Question about 401k and IRA for Canadian

[sana307]

Hello all,
I am Canadian and recently start working in US on TN-visa.
I know that 401k and IRA account are tax shields for tax in US, but are they tax shield for income I need to report to Revenue Canada.

Let's consider a simple example:
Annual income in US: $80,000
401k: $10,000
IRA: $5,000

Question:
1. In this case, do I report my earning in US as 80,000 USD or 65,000 USD to Revenue Canada?
2. Since Canadian income tax is higher, can I also contribute to RRSP in Canada to reduce my income tax to Canada?
3. When I report my income in US, what exchange rate will they use?
Do they use year end exchange rate or the exchange when I file my income tax to Revenue Canada? Or some other exchange rate?

Thank you very much.

[agnelson]

Starting in 2009, your 401(k) contributions are treated the same in Canada as in US, so you report the same wage as indicated on your W-2: which is without including the 401(k). IRAs on the other hand are not a deduction in canada. Be careful with IRA, since you ahve a 401(k), your IRA contribution might not be deductible. You should probabaly do Roth IRA instead, as this will grow tax-free.
2. With the 401(K) deduction now accepted, your RRSP contribution is reduced by your 401(k) ammount, so probabaly not.
3. CRA publishes an avearge annual rate at the end of the year.

Bigger question, though, is why you feel you would need to report your US income in Canada in any event? Do you still live there? If not you should be filing a Cdn departure return, which typically would not include any

[sana307]

Thanks for the reply.

The reason I feel in need to report my US income in Canada is because I thought as Canadian we need to report global income.
I live and work in US since this Feb., so I thought CRA would still consider me as resident in Canada for tax purposes.
In addition, I still have residential ties in Canada. ( Canadian driver's licence, Canadian bank account, Canadian credit cards )

[agnelson]

Your thought and feelings are incorrect. The ties you mention are not strong enough. Besides, your DL is likley invalid.

Read the Emigrants guide from CRA.