QUESTION: My wife and I are both Canadian citizens and we have been living
in the US for about 10 years. We both got green cards 6 years ago. Now, we
plan to move back to Canada for good.
We will sell our jointly-owned home, that has appreciated substantially,
before moving.
In Canada, I expect to get a six figure salaray and my wife will not be
working.
I was thiniking of getting US citizenship before moving out just in case if
we ever need to come back to the US, although we just plan to live in Canada
forever.
(1) If we leave without US citzenship, is there any special tax we need to
pay to the US? Is such tax over and above our regular tax obligations as per
1040? Is it okay to leave my funds ( about 60k) in 401k?
(2) If we obtain US citizenship and then move to Canada, do you think we may
end up paying sizable taxes every year (AMT etc.) to the US? To the state of
CA?
(3) Can you recommend any tax book on the subject?
Thank you in advance for your help.
---------------------------------------------------------------------------
david ingram replies:
If you have lived in the US for 10 years and contributed to US social
security for 40 quarters, you are eligible for USA medical benefits which
are equal to most Provincial plans.
However, if you give up your green cards after ten years in the US, you are
subject to departure tax. Depending upon your assets, that may or may not
be substantial. It will NOT apply to any profits on the sale of your family
home.
A significant number of people who return to Canada and give up their green
cards regret it afterwards when they would really like to go and retire in
Palm Desert or Corpus Christi or Fort Lauderdale but cannot get permission
and end up having to maintain two households to spend their winters down
south and their summers in Canada.
If you get US citizenship before you leave, you will have to continue to
file US returns for the rest of your life but make life far simpler if you
want to go back or even just visit the US.
The extra tax return is no more onerous in most cases than filing a Quebec
and Canadian return if you live in Montreal.
Or filing New York City, New York State and US federal returns if you live
in New York City or the Bronx..
You seem to be living in California so the city tax return is not something
you have done.
However, my past experience would advise you to get the US citizenship first
because you are considering it.
If you are considering it even a little bit, if it is a little niggling
thought in the back of your mind that you should not give it up because so
many people want it and it is so hard to get, then take it out.
You will need help with your tax returns when you do leave and that, of
course, is my specialty by fax, mail, email (pdf files only) or courier.
=======================
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