TN Visa and non resident status with CRA

Mitchell_
Junior Member


Finally made it to the USA!

Joined: 18 Feb 2008
Posts: 11
Location: Willow Grove, PA

Posted: Mon Jul 21, 2008 7:30 am

 

---

All,

I have done some research and I'm still terribly confused about this tax situation. The ITO at CRA was very UNhelpful.

I am moving to the US in august. I have NO intention of coming back, obviously the TN Officer will hear other wise (yes, I intend to come back to canada in a year, officer.).

That being said, I don't want to pay canadian taxes, and I want to start the clock on unlocking my locked in RRSPs so I can bring that money to the US in 2 years.

The only "ties" I will have to Canada is my family (who will be my "residence in canada" as well), and the only financial tie will be this stupid RRSP account as I'm going to open a US bank account and such.

So here's my question, does becoming a non-resident with CRA affect my TN renewal in any way? I just need to know that if I go through the process of becoming a non-resident that when I go back to the border in a year, as long as I still have my connection to my family and a "place to live" in canada, that will be enough to keep the FTO happy.

Thanks!

---

Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1064
Location: Calgary

Posted: Mon Jul 21, 2008 10:45 am

 

---

http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html (File Form 8891 for the RRSP if you move your tax home to the US).

The short answer is yes, it can affect your TN renewal if they start grilling you. To get TN-1 you have to have "bona-fide non-immigrant intent" and if you are declaring to the IRS that you are a resident by filing a 1040 instead of a 1040NR and you are declaring to the CRA that you are non-resident and have cut all residential ties, clearly you are violating that rule.

Having said that, the question may not come up.

Going by the threads on here the general impression I get is that moving your tax home to the US is a bad idea unless you are sure you are aware of the implications of doing so (and they are many and various), because moving it temporarily to the US can cause you all sorts of headaches not related to the TN-1.

Generally, only do it if you save enough tax money to hire a good cross-border accountant in Canada who is fully aware of all the forms. Emphasis on the "good". Find one before you go, I would suggest. I've used Serbinski and he is near you.

One of the various problems for example is that if you get refused entry and you have moved your tax home to the US, you essentially become a resident of Canada again at that point which means a ton of tax paperwork you weren't expecting.

You should read IRS publication 519.

What the IRS doesn't make terribly clear in that document and the CRA doesn't make terribly clear in the above document is that you can remain a tax resident of Canada pretty much forever if you are in a temporary status in the US, by filing Form 1040NR and making a tax treaty claim on Form 8833. This means you can carry on contributing to your RRSP for example.

However publication 519 does explain how to move your tax home to the US, i.e. filing a dual-status return if you move mid-year (this means three tax returns in the year that you move, a T1, a 1040 and a 1040NR). Just be aware that moving it back is a lot of paperwork too.

There is other paperwork other than tax and immigration paperwork as well if you move your tax home, i.e. the FBAR form: http://www.fincen.gov/forms/files/f9022-1_fbar.pdf - you may need to file this if you maintain a Canadian bank account/RRSP
_________________
Steve.

---

Mitchell_
Junior Member


Finally made it to the USA!

Joined: 18 Feb 2008
Posts: 11
Location: Willow Grove, PA

Posted: Mon Jul 21, 2008 3:13 pm

 

---

I think what I've gotten from this excellent response is, "no freaking way" am I moving my tax home until I'm becoming a green carded resident.

Thank you for the wonderful info, I'm going to bookmark it for future reference for sure!

Mitch

---

Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1064
Location: Calgary

Posted: Tue Jul 22, 2008 1:47 pm

 

---

If you have to file Form 8833 (and you probably will at some point) I very strongly suggest you phone up the IRS to find out how to fill it in. Publication 519 and 597 give you some idea, but it's a five-question one-page form and on the back they reckon it takes six and a half hours to fill it in. It's quicker to phone them and ask. I've had to do it and the answers are so obscure I can't even vaguely remember what they were.
_________________
Steve.

---