Working as an EXPAT in the US

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pqpq
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Working as an EXPAT in the US

Post by pqpq »

Hi All,

I'll be relocating with my company to California. The assignment is 2 years long. After the 2 years I can make a decision to stay, or I will have a guaranteed position back in Canada. At this point I will make plans based on returning to Canada, but would like to keep in mind the possibility that I might not. My wife will be moving along with me and most likely working in the US. I plan on keeping my house and maintaining Canadian Residency. I'll be working under an L1 visa.



What are some of the things I need to be aware of?

- I know I will have to pay income tax in both locations. I assume I will pay most of the tax in the US, but will be less tax than what I would be paying in Canada.
My understanding is that if for example i would've paid a combination of say 30k in federal and provincial canadian tax, based on that yearly income, but I already paid 25k in the states, I owe the difference (5k). Is this correct?

- I plan on renting out my home. How will this be treated? Taxed as income in the US, with some extra tax payable in Canada?

- I'm getting some benefits from the company such as a housing allowance and a car allowance. I believe this is taxable in the US and they will take care of it on that side of the border. Are these benefits taxable in Canada as well?

- They are offering me $5000 compensation for tax advice. Will it really cost this much for a tax professional to file tax on both sides of the border? Is it so complicated that I couldn't handle it myself? I currently file my own taxes here in Ontario.

- My understanding is that my dividends in TFSA, RRSPs, and Non-Registered will be taxed across the border, correct?
We have $500k in investments.. $10,000 of dividends paid yearly. So I assume some additional taxes of ~$2k compared to what I would have otherwise paid in Canada. Is that correct?

- Will my wife and I continue accumulating RRSP and TFSA room?



Trying to make an informed decision before I accept the job. I really appreciate any help I can get. It's a little overwhelming at this point.

Edit: sorry I realize too late that this should have gone in the taxation forum. I'd ask the moderators to move it if necessary.
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Re: Working as an EXPAT in the US

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It depends on how sophisticated your company is, but the big multi-nationals, at least in the oil industry, are somewhat similar, and if so, then my last ex-pat experience 2003-2006 might be of value to you.

1. My multi-national kept me whole on tax such that I would not pay more in total (while in the USA) than I would have on my income had I stayed in Canada. US income tax takes precedence, if you become a non-resident of Canada for tax purposes, and any 'withholding tax' you pay as a non-resident of Canada will be a foreign tax credit in the USA (the Can US tax treaty). One benefit of a L-1 Visa was (maybe still is) that it was long enough (3 years with renewal provisions) that it could be argued with CRA that you are NOT a resident of tax purposes. And if not, your income tax obligations to Canada would only be a Part XIII tax return, essentially just withholding taxes on income earned in Canada. My company provided 'gross ups' each year (top ups) to make sure I was kept whole overall. Your company may not do that.

2. Renting out a home in Canada can be problematic in trying to justify you are a non-resident of Canada for tax purposes. CRA will assume you are coming back and may try to tax you as a resident. I strongly recommend against keeping your Canadian home and it is tough in any event being an absentee landlord. Some people get lucky with tenants, Some have the tenants from hell. From all the ex-pats I have been associated with, there are enough stories from hell that I'd never be an absentee landlord. Cannot help you on how rent is handled tax wise. FWIW, I've not known many ex-pats who actually wanted to come back to their Canadian home after being away for 3-5 years. Their lives have moved on.

3. Those allowances are taxable benefits. In my case, I was kept whole (with gross ups) such that these benefits effectively became After Tax income to me. Gross ups build over time because the gross up is taxable as well, so there is a compounding effect. I have no idea whether your company will give you gross ups so that you are not burdened personally with taxes due on the housing and car allowances. Doesn't sound like this is the case....so Uncle Sam will tax you. This should not be a factor for Canadian tax since as a non-resident of Canada for tax purposes, you only pay withholding taxes on income earned in Canada (not world wide income).

