thinking of moving back to Canada - form I-131 - ask

Sent: Wednesday, September 07, 2005 6:44 AM
To: taxman at
Subject: thinking of moving back to Canada
Hello, I am a US green card holder who is thinking of moving back
to Canada.  I want to make sure that I don't make this jump
without understanding the tax implications.
Here are some details that I'm curious about, some of them are
for US taxes and others for Canadian.. hope you can help me out.
My husband has been here 10 years, me nearly 8.  We have 2 minor
children born in the US but also recognized as Canadians.
Q1. My husband has qualified for social security benefits - any
idea if those will come his way once he reaches retirement age
even if we live in Canada? (and aren't us permanent residents
Q2. We sold our house  last month and have met the five-year
exemption from capital gains on our US taxes.  If we move to
Canada next month, will this exemption still be legit or will we
be subject to some hideous nonresident noncitizen tax situation
on our US taxes?
Q3. Will we have any tax responsibilities (Canadian and/or US)
for assets (house equity, 401K, stocks) we bring with us?
Q4.  When do we file our US return and is there anything special
we need to do?
Q5.  Is there anything else we need to consider?
Thanks very much,
 david ingram replies"
 1.    Your husband can collect his US social security benefits
while living in Canada providing he can prove (on application)
that he was in the US working legally when he made the
contributions.  Your green card status means that you were there
2.    because your husband has been in the US for 10 years and
you are now giving up your resident alien (green card) status,
you are subject to a US departure tax.  This requires you to list
your assets when you leave and calculate any capital gains or
accrued earnings. (this is analogous to Canada's rules). There be
no surprises about the house.
3,     There are no US accrued taxes on the 401(K) or house
profits.  There will be / may be / should be tax on any increased
value of the stocks.  Canada also values assets at their value as
you cross the border.
4.    You should file a temporary 1040C return as you leave the
country.  Then your formal 2005 1040 return will be n April 15,
2006 as usual.  You can also apply for extensions at that time
and, of course, your kind of dual country returns are the ones we
specialize in.
5.    Give a lot of thought to NOT giving up your green card.  If
I were you,I would fill in form I-131 BEFORE you leave the US.
time to re-assess your situation.  I cannot even begin to count
the number of clients I have had who have given up their green
cards to come back to Canada and then changed their minds too
late to return.
You can find out more about form I-131 at:
If I were you, I would apply for my US citizenship first.
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