CAN>US. What to do about finances?

[Jimmy The Tulip 3]

Where can I learn more about what to do with my finances? No mortgages or real estate-just cash and stocks in RRSP/TFSA/Savings.

 

What are tax obligations entering the US? Are there any tax obligations, outside of the norm, when leaving Canada? What is the most efficient way to transfer/bring that money to the US? I have more questions but hopefully someone can direct me to a resource I can sift through. Google searches arent giving me all the answers.

 

Thanks!

[Loren Y 2,755]

The most efficient way is to bring it with you. Bring a cashiers check payable to you, but that will take a week to clear minimum when you get here. Bring it all in cash if you want, just declare it if over 10.000.00 US and fill out a simple 1 page form and in you come with as much as you want. I have traveled with amounts ranging from 20- 60 thousand US dollars with no issues. You have a valid reason to be bringing the money( You are moving here on a immigrant visa if F2-A is what you enter on), and they will understand your need to bring your money with you. That is the free way more or less. Or you come here and open a bank account then do an international wire transfer ( Cost 35.00 or so) and electronically transfer the money in. If it's millions of dollars, go for the wire transfer, under 100K just carry it in. Under 10k, you don't have to declare anything and just cross with money on your person. And I am not a tax expert, so I won't give a 100 Percent guaranteed answer, but as long as the money was earned outside the US, I don't believe you have to pay taxes on it, but I am sure someone else can offer a better insight on the tax aspect.

Edited January 10, 2019 by Loren Y

[Jimmy The Tulip 3]

3 minutes ago, Loren Y said:

The most efficient way is to bring it with you. Bring a cashiers check payable to you, but that will take a week to clear minimum when you get here. Bring it all in cash if you want, just declare it if over 10.000.00 US and fill out a simple 1 page form and in you come with as much as you want. I have traveled with amounts ranging from 20- 60 thousand US dollars with no issues. You have a valid reason to be bringing the money( You are moving here on a immigrant visa if F2-A is what you enter on), and they will understand your need to bring your money with you. That is the free way more or less. Or you come here and open a bank account then do an international wire transfer ( Cost 35.00 or so) and electronically transfer the money in. If it's millions of dollars, go for the wire transfer, under 100K just carry it in. Under 10k, you don't have to declare anything and just cross with money on your person.

 

This makes sense. thank you.

 

Are there any tax obligations on that money upon entry or a year later when I have to do my taxes? Lets say I bring in a cashiers cheque for 50k USD.

[Loren Y 2,755]

1 minute ago, Jimmy The Tulip said:

This makes sense. thank you.

 

Are there any tax obligations on that money upon entry or a year later when I have to do my taxes? Lets say I bring in a cashiers cheque for 50k USD.

I am not 100 percent on the tax thing, but is you keep a record of where the money came from ( Bank statement) and it was not earned here, I don't think you have to mention it, but I am not sure. Cash, cashier check, gold, silver, diamonds, doesn't matter as they say any " Monetary instrument" over 10,000 has to be declared, the money part I am very familiar with, tax aspect not so much. But there are excellent knowledgeable people on here that I am sure will offer you some pointers on the tax responsibility.

[shammykay 63]

2 hours ago, Jimmy The Tulip said:

Cash and stocks in RRSP/TFSA/Savings.  What are tax obligations entering the US? Are there any tax obligations, outside of the norm, when leaving Canada?

When you finally emigrate to the US and are no longer a tax resident of Canada, beware of the TFSA.  It is not tax free in the US, even if they have the equivalent Roth.  Cash it out beforehand.

 

RRSP - Do "step up" in cost base before you depart.  Google that.  Basically buy/sell stocks inside RRSP to have higher tax base.

 

Investments outside of TFSA/RRSP - Well even if you don't sell, you will owe Canada what is commonly known as departure tax, which is paying tax on the value that an investment appreciated in capital until the day you departed.  I saved myself the trouble and liquidated my investments.  Ditto for investments inside TFSA.

 

Make sure you have a plan for your future FX conversion.  Open a US bank account in advance and set up a FX exchange service.  Do not transfer FX at the bank - they hose their customers.

[Jimmy The Tulip 3]

8 hours ago, shammykay said:

When you finally emigrate to the US and are no longer a tax resident of Canada, beware of the TFSA.  It is not tax free in the US, even if they have the equivalent Roth.  Cash it out beforehand.

 

RRSP - Do "step up" in cost base before you depart.  Google that.  Basically buy/sell stocks inside RRSP to have higher tax base.

 

Investments outside of TFSA/RRSP - Well even if you don't sell, you will owe Canada what is commonly known as departure tax, which is paying tax on the value that an investment appreciated in capital until the day you departed.  I saved myself the trouble and liquidated my investments.  Ditto for investments inside TFSA.

 

Make sure you have a plan for your future FX conversion.  Open a US bank account in advance and set up a FX exchange service.  Do not transfer FX at the bank - they hose their customers.

So it seems like cashing out of my stocks is the easiest way. I can do that.

 

So now lets say I have 50k CAD or USD as a bank draft to bring with me. When I cross I will declare this amount. Are there any tax obligations on this from the IRS side? Be it at entry or in a year when I have to do my taxes? I want to know if the money I am bringing in will be taxable or not. Hoping not, but want to confirm.

[JP John 65]

Leave your RRSP alone.  Reset the book value to todays values.  The USA only taxes gains from the book value and once you are a non res of Canada as you start to receive your retirement benefits from it is only taxed at 15%.  Ask an accountant.

[santoki 2]

On 1/10/2019 at 7:22 AM, Jimmy The Tulip said:

So it seems like cashing out of my stocks is the easiest way. I can do that.