4. $5k in tax advice compensation should be enough on an annual basis. Take my word.... Use a cross border tax professional. Don't even dream for a moment about doing your own tax returns. They are extremely complicated.

5. There will be wihholding taxes in Canada on Canadian income (15% on dividends for example) which will be a foreign tax credit on your US tax return. Your RRSP income will not be taxed federally in the USA if you fill out the right forms but some states such such as CA do not recognize the US-Can tax treaty so they will tax RRSP income. The US Feds do not recognize the TFSA as a retirement account so will tax TFSA income.

6. You do not continue to accumulate RRSP and TFSA room as a non-resident of Canada. You will only have RRSP room for the year following departure which you don't want to use (as a deduction) while in the USA. Use it as a deduction after you return. You only have to be a resident of Canada for a partial year to get the full $5500 credit for TFSA for that year, both leaving and coming. Example: Leave Nov 2017 - get full $5500 credit for 2017. Return Nov 2020 - get full credit for 2020.

Added later:

If you are a non-resident of Canada of tax purposes, your $10k of Canadian dividends will have Part XIII tax at 15% withheld at source by your financial insitution, i.e. $1500, They will do this automatically when your account has a US postal address. This will be a FTC on your US tax return. There is no withholding tax (that I know of) on interest from bank accounts (revised tax treaty) though there will be from distributions from money market funds and ETFS that would issue a T3 otherwise.

If you have any ETFs or mutual funds outside your RRSP, these are considered PFICs by Uncle Sam and I understand there is an enormous amount of paperwork associated with these. Best advice: Do not hold any potential Passive Foreign Income Companies. There is lots of info on the web (Google) on these issues.

As well, you will have been deemed to have disposed of your non-registered capital investments at the market value on the day of departure from Canada. You will have to pay cap gains taxes on deemed gains. Additionally, a number of brokerages will not allow you to trade our non-reg account (and maybe your RRSP and TFSA as well) while outside of country. Speak to your brokerage. You may have to switch brokerages if the one you are with now essentially freezes your accounts. I hear that TDDI may be the most flexible in these matters. Additionally, get your financial investments in order before you leave. Do the buy/sells you want before you leave since you will most likely NOT want to trade these holdings while a resident of the USA.

There is more information to be had on the Serbinski tax forums on cross-border matters, some information in our own finiki, and in other threads on this forum.
Last edited by AltaRed on 21 Sep 2017 09:24, edited 1 time in total.
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Re: Working as an EXPAT in the US

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The problem is the house is a recent purchase, within the last 6 months. With the market going down / sideways, and real estate fees that I would incur, I’d be taking a loss with the sale.
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Re: Working as an EXPAT in the US

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pqpq wrote: 21 Sep 2017 09:13 The problem is the house is a recent purchase, within the last 6 months. With the market going down / sideways, and real estate fees that I would incur, I’d be taking a loss with the sale.
You probably should talk to a cross-border tax accountant on how this might affect you continuing to be a tax resident of Canada or not. The tax treaty has several tie-breaking rules. A key part of those rules is to determine where you have the most 'presence'. Employment in the USA is not enough necessarily for you to become a non-resident of Canada for tax purposes. You need to shed other 'ties' such as health insurance, drivers licenses, club memberships and other such ties. Keeping investment accounts, a bank account and a credit card generally are not key factors in this test. Every time I became an ex-pat, there was no issue for me.... as I only kept investment and bank accounts and credit cards in Canada. I shed all other ties. I also had a multi-year lease on a house in the USA, had US health insurance, and a US driver's license.

I presume your employer will put you on their US health insurance plan. If not, your US health insurance will be very expensive (somewhat expensive even with group work plans). You should get some input on that to factor in how that will affect your pay. Additionally you will pay FICA taxes above and beyond Federal and State income taxes in the USA. Net-net, the overall US tax take isn't really much less, if any, than your tax burden in Canada.
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Re: Working as an EXPAT in the US

Post by planB »

Everything AltaRed said.

