Exit tax and what do I do with my US investment accounts

[Alittke]

Hi, not sure if this is the best place to post my question but here it is: I am a Canadian citizen living in the US on a Green card. I have been living in the U.S. for 20+ years. I have substantial assets in the US and as I plan to move back to Canada in 6-8 months, I have been told I will have to pay an exit tax if I give up my Green card. Has anyone had experience paying an exit tax? In addition, I have a house I will need to sell, an IRA and managed US investment accounts with Fidelity. Can I keep my investment accounts in the US? Will I have to liquidate everything? Can I transfer in-kind to Canada? Any advice from people who have been in a similar situation would be appreciated. Thanks, Adam

 

[Hurlabrick]

Hi, not sure if this is the best place to post my question but here it is: I am a Canadian citizen living in the US on a Green card. I have been living in the U.S. for 20+ years. I have substantial assets in the US and as I plan to move back to Canada in 6-8 months, I have been told I will have to pay an exit tax if I give up my Green card. Has anyone had experience paying an exit tax? In addition, I have a house I will need to sell, an IRA and managed US investment accounts with Fidelity. Can I keep my investment accounts in the US? Will I have to liquidate everything? Can I transfer in-kind to Canada? Any advice from people who have been in a similar situation would be appreciated. Thanks, Adam

I can only help with part of this.

You can keep some or all of your investments and assets in another country once you move to Canada. But you will need to declare the value of tgese assets to CRA in your first FULL CRA TAX YEAR following landing as settler (CRA tax year runs 1 Jan to 31 Dec), then declare them every year thereafter. No Canadian tax on them as such. Any income from them must be declared as overseas incone to CRA and is liable to Canadian tax. There is a dual tax agreement between Canada and US such that if you are taxed in one country, you will not be taxed in the otger country (over simplified here to make tge point).

I have settled my UK taxes and been declared a non-UK taxpayer by HMRC. I therefore now pay all appropriate taxes to CRA, including taxes on overseas incone and overseas capital gains. HMRC have notified one of my investment companies that I am no longer a UK tax payer, so this company no longer deducts tax at dource for my withdrawals and now pays gross. I have no idea what US practice is in this respect.

 

[Publius_Cornelius_Scipio]

You really need to pay an expert for this kind of issue.

Has anyone had experience paying an exit tax?
It is in the tax book of IRS. I came across it while reading the codebook before. You are a tax resident of the USA and would have to pay it if you meet the conditions. [Canada also has an exit tax, albeit different rules.]

In addition, I have a house I will need to sell, an IRA and managed US investment accounts with Fidelity. Can I keep my investment accounts in the US?
You can but all non-retirement investment accounts will be frozen once you update your address to be a Canadian one due to some legislation of Congress. You would be able to take money out but cannot change investment or contribute to these accounts afterward.

Will I have to liquidate everything?
You don't have to do anything. This is a free nation. But it may benefit you to do certain things.

Can I transfer in-kind to Canada?
As far as I know, only for cash, checking and savings accounts.

Any advice from people who have been in a similar situation would be appreciated.
You need an expert on this. I really suggest you go and find one.
A second choice is to read books and tax code and DIY. The choice is yours.

 

[saddlepatch]

Do

You really need to pay an expert for this kind of issue.

Has anyone had experience paying an exit tax?
It is in the tax book of IRS. I came across it while reading the codebook before. You are a tax resident of the USA and would have to pay it if you meet the conditions. [Canada also has an exit tax, albeit different rules.]

In addition, I have a house I will need to sell, an IRA and managed US investment accounts with Fidelity. Can I keep my investment accounts in the US?
You can but all non-retirement investment accounts will be frozen once you update your address to be a Canadian one due to some legislation of Congress. You would be able to take money out but cannot change investment or contribute to these accounts afterward.

Will I have to liquidate everything?
You don't have to do anything. This is a free nation. But it may benefit you to do certain things.

Can I transfer in-kind to Canada?
As far as I know, only for cash, checking and savings accounts.

Any advice from people who have been in a similar situation would be appreciated.
You need an expert on this. I really suggest you go and find one.
A second choice is to read books and tax code and DIY. The choice is yours.

Do you know if the exit tax applies to Green Card holders under 8 years? I keep reading you need to be in the US for 8 years before they can apply the tax.

I def do not have the funds to pay this tax....

 

[Publius_Cornelius_Scipio]

Do

Do you know if the exit tax applies to Green Card holders under 8 years? I keep reading you need to be in the US for 8 years before they can apply the tax.

I def do not have the funds to pay this tax....

The Canadian in America: Real-Life Tax and Financial Insights into Moving to and Living in the U.S.
by
Brian D. Wruk

 

[saddlepatch]

The Canadian in America: Real-Life Tax and Financial Insights into Moving to and Living in the U.S.
by
Brian D. Wruk

Yeah I'm not buying a book lol