Tax Story 2

I sold my house! after the friends that were living in it for almost a year purchased and moved into their own home.

Things happen fast, as things are wont to do, and one is never quite prepared for the ride.  Good thing I have super-keen adaptability (as well as a flashy writing style).

Yesterday, I learned more about my tax situation in 30 minutes than I could have learned all year, simply by talking with the right persons! What I confirmed upon speaking with a Canadian real estate lawyer, and subsequently, a Canadian Revenue Agency expert is that I am indeed a non-resident (in Canada), even with close ties.  And as a non-resident holding rental property in Canada, I must elect to file under section 216 for rental income and non-resident tax. Renters of my property must also do special tax-y things, like send a percentage of the rent to the CRA instead of me.

Whoops.

Bottom line

• If you are a non-resident of Canada holding rental property, you must elect to file under section 216 for rental income and non-resident tax at income tax time.
• If you are a non-resident of Canada holding rental property, you must have your renters or rental manager submit an NR4 slip along with 25% of the total rent no later than 15 days past payment due.
• If you are a non-resident of Canada selling property, you must reveal the type of residence at time of sale to submit yourself to possible Capital Gains tax. (25%, for non-residents).

I’ve been assured by the tax expert that because the house has been my primary residence when I lived in Canada that I would not be taxed the 25% Capital Gains on the sale.  Hopefully, the rental income, which was below cost, doesn’t bite me… I will likely update this post when I learn my fate there.  No reason to keep you all in the dark.

I know I can’t prevent having to react to life events, but I’m looking forward to minimizing the nasty surprises. (Keep bringing on the good ones though, Universe!)

I will think fondly of that house I’ll never see again. Some very good times had inside and outside those walls.

Tax Story

Turns out, there is no ‘one size fits all’ solution to taxation when, mid-way through the year, one moves across the border. But I personally filed two income tax returns, and as I don’t have a lot of crazy investment, both were relatively simple.

Canadian taxes include teh Universal Health Care, so I expected that I would pay more tax per dollar earned, but I was a bit surprised at how much more.

Then I considered what I paid into the comprehensive Benefits plan that my excellent employers offer here in the U.S. to discover that maybe the margin isn’t so great after all (about 20%). Of course, in Canada, there are no deductibles for doctor visits, emergency care or surgical hospital stays, and no insurance company-hospital negotiation shenanigans.

Maybe not such a bad deal for peace of mind, huh?

 

Plum Creek and Beyond

…seems like a dream to me now

I had a hitch installed on my car.  I rented a UHaul trailer — one that met the specifications on hitch/car load with about 960 lbs to spare.  Of course, I left a huge chunk of my life-to-date behind and distributed stuff to the four winds, but still ended up over-packing.

I had a lot of anxiety about travelling over the border and across country by myself with 2 old dogs in tow. We made it to North Portal at around 9 pm.  I had the passport with I-94 paper, job offer letter, International travel certificates for the dogs, car registration, hand-written general manifest of goods in the trailer.  I was ready for whatever, but the only thing the Border Guard asked after looking at my passport, and glancing at the deer-in-headlights dogs in the back seat was whether or not I was carrying any alcohol or tobacco products. I had to spill my guts about the Tangle Ridge behind the passenger’s seat. He looked in the trailer stuffed entirely with boxes, and sent me on my way within 15 minutes.  We made it to Minot by 11 pm but there were no rooms available on account of some state fair so we slept in a Walmart parking lot. Not terribly comfortable, but I managed a few hours sleep and was able to enjoy the hospitality of Walmart facilities to wash up at daylight.

Things to prepare:

1. Passport, of course.
2. TN-1 paperwork
3. Simple manifest of items in tow (number of boxes, loose items — this info was obtained by looking at Jay’s Moving and Storage website)
4. Valid Car registration.  According to this site, non-residents (official status) can import a car for personal use duty free for up to one year.
5. Umm… hotel reservation would be advisable.

You may skip the next paragraph if you are merely looking for information. I will recommend, however:

• Midas on West Division Street in St. Cloud, MN
• Companions Animal Hospital in St. Cloud, MN

Day 2 we made pretty good progress and even had a hotel reservation in Eau Claire, WI.  But, alas, we never made it there on account of an Interstate vs. car situation and veterinary emergency.  I thought I had blown the suspension in my car, and Buddy’s surgical stitches (leg) had become badly infected.  St. Cloud, MN was my silver lining.  This place is where I gained <blink>re-affirmation that people are the same everywhere and want to help and do good things</blink>.  First hotel I stopped at allowed pets. YAY.  I located an excellent vet clinic about 3 minutes away, and made an appointment for the car at Midas on West Division Street for the next morning. The future was still uncertain and I began phoning UHaul and other truck rental places in an attempt to make alternate arrangements in case the car suspension was wrecked. I lost a full day, but in the end, Buddy got fixed up, the car’s suspension was fine but the trailer was GROSSLY overweight, and the awesome proprietor did not charge me anything but suggested if I couldn’t get a truck rental (which I couldn’t), to simply keep plodding along at safe speeds. Go, Matrix! Go, people! P.S. It was great to have a shower and a bed for 2 nights!!

Luckily, the mid-west is pretty flat. As soon as I passed St. Paul, MN (route change), the road improved significantly and I was able to relax.  It was then that I could enjoy the thought of having passed signs that read “Plum Creek”.