The tax treaty sets the rules for tax residency, usually interpreted by an accountant with your visa and travel info. I'm pretty sure that if you are living and working in the US with the intent of staying for 2+ years you will be a US resident for tax purposes. In my case, having cars, property, and financial accounts in Canada had no impact on determining my US tax residency. From expat water cooler talk, residency for employees (not retirees) becomes uncertain when they are part-timing on both sides of the border, or if the family stays home while the employee is working across the border. [OT] I thought that the ties to Canada argument was mainly relevant to travelling retirees trying to dodge taxes, people working in countries without tax treaties, or people trying to claim Canadian benefits (but I have no expertise here). [/OT]

For rental property in Canada you file a Section 216 return (its not hard) and you need to submit an NR6 (?) for withholding tax on rental income. Note if you sell your Canadian house as a non resident, you will have capital gains/losses on your California return.

I enthusiastically second AltaRed's recommendation that you speak with a cross-border tax specialist. I use KPMG Santa Clara. Good luck!
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Re: Working as an EXPAT in the US

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planB wrote: 21 Sep 2017 13:29 [OT] I thought that the ties to Canada argument was mainly relevant to travelling retirees trying to dodge taxes, people working in countries without tax treaties, or people trying to claim Canadian benefits (but I have no expertise here). [/OT]
Not just those folks.

Folks on TN (typically 1 year or so) Visas often successfully make the argument that they remain residents of Canada for tax purposes despite having a full time job in the USA, and it is accepted (no family dependents in Canada necessary). The argument works because of the 'temporary' nature of the TN despite it being renewable on an ongoing basis, and if the taxpayer keeps Cdn health insurance, etc, etc, etc. A taxpayer may wish to stay a tax resident of Canada to avoid: 1) expensive US health insurance, 2) FICA taxes, 3) large cap gains taxes as a result of deemed dispositions of capital investments.

I had single status assignment back in 2000/2001 in the USA whereby I left my family in Canada and rented a townhouse in the USA. My tax accountant, a partner at PWC, successfully argued that I remained a resident of Canada for tax purposes per the tax treaty despite IRS trying to argue the opposite. That is where a well experienced cross-border tax accountant earns his/her keep. Any of the big outfits will do, whether PWC, KPMG, etc. and they do cost money. Fortunately my employer gave me carte blanche access to tax accountants and I never saw an invoice (my employer had a contract with them due to having thousands of ex-pats at any given time).

Tax accountants can help keep a person onside with complicated US laws. Not just IRS, but examples like Treasury forms to be filled annually disclosing 'foreign' fianancial accounts in Canada. The penalties are severe.
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Re: Working as an EXPAT in the US

Post by twa2w »

Just to second what AR said about ensuring you do not have any PFIC's in your Canadian accounts. A former friend of mine does cross border taxation. The normal fee for dealing with PFIC's was 1500 to 2500 per PFIC, per year. ( this was for US citizens in Canada, holding non US domiciled mutual funds.) And it was more expensive at the bigger accting fims.
So your 5,000 per year may not go far.
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Re: Working as an EXPAT in the US

Post by brucecohen »

Close your TFSAs. Even if you and your wife are willing to pay the tax Uncle Sam will want, the required paperwork is absolutely horrendous. If/when you return to Canada you can open new TFSAs and replace the money you took out.
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Re: Working as an EXPAT in the US

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Thank you all for the feedback.
here's what I've summarized so far:
-I can possibly declare non-Canadian residency since I'm there long term (L1 Visa), despite the fact that I'm keeping my house in Toronto. My case won't be black/white so it might not work out in my favour. It is advisable to go this route however to minimize taxes.
-I can rent out my house and I have to pay taxes every month on the gross to the CRA, then I can file something at the end of the year to claim the expenses, and only actually pay taxes on the net. I did some extra research to get to this.
-TFSA makes my tax application more complicated.

