that are on my credit history(Bay e.t.c)

Is there anyhting else I need to do. I'm keeping my RRSP account and not doing anything to it.

Is this enough to show revenue canada that I'm a deemed non-resident in order to not have to enter my US income on my world income when I file my tax return next year?


I'm prepared to completely cancel my accounts but I think that swithing them to a non-resident account is enough.

Thanks
Reba

Post Wed Jun 06, 2007 4:30 pm

you may be able to get a free consultation with a financial advisor who can do a bit of research for you. Every state is different, so there may be consequences on the US side to keeping your Canadian RRSPs. I ended up cashing mine in because of a crazy law in North Carolina about foreign investment advisement :p

Also, go to the book store and get yourself a copy of a book called The Border Guide. Lots of info there for Canadian ex-pats in the US.
eddycurrentsCanuckAbroad Regular
Posts: 48
Topics: 1
Joined: 18 Jun 2007

Post Mon Jun 18, 2007 7:28 pm

Declaring you a non-resident is a judgment call by Revenue Canada. The more ties you have to Canada, the less likely they will rule in your favor.

RRSPs don't count, it says that somewhere.

For us, we needed our Canadian Visa card because we had no credit history in the US and no credit card company would touch us.

(Seriously, we would get a dozen credit card offers per week and any we tried turned us down because they couldn't be bothered to check our Canadian credit history -- it cost them an extra $20 or something, but I think the main reason was it simply wasn't in their sales scripts. I asked Equifax and Transunion about this. They said they have Canadian offices and they do not "bridge" credit ratings across the border.)

We also needed to keep a Canadian bank account to pay our Canadian credit card.

Plus we had 4 RRSPs.

That's it, no property or anything.

We noted all this in our letter to Revenue Canada and emphasized that we were not planning to return to Canada anytime soon (this is very important).

We received a letter back from them a few weeks later with kind of history in it. It looked like our request to be non-resident went to a few people and it was originally denied, or maybe just questioned, then it went to an ombudsman who wrote in pen in the margin of some other guy's letter, saying something like "they are obviously moving permanently to the US". Our request was approved. (Whew)


One thing I said in another post that I'll repeat here: make sure you max out all your RRSP contributions before you go, then cash out RRSPs and pay the 25% flat tax if you need the cash.

That way, you get a Canadian tax refund at a high marginal tax rate (for me it was 46% or something), pay the 25% tax, and pocket the difference. It's a weird little loophole for people moving to the US.

We used the proceeds from selling our house to max out our RRSPs, then cashed some out to buy our house in the US. Saved us a few thousand dollars.

At least it was a loophole 4 years ago, hopefully it's still open. Check with a financial advisor or tax accountant.
eddycurrentsCanuckAbroad Regular
Posts: 48
Topics: 1
Joined: 18 Jun 2007

Post Mon Jun 18, 2007 7:35 pm

One other thing -- you don't need to inform the IRS about your RRSPs if you are working on a TN visa. If the form you mention is the same one my financial advisor sent me, it states clearly that it is only for "residents" of the US on an H visa or green card.

At least, that was my interpretation and I read that form over 10 times. I have filed 4 US tax returns without it and they haven't said anything. hopefully they don't audit me. I am just doing what the form says!

The US does not consider you a resident if you are here with a TN visa, as I discovered to my shock when I tried standing in the "US resident" line at US customs in Chicago. I have been here for 4.5 years, I have a house, car, job, kid in school -- but I am still a "visitor".

In fact, since the Canadian government approved me as a non-resident of Canada, apparently I don't actually "live" anywhere.
oltibcNew Member
Posts: 1
Joined: 26 Jun 2007

Post Tue Jun 26, 2007 8:10 pm

Having lived in the US for a few years here's what I suggest:

1) Talk to a Canadian accountant about the paperwork needed to be deemed as a non-resident and have them file it for you. You can keep Canadian bank accounts as long as they are not your primary banking institution. FYI you will be charged non-resident fees for transactions so be aware of these upfront.

2) Someone talked about how hard it is to get a credit card in the US and it is extremely difficult because you don't have a US credit history and they could care less about your Canadian credit history (no they won't check it). My way around this is to go to a department store like Macy's or JC Penny's. They are used to Canadians applying for their cards and use all your Canadian information. FYI - I kept a Canadian PO box with the mail forwarded to my US address for six months just for this reason.

3) While still in Canada get a US Visa credit card (Royal Bank has one) so that all your charges are in US funds and they expect you to pay it from a US bank account. So it's really easy to pay this (by cheque not electronically unfortunately). Having this credit card will not affect your non-resident status.

4) US bank accounts can't and won't recognize Canadian accounts for electronic payment. So any ongoing bills will have to be paid by cheque and always plan for at least a week for the mail to get through.

5) If your passport is almost expired renew it while you are still in Canada. The turn around is way faster. If you renew after you move to the US remember that there is only one office that accepts out of country requests for passport renewals. I also ordered a duplicate birth certificate before I left which was helpful - there will be times when you have to mail your physical birth certificate away (like a passport renewal) and if it gets lost in the mail - well you can imagine how much longer everything will take.

That's it. Good luck with your move!
jenn00New Member
Posts: 2
Joined: 19 Aug 2007
Location: UK

Post Sun Aug 19, 2007 9:02 am

Hi, I remember there was some paperwork, but they determine residency more by the strength of ties to each country, where you hold a mortgage or lease, utilities etc.

You might want to reconsider closing accounts and cancelling credit cards, especially at first while you're getting set up financially in the US. In the first few months after moving my Canadian credit cards were very well used, my SSN took forever and my work couldn't legally pay me until I had it.

I was on TN then H1-B visas and was able to get a credit card through my bank there, but it can be a bit difficult at first, after that they don't stop offering you more. Despite having great credit it was still impossible to get a line of credit five years later as a non-resident. And once you're a Canadian non-resident most banks won't let you open any sort of account either. I did eventually cancel all my Canadian credit and kept one checking account that I need every now and then, but am now wondering what my credit score will be whenever I end up moving back.

Basically you need to show you are seriously living in the US and intend to stay a while but don't have to sever absolutely all ties to Canada.

At least banking in the US is easier than the UK. :roll:
perkyjCanuckAbroad Regular
Posts: 74
Joined: 21 Mar 2008
Location: Illinois

Post Fri Apr 18, 2008 2:39 pm

Is this true? Can you tell me which form this was? As a Canadian non-resident for tax purposes, don't you automatically become a US resident for tax purposes and therefore have to report RRSPs etc. over 10,000?

Quoted: "One other thing -- you don't need to inform the IRS about your RRSPs if you are working on a TN visa. If the form you mention is the same one my financial advisor sent me, it states clearly that it is only for "residents" of the US on an H visa or green card."
saikrishnaCanuckAbroad Regular
Posts: 42
Joined: 22 Apr 2007
Location: U.S.

Credit Card

Post Sat Apr 19, 2008 3:56 pm

If you have Canadian issued American Express, call American Express and tell them that you need U.S. issued card. They will tell you to cancel your Canadian issued card and then will send you U.S. issued card. American Express is widely accepted in the U.S.
Traveller
sparcNew Member
Posts: 4
Topics: 1
Joined: 19 Jun 2008

Post Sun Jun 22, 2008 2:36 am

I had little trouble when I went to Bank of America a year ago and asked them to look up my Canadian credit history to issue me a credit card, for what that's worth. It might have helped that this was in Silicon Valley and I'm sure they deal with newcomers all the time.
Reba

Post Sun Jun 22, 2008 5:17 am

depends where you are. In smaller cities and towns they may not be so eager to help out a foreigner. Or even know how.

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