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Phil Hogan, CPA, CA, CPA (CO)
Cross-Border Tax and Investment Specialist
Dear Mr. Phil Hogan,
I’m a Canadian citizen who recently moved to the states for work. I came across your contribution to a Canadian news article about cross border income tax a few months ago when I was preparing for my move. Although the tax season is a bit far away right now, I would like to get your advice about my Canadian and American residency status for 2021, which will really help me figure out the duration of my stay in Canada for the holidays.
I lived and worked in Toronto, Canada in 2021 up until June 27th when I moved to Philadelphia under a TN visa for work. I am not married, don’t have property in Canada, only a Canadian bank account (checking and savings only, I closed my TFSA before moving) and I’ve transferred my Ontario driver’s license to a Pennsylvania license. This is my first full year of working and I have about 10 years worth of Canadian tuition tax credits.
My current understanding of my 2021 tax situation is as follows. As an American resident, I would only have to pay Canadian income tax from Jan-Jun 2021 and then American income tax on my American Income. (Tax has been withheld in both my Canadian and American jobs.) As a Canadian resident, I’d have to pay Canadian income tax on my Canadian income and my American income. Since my American income would be converted to Canadian, I would likely be paying more income tax. Generally, it seems like there would be lower taxes as an American resident. I don’t have assets to tax (e.g. departure tax) since TFSAs are exempt, and if possible (i.e. being American resident) I would like to reserve tuition tax credits in case I move back to Canada in the far future (e.g. after 5/10+ years). However, since I moved to the states around the middle of the year, I’m wondering if and how visiting Canada during the holidays would affect my residency status (& thus taxes). I will be asking for time off for holidays in the next week or so and had some questions to ask you in order to be aware of any implications it may have on my residency & taxes:
1. Would the number of days I visited Canada for the holidays would affect my (American?) residency status?
2. Would I be considered an emigrant or non-resident of Canada and an American resident? If I was considered an emigrant of Canada, would the number of days I visit Canada for the holidays not matter? I’m aware of the substantial presence test and have been to the States in 2019 for six days for a conference. How would this work into figuring out my residency for 2021?
I would really appreciate your knowledge on this. Thank you very much for your time and consideration. Please let me know if there is additional information I would need to provide to help you with the questions.
Thanks for the email. You have quite a lot going on here so I’ll do my best to provide some general insights (not professional advice). That being said, if you need more detail we’ll need to schedule a consult ($450 per hour):
• Claiming Canadian non-resident is not necessarily as easy as “moving out of Canada”. Although you have severed most of your ties from Canada the fact that you’re only on a TN VISA may not be enough to fully claim non-residency. That being said, if it’s your intention to stay in the US for 3 to 4 years that may be enough.
• Technically can you visit up to 183 days in Canada before being considered a Canadian resident under the sojourner rules. That being said, this is assuming you already claimed Canadian non-residency.
• If you did claim Canadian non-residency when you left Canada you would be subject to the Canadian emigration deemed disposition rules. That being said, it doesn’t look like you have many assets that would be affected.
Hope that helps a little and let me know if you want to setup a full one hour consult.