My company is offering health insurance for my spouse and I I think? I see an estimated cost of $5000 per person as "Expat Insurance". We're in our 20s. Does this sound right?


Questions:
Not quite sure what is PFIC? I hold only ETFs: ZAG, VAB, XIC, XEF, VTI, VXUS, VEA, VWO in the various accounts. I hope these are OK?
Should I just keep the TFSA since I'm not the one having to prepare the tax? Or is it likely to make the tax specialist bill go beyond $5000 for 2 people?
Sounds like I have to pay FICA. Will I also have to pay Canadian EI/Pension?
Is there any tax advantaged accounts that I can contribute to in the US? Is there a point in doing this considering i'm only staying for 2 years or is it going to seriously complicate my life?
What happens when I declare non-resident and file a departure tax ---- Any taxes on my residence which I'll be keeping? How about non-registered investment accounts? I read that all holdings will be treated as 'sold' and I will have to pay the capital gains. Any impact on RRSPs or do I just continue holding those and pay state (California) tax?

Sorry for all the questions... I will definitely use an accountant's services. I'm just trying to get some understand of all this before I actually sign the offer. I don't want to make the move and end up netting less $/month due to all the additional tax issues...

Again, thank you all.
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Re: Working as an EXPAT in the US

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1. Whethe you declare non-residency for tax purposes or not will ultimately be a matter of fact determined by the US Can tax treaty. Canada may fight to claim you as a tax resident. Your expert cross-border tax accountant will have to fight that battle. Best you engage such a person as soon as you can, certainly well before having to file your first US and Canadian tax returns.

2. Bruce advises ridding yourself of the TFSAs. Your tax accountant will likely advise the same given the cost of the paperwork. I think the folks on the Serbinski tax forum will tell you that in spades.

3. Do NOT keep any Canadian domiciled ETFs or mutual funds in your Canadian non-reg account. Means no ZAG, CVAB, XIC or XEF. Each one will be considered a PFIC with its mountain of paperwork. Start googling if you don't know what it is. Google 'PFIC filings' or similar. Keeping VTI, VXUS, VEA, VWO will be fine as they are US domiciled. Since you will pay cap gains taxes on these anyway as 'deemed dispositions', sell the Cdn domiciled ones and re-invest potentially in US domciled ones, or individual stock holdings and a GIC ladder. You will burn up extraordinary tax accounting fees.

4. You will not pay EI/CPP while on US payroll.... unless you remain an employee of a Canadian subsidiary of the American company you are going to work for. If so, they may wish to continue making CPP contributions on your behalf.

5. In my opinion, it is not worth considering US retirement accounts for the short few years you will be in the USA. You will not have built up much of a net worth in them and would most likely be best to unwind them when you leave.

6. If you leave Canada before the end of 2017, your 2017 tax return will include your departure date and your Schedule 3 will capture all your cap gains (deemed and otherwise). Your tax accountant may include a separate sheet of paper describing what was a deemed sale vs an actual sale.

7. It is likely best to keep your RRSP and simply pay CA taxes on RRSP income. There is a form that must be filed with the IRS at some point (when you file your US tax return I believe) asking for exemption for your RRSP.

8. I have no basis to comment on the cost of US health insurance. I only know when I was part of a group plan in 2003-2006, the company paid the bulk of the premium, but my share was still pretty significant. Then there are all the co-pays you will pay when you avail yourelf of the health system anyway. Most group plans are based on networks which means you are expected to seek health needs from 'network' providers. That is simply a detail not worth discussing. Given your ages, you are not likely to be a burden on the health system nor incur excessive co-pays.

It was my experience that going on US payroll was not a disadvantage per se overall. It just isn't a windfall given Canadian perceptions that the USA pays way less taxes than Canadians. Whether that has changed is an unknown. California is NOT an inexpensive state and has a pretty healthy state income tax system. I used to be in Texas that had no state income tax which made it more 'tax effective'.

