Author Topic: American Doctor in Canada with tax questions  (Read 291 times)

Will_slack

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American Doctor in Canada with tax questions
« on: July 03, 2018, 07:25:07 AM »
2 years ago I moved from California  to Victoria to retire with my husband. We are working from our retirement and estate plan with our US wealth manager however he has very little experience on the Canadian rules. We’ve been with him forever and would like to maintain the relationship. However we don’t want to make any decisions that will result in negative Canadian tax consequences.

One of my main questions is what investment account should we draw from first? I’ve listed out our investments below (all estimates):

- $200,000 RRSP from when I worked in Canada early in my career
- $500,000 IRA
- $100,000 ROTH
- $1,200,000 investment account

In case this make a difference in the planning we have 3 kids (1 in Canada and 2 in the US) that will be inheriting the residual of our estate when we pass.

TY

Phil Hogan, CPA, CA, CPA (Colorado)

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Re: American Doctor in Canada with tax questions
« Reply #1 on: July 15, 2018, 12:21:49 PM »
Hi Will

Thanks for the post. You'll want to sit down with a cross border professional to work through this in more detail, however I can give you some guidance on this post. With respect to your question it's often more efficient to pull from your Canadian and US non-registered accounts first. Any time we can continue to defer US and Canadian registered accounts like RRSP, RRIF and IRA we should do so.

You'll find that you'll be forced to pull from your RRIF in your 70s, there you won't have full control over the complete deferral of registered accounts. Also, I would normally suggest that you hold off as much as you can on pulling from your IRA (RMD will be required) as they accounts can be passed down to the next generation tax free. The savings on this "stretch" can be significant.

Hope that helps and please let me know if you have any other questions.

Regards

Phil
Phil Hogan, CPA, CA, CPA (Colorado)
250-381-2400
Hutcheson.ca
phil@hutcheson.ca
* The information contained in these posts should not be construed as professional advice and is for informational purposes only.

Phil Hogan, CPA, CA, CPA (Colorado)

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Re: American Doctor in Canada with tax questions
« Reply #2 on: July 18, 2018, 06:34:00 PM »
Hi Will

I further flush out some guidance...
 
We were recently working with a client in a similar situation and after speaking with a local cross-border advisor (who is an American also) we discovered the following I wanted to share with you.
 
1. Compliance – make sure the advisor in the US is licensed to deal with Canadian residents. Most of the clients we see with US IRA or brokerage accounts use their “US address” on the statement to keep the account open. The challenge with that is you are not protected from a compliance perspective in either the US or Canada in case something went wrong.

2. Inherited Accounts – Due to recent changes in US/Canada law a number of US custodians (UBS, Merrill Lynch, Smith Barney, ect) will no longer open up inherited IRA accounts for non-US residents. Make sure that you children on both sides of the border will be able to open accounts in the future.

3. Investment Accounts – Most US advisors in California (due to the high tax rate) invest clients funds in municipal bonds or California state bonds. They do not realize that for non-residents the tax savings does not exist. This will cost you an extra 1% in lower returns. Also, if the investment account has a large number of ongoing trades in it, the account cost of reporting those can become onerous.
 
Hopefully this helps, please email me and I can send out an introduction to a cross border investment advisor that has been helpful to many of my other clients.

Thanks

Phil
Phil Hogan, CPA, CA, CPA (Colorado)
250-381-2400
Hutcheson.ca
phil@hutcheson.ca
* The information contained in these posts should not be construed as professional advice and is for informational purposes only.