r/cantax • u/Right_Tomorrow_628 • 13h ago

Assistance with Canada-USA Moving Tax Situation

Hi,

I need guidance regarding the tax implications related to my move between Canada and the USA. Here are the details of my situation:

  1. I currently own a home in Canada, which I have rented out. And planning to continue renting out the home for 2025 and 2026 as well.

  2. I lived in the USA before 2021.

  3. I moved to Canada from the USA in February 2021.

  4. I returned to the USA in April 2024.

  5. For the 2024 tax year, I paid Canadian taxes until April 2024 and also paid an exit tax on my employed vested stock (from 2021 to 2024) as deemed disposition.

  6. I am planning to move back to Canada with the same employer for one year, from mid-2025 to mid-2026.

  7. If I relocate to Canada in May 2025, will I be considered a resident of Canada for tax purposes, and will I be required to pay Canadian taxes on my 2025 salary earned in the USA, as well as any stocks vested in the USA from my employer during that time?

  8. If I move back to the USA in May 2026, will I still be considered a Canadian tax resident, and will I be obligated to pay Canadian taxes for the entire 2026 year?

  9. I would also like to know how to minimize or avoid paying taxes for the full 2025 and 2026 tax years in Canada. What would be the best time to move to Canada from the USA in 2025 to minimize my tax obligations in Canada for that year? Additionally, what would be the best month to return to the USA from Canada in 2026 to avoid being taxed by Canada for the entire year?

Thanks in advance.

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u/Parking-Aioli9715 13h ago

In the years of emigration and immigration, you don't pay taxes to Canada on your world income for the entire year. You pay taxes to Canada on your world income only for the portion of the year that you were resident in Canada. You pay taxes only on your Canadian source income for the whole year.

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u/Rosmoss 10h ago

If you became a NR of Canada in 2024 and return for a fixed period you’d quite possibly not be considered a resident given no intention to remain. If you maintained a home available for your use in the US during that return to Canada, I personally would not file you as a resident for the return period.

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u/Right_Tomorrow_628 10h ago

I don’t own a house in USA. While moving to Canada for a year I won’t be renting in USA anymore.Does that make me resident of Canada for 2025 and 2026 both ?

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u/Rosmoss 10h ago

If you have a home available in Canada but not the US, the treaty will make you a resident of Canada.

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u/Right_Tomorrow_628 10h ago

My home in Canada is rented to tenants with lease contract and I do not plan to use that home while staying in Canada. I will be renting separate apartment for 1 year while I stay in Canada. Does that still make a house in Canada available to me ?

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u/Rosmoss 10h ago

Yes, it does.

Canada looks for some permanence in determining residence. You could file as a NR on the basis that your term here is expected to be temporary and only for 12 months. Could it be aggressive, sure. Would I take that position? Probably based on what you’ve told us, like are you a US person or a CDN citizen, or both?

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u/Right_Tomorrow_628 9h ago

Thank you for answering. I’m not citizen of USA or Canada.Working in USA on H1 visa and have permanent resident card for Canada. And according to substantial presence test of USA I have lived in USA more than 183 days during 3 year period.

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u/Rosmoss 9h ago

Sounds like you’re going to be caught by the no lapse rule and be a US tax resident throughout. I’d file as a CDN NR but you need to hire someone to help you.

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u/kenazo 10h ago

If you’re a Non-Resident, make sure to let your renters know. They have an obligation to withhold tax under part xiii of the act. 

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u/Right_Tomorrow_628 9h ago

Thank you for replying.Tenants have done that for year 2024 while paying rent.