It is my take this is a good career move, or at least good for the resume. Sometimes you need to experience an adventure to get ahead. I was an ex-pat 4 times. Don't let the tax tail wag the dog unnecessarily BUT position your financial affairs wisely before you depart. Woulda/shoulda/coulda doesn't work AFTER the plane leaves Canadian territory.

One last point. Make sure your current discount brokerage will let you keep (and perhaps trade) your accounts while a resident of the USA. You may have to change brokerages before you leave and that takes time. As I mentioned previously, it seems TDDI might be the most tolerant. Maybe Interactive Brokers as well.
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Re: Working as an EXPAT in the US

Post by brucecohen »

These books are probably worth getting. They're written by financial/tax advisors in the business of helping Canadians and Americans move across the border both permanently and temporarily.

The Border Guide
The Canadian in America

I don't know if either one has been updated in recent years, but most of the info and all of the concepts should still be valid.

RE: health insurance. You and spouse will be under Obamacare until/unless the Republicans repeal it. Use this website to window shop. Or consult a health insurance broker in the area where you plan to live. Note: one big determinant of your cost is how much deductible you're willing to accept. As I think about it, health insurance in the US is so complicated that, coming from Canada's simple system, you're probably best off consulting a health insurance broker in your new home.

RE: FICA. IIRC -- and this is a very distant memory -- Canadians can work up to five years in the US without having to join Social Security and Americans can work up to five years in Canada without having to join CPP. This verifies that but I don't know what paperwork is required -- yet another reason to consult an experienced cross-border tax advisor.
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Re: Working as an EXPAT in the US

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I see an "estimated health insurance" cost already... Does it mean the company has to pay into it as well as me? or does it mean it's fully covered by the company? I'll ask my company the question when i get a chance next time.

I think I will infact continue to get paid by the "Canadian" company. Does this change things in terms of residency status?

Also... The move would probably happen end of this year or early next year. Any advantage either way? I have about 50k of capital gains to realise in our non-registered accounts (if i was to declare non-residency) ... Could I do it in 2018 right before the move, since I will have almost 0 income in Canada for the year....??
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Re: Working as an EXPAT in the US

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pqpq wrote: 22 Sep 2017 22:24 I think I will infact continue to get paid by the "Canadian" company. Does this change things in terms of residency status?
I got partially paid by my Canadian company and they took CPP off that pay in CAD. I also got partially paid by the US company, including the allowances, and they took FICA off plus health insurance, etc. in USD. It depends how your 'companies' decide to allocate. That should make no difference on residency for tax purposes. It is an internal process.
Also... The move would probably happen end of this year or early next year. Any advantage either way? I have about 50k of capital gains to realise in our non-registered accounts (if i was to declare non-residency) ... Could I do it in 2018 right before the move, since I will have almost 0 income in Canada for the year....??
That would be a real plus, and it is not payable until the 2018 return is filed April 2019.
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Re: Working as an EXPAT in the US

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I picked up the 2 books that were recommended and I'm currently going through the first one. A lot of the critical information that I've read so far has been mentioned in this topic (withdraw TFSAs, eliminate canadian ETFs, be ready for a departure tax). I still have more material to go through, and perhaps some re-reads.

While the job is intriguing and may lead to further career progression down the road, I'm having some serious doubts about accepting it due to the financial aspect. Here's my thoughts:

Current compensation = CAD95k + CAD35k OT + CAD10k Pension = CAD140k.
Proposed compensation = USD75K-- there's an assumption that I would only be paying 9K USD in taxes. This is justifying a lower GROSS salary since my NET salary will be higher. USD40K in housing / car compensation (tax neutral).