 

So now lets say I have 50k CAD or USD as a bank draft to bring with me. When I cross I will declare this amount. Are there any tax obligations on this from the IRS side? Be it at entry or in a year when I have to do my taxes? I want to know if the money I am bringing in will be taxable or not. Hoping not, but want to confirm.

Would be interested in this too. Did you ever find out?

I would potentially need to bring north of $200K of savings to the US when we officially move there. I want to make sure there is no obligation to pay any tax on them. 

[Jimmy The Tulip 3]

On 1/14/2019 at 11:10 AM, santoki said:

Would be interested in this too. Did you ever find out?

I would potentially need to bring north of $200K of savings to the US when we officially move there. I want to make sure there is no obligation to pay any tax on them. 

I have not. I have a few contacts that have done this move so I will know soon-my interview is end of Feb so I need to know soon. 

 

Check back with me in a few weeks. If you come across anything in the mean time let me know

[NikLR 13,227]

Try serbinski tax forum.  Deals with us/can tax issues. 

[shammykay 63]

On 1/10/2019 at 7:22 AM, Jimmy The Tulip said:

So it seems like cashing out of my stocks is the easiest way. I can do that.

 

So now lets say I have 50k CAD or USD as a bank draft to bring with me. When I cross I will declare this amount. Are there any tax obligations on this from the IRS side? Be it at entry or in a year when I have to do my taxes? I want to know if the money I am bringing in will be taxable or not. Hoping not, but want to confirm.

As far as I know, there are no implications to move cash.  If > $10k, they will ask the reason why.  That's just policy to comply with federal regulations.  Canada will do the same on their end.

Do not suggest bank draft.  Open an account and then do a service like Transferwise/Knightsbridge to bring it in and exchagne to USD.  Most banks in Canada have terrible FX rates.  I can move $ with TD for convenience as I have TD accounts on both sides but their rates are not that good.

There is no entry on US tax returns for moving money.  

When you bring the $ over from Canada to the US, it is no longer eligible for FATCA reporting.  But you have to do FATCA for any Canadian retirement accounts.  Also not too sure if it existed in the beginning of the year you moved they want it reported even at $0 value.

[purem4g1c 113]

Hm my TFSA is maxed out at the moment, so I should move my whole TFSA into my savings when I move to USA? Also I am in the same boat as santoki, got a large amount of money in savings account that I don't want taxed. I was thinking of just leaving a lot of my CAD in my CAD banking account and just let it collect interest for time being as I probably won't need it for a while. Interest earned in canadian bank shouldn't have extra taxes should it?

[santoki 2]

13 hours ago, purem4g1c said:

Hm my TFSA is maxed out at the moment, so I should move my whole TFSA into my savings when I move to USA? Also I am in the same boat as santoki, got a large amount of money in savings account that I don't want taxed. I was thinking of just leaving a lot of my CAD in my CAD banking account and just let it collect interest for time being as I probably won't need it for a while. Interest earned in canadian bank shouldn't have extra taxes should it?

I've been doing some reading on the situation and savings brought over to the US aren't taxed. It's only income earned outside the US that is taxed. However, Canada and the US have a reciprocal agreement, so if you're being taxed on income in Canada then you won't be taxed on it in the US. 

BUT that is only true up to a certain amount which I believe is ~$90K. Whenever I file my US taxes here in Canada, it's always $0 payable because my income is not high enough. And it's not all income taxed over $90K, it's just the amount earned over $90K that would be taxed. Consult with an accountant on that but that's what I remember mine telling me a few years back when we were obligated to first file.

As for interest earned on a savings account, you'd be declaring that on your Canadian taxes so it would be declared on your US taxes but the amount is going to be negligible if $90K is the approximate barometer.

Edited February 9, 2019 by santoki

[AstroCanada 206]

On 2/9/2019 at 10:12 AM, santoki said:

I've been doing some reading on the situation and savings brought over to the US aren't taxed. It's only income earned outside the US that is taxed. However, Canada and the US have a reciprocal agreement, so if you're being taxed on income in Canada then you won't be taxed on it in the US. 

BUT that is only true up to a certain amount which I believe is ~$90K. Whenever I file my US taxes here in Canada, it's always $0 payable because my income is not high enough. And it's not all income taxed over $90K, it's just the amount earned over $90K that would be taxed. Consult with an accountant on that but that's what I remember mine telling me a few years back when we were obligated to first file.

As for interest earned on a savings account, you'd be declaring that on your Canadian taxes so it would be declared on your US taxes but the amount is going to be negligible if $90K is the approximate barometer.

That magic number arises from the foreign earned income exclusion.  There's a completely different way of dealing with dual taxation with the foreign tax credit, which uses Canadian taxes to offset corresponding US taxes.  If you're a high earner that might be the better way to deal with it.  If you're also in that tax bracket, accountants are a very good idea

[shammykay 63]

On 1/10/2019 at 7:22 AM, Jimmy The Tulip said:

So it seems like cashing out of my stocks is the easiest way. I can do that.

 

So now lets say I have 50k CAD or USD as a bank draft to bring with me. When I cross I will declare this amount. Are there any tax obligations on this from the IRS side? Be it at entry or in a year when I have to do my taxes? I want to know if the money I am bringing in will be taxable or not. Hoping not, but want to confirm.

There are no obligations on taxes to move cash, only when you move it.

I honestly suggest services like Transferwise or the like.  I would move the $ in Canada from a joint account with your spouse to an account the spouse has already set up in the US with a service like Transferwise, Knightsbridge, etc.

If you and your spouse bank with RBC or TD, cross border transfers of USD are one day and can be executed from a mobile device.  I think other services offer better FX rates, though.

I have had to keep some money in Canada for my final tax return, wind-down of my bills, vacations to return, life insurance contract for the next 10+ years, etc.  Each situation is different.