These are issues I'm struggling with:
I asked questions about the estimated tax and I'm told they are estimates by tax firm. However every online calculator that I've found online estimates 13k-16k. It's hard to figure out the number because I'm not sure about my wife's employment.
My departure tax won't be covered ~10K in capital gains.
I will lose my TFSA and have to pay additional taxes on non-registered investments.
I will pay California taxes on RRSP.
I will lose RRSP contribution room.
I lose eligibility for over time pay.
My wife might be out of work for a while (loss of CAD85k/year). She will be interviewing with the my company for a role (they just had an opening after losing an employee, and coincidentally this opening is her area of expertise) , but there's some big risk here. If she gets the job, it might mean a pay bump for her. However, if she doesn't get the job, we'll be moving to a small city in California and we worry she won't find employment in her field.

Thoughts? Am I going about this the wrong way, or something major that I'm missing here? Would appreciate some general life advice / 'what I would do if I were in your shoes'.
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Re: Working as an EXPAT in the US

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Everyone's experience will be slightly different. California is a tougher place to make the numbers work, compared to Texas (as an example) that has (or had) no state income tax system at all. That might be offset by a spouse's ability to work or not (wasn't a factor in my decisions).

I've had a number of ex-pat assignments over my working career. Generally they were financially positive when I looked at it over a bigger period of time... and didn't get too tied up in the weeds on short term impacts, like early payment of tax for dispositions and deemed dispositions, and instead looked at the forest rather than the trees. The big plus in my ex-pat assignments was the work and social experiences we had living and working elsewhere, and the boosts it gave me in my career (including more senior positions and income). IOW, it was an investment in my career that paid off in later decades.

It is important to understand the issues like you have done to position your assets and accounts to minimize the pain, but at the end of the day, it is important to consider the value, or potential value, of the 'bigger' picture. It could be a crap shoot but you may never know if you don't try. You are the best judge as to where that US experience may take you longer term.
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Re: Working as an EXPAT in the US

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pqpq wrote: 21 Sep 2017 22:59 Questions:
Not quite sure what is PFIC? I hold only ETFs: ZAG, VAB, XIC, XEF, VTI, VXUS, VEA, VWO in the various accounts. I hope these are OK?
I don't have the experience to help you directly, but I can help you with US Internal Revenue Service tax definitions.

PFIC is a Passive Foreign Investment Company. You can find detailed info on our sister US forum's wiki: Passive foreign investment company - Bogleheads

Navigating taxation across borders does indeed need a cross-border tax expert.

Disclaimer: I'm a member of both forums.
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Re: Working as an EXPAT in the US

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As for the lifestyle:
pqpq wrote: 20 Sep 2017 22:25 I'll be relocating with my company to California. The assignment is 2 years long. After the 2 years I can make a decision to stay, or I will have a guaranteed position back in Canada, but would like to keep in mind the possibility that I might not.
Is the company closing its doors and you have to move to stay employed? Could you find employment locally at a different company?

The corporate culture will completely change. Not because it's to the US, but because you'll be working with different people at a new location. Do you like the job enough to stay with the company, regardless if you have a new boss and coworkers? Consider that your job description will change. Be very sure that it's for the same thing you do now.

A major red flag is the promise of a guaranteed position on your return. I agree on your assumption that it may not.

I assume there will be a strong agreement in place in which you agree to remain with the company in the US in order to get reimbursed for relocation expenses incurred. That happened at my company a few years ago. I didn't go for the move and heard from others that the costs to get out of the agreement were much more than they thought.
pqpq wrote: 21 Sep 2017 09:13 The problem is the house is a recent purchase, within the last 6 months. With the market going down / sideways, and real estate fees that I would incur, I’d be taking a loss with the sale.
Is there an agreement in which your company would buy the house from you? My company did this for the move (which I did not take). I don't recall the details, but consider that you don't get the market rate.
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Re: Working as an EXPAT in the US

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AltaRed wrote: 06 Oct 2017 09:45 Everyone's experience will be slightly different. California is a tougher place to make the numbers work, compared to Texas (as an example) that has (or had) no state income tax system at all. That might be offset by a spouse's ability to work or not (wasn't a factor in my decisions).

I've had a number of ex-pat assignments over my working career. Generally they were financially positive when I looked at it over a bigger period of time... and didn't get too tied up in the weeds on short term impacts, like early payment of tax for dispositions and deemed dispositions, and instead looked at the forest rather than the trees. The big plus in my ex-pat assignments was the work and social experiences we had living and working elsewhere, and the boosts it gave me in my career (including more senior positions and income). IOW, it was an investment in my career that paid off in later decades.

It is important to understand the issues like you have done to position your assets and accounts to minimize the pain, but at the end of the day, it is important to consider the value, or potential value, of the 'bigger' picture. It could be a crap shoot but you may never know if you don't try. You are the best judge as to where that US experience may take you longer term.
Thanks for the feedback.



LadyGeek wrote: 06 Oct 2017 11:26 As for the lifestyle:
pqpq wrote: 20 Sep 2017 22:25 I'll be relocating with my company to California. The assignment is 2 years long. After the 2 years I can make a decision to stay, or I will have a guaranteed position back in Canada, but would like to keep in mind the possibility that I might not.
Is the company closing its doors and you have to move to stay employed? Could you find employment locally at a different company?

The corporate culture will completely change. Not because it's to the US, but because you'll be working with different people at a new location. Do you like the job enough to stay with the company, regardless if you have a new boss and coworkers? Consider that your job description will change. Be very sure that it's for the same thing you do now.

A major red flag is the promise of a guaranteed position on your return. I agree on your assumption that it may not.

I assume there will be a strong agreement in place in which you agree to remain with the company in the US in order to get reimbursed for relocation expenses incurred. That happened at my company a few years ago. I didn't go for the move and heard from others that the costs to get out of the agreement were much more than they thought.
pqpq wrote: 21 Sep 2017 09:13 The problem is the house is a recent purchase, within the last 6 months. With the market going down / sideways, and real estate fees that I would incur, I’d be taking a loss with the sale.
Is there an agreement in which your company would buy the house from you? My company did this for the move (which I did not take). I don't recall the details, but consider that you don't get the market rate.
I can continue with my current job if I choose. The company is unionised so 0 chance of losing my job, for saying 'no'. Job loss would occur only if the Canadian branch shuts down (outsourced to lower cost country).

No agreement to purchase the house. It's a 2 year contract and the expectation is for me to return to Canada unless I decide that i would like to stay / they want to retain me. We would renegotiate at that point.


One last question: Can I contribute to something similar to an RRSP in the US and is it advisable? Will it be easy enough for me to bring it back to Canada?
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LadyGeek
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Re: Working as an EXPAT in the US

Post by LadyGeek »

pqpq wrote: 07 Oct 2017 20:00 One last question: Can I contribute to something similar to an RRSP in the US and is it advisable? Will it be easy enough for me to bring it back to Canada?
The closest US equivalent to an RRSP is a Traditional IRA. However, the contribution limits are much lower.

In the US, employer retirement plans exist with much higher limits. Called 401(k) plans, employers may provide additional incentives by matching your contributions up to a certain limit. For example, an employer may match (add to your contribution) 50% of your contribution up to 8% of the total allowed annual amount.

Assuming your company offers a US 401(k) with a contributing match, that's "free money" for you and it's well advised to contribute to your 401(k) plan - at least up to the company match limit.

However, taking it back to Canada is something that I don't know anything about. It's not straight-forward, I'll defer to the experts for an opinion.

I do know that US domiciled Vanguard funds (what may be present in a US-based 401(k)) does not do business with clients outside the US. Moving back to Canada could present a problem later on.

This finiki article can help: Cross-border and expatriate issues - finiki, the Canadian financial wiki

Also: Canadian-US investing differences - finiki, the Canadian financial wiki
Imagefiniki, the Canadian financial wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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