Yada, yada, yada… crossed the Mississippi River 3 times that day after taking a wrong turn, spent the night in Bloomington, IL Walmart parking lot, blessed with an amazing lightning and thunder spectacle (read: dogs UPSET), made it to Mason around 2 pm on Sunday, and was very glad that I’d hired moving helpers to unload the trailer.  What took 2 fellows 45 minutes would have taken me hours!

• moving helpers ftw

…signed in triplicate, sent in, sent back, queried, lost, found, subjected to public enquiry, lost again, and finally buried in soft peat for three months

To register my car in Ohio, I had to get Title, which cost about $20, insurance, which I actually had to shop for *crazy*, and obtain an Ohio Driver’s License, meaning I had to take a written and practical exam.  The insurance company you choose will most likely require your Canadian Driver’s Abstract. The entire process took about a month, on account of all the fresh Driver’s Ed graduates taking up all the good exam times. The anticipation was worse than the test, btw. Also, pretty sure I saw Gordon Lightfoot taking his test right after me (big black 4×4 with ON plates and everything). cool.

And after living here for 3 months, my Canadian Health Care ceased.  I am pretty sure that I felt a bit of a disturbance in the force that day, as a safety net I’ve had ALL MY LIFE was suddenly not there.  Scary.  Luckily, my workplace benefits offer some comfort.

• You will likely have to take a written and practical driving exam.
• You will no longer be covered by Canadian Universal Health Care after 3 months of not living in Canada.  EDIT: I’ve recently learned that Canadians can have their Health Benefits extended by providing the Offer of Employment letter and anticipated return date to respective provincial Health Card providers. NOT that you are eligible for full benefits while outside of Canada, mind you.
  

So, I was a little long winded starting off this post, but hey, it’s my blog and it was a very problematic and emotional trip for me, so suck it up! I still provided some useful information, I think.

One last installment in this Triptych of Four Panels forthcoming — that’s right: filing taxes… sometime in the New Year, which is approaching much too quickly!

Until then…

South of the 49

Once past U.S. Customs and having obtained TN-1 status, I had a week to establish 3 things, besides, umm, start the new  job:

1. Social Security Number
2. Bank account
3. Living accommodation

Of course, this all depended upon me finding my way out of the Cincinnati/Northern Kentucky International Airport and to my hotel.   The interstate was like nothing I’ve ever driven before.  But I digress…

After I located the nearest Social Security Office, I brought all my paperwork with me (to be safe). I presented my passport, and Employment Offer.  I was told that it would take up to 30 days for my application to be processed, and that the application would not leave Homeland Security until after I’d spent at least 13 days on U.S. soil.  Homeland Security would then pass it on to the next administration office.  At this point, I did not yet have a mailing address in the U.S., and so used the office address on my employer’s letterhead.

Summary:

1. Passport with 1-94 (number required for application information)
2. Employment Offer
3. U.S. mailing address
4. patience, and if possible, 13 contiguous days to spend on U.S. soil.

Do not put this off!  You need a Social Security Number to do pretty much EVERYTHING here.

Fortunately, I was able to use my Canadian Passport and Canadian Driver’s License to apply for an apartment*.  Still, I did not even try opening a bank account, and even after I did finally get a Social Security Number and card, keeping a bank account became non-trivial… but that is another story.

*(When my application for an apartment was finally approved, I had to set up immediately, renter’s insurance, and electricity.  Of course, both required a SSN, and as I did not have one, my electricity hook-up required me to provide a sizable deposit. Renter’s insurance was happy to sell me a package despite not having a SSN — as long as I had a credit card.)

In retrospect, I should have tried opening a bank account without having a Social Security Number.  I may have been able to surface the issues I encountered earlier.

• Note: Bank Customer Service in the U.S. is way less personalized than in Canada.  It is up to YOU to ensure that everything you think is happening, is really happening. Be a very conscious consumer and do not assume that systems are in place first and foremost to help you. They are not your mom.

Next up: Moving all my worldly possessions across the continent, what happens to my Universal Health Care, my existing car insurance, and whatever else I can think of…

The Job Offer from South of the Border

So there you are, in Canada, just being a Canadian citizen looking for work, when after soul searching as well as job searching, BAM! a U.S. job offer lands in your Inbox. SUPER! It’s a great offer and for a position you just know you are going to love.

Get ready for some extra stuff to do before you can legally work in the U.S.

First and foremost, you need to have an offer letter that has a few specific elements to it:

1. This letter must be on original letterhead with original signature of Employer.
2. The Date
3. The Position (exactly one of the TN-1 Professions listed here)
4. The salary and wage/pay period
5. The start* and end date of of work**
6. Statement of duties to coincide with The Position.

*(Sources suggest that the application date for TN-1 status must be within 2 weeks of the start date)
** (TN-1 Status is tied to an employer and is valid for up to 3 years at which time it may be renewed — before the date is up)

Next, you will need documentation to prove that you meet the professional requirements. In my case, I collected

1. Resume
2. Original Post-Secondary transcripts
3. Original Diplomas and Degrees
4. Confirmation Letters of Employment
5. Letters of Reference

Your passport MUST be valid for as long as the working period, so if your passport expires next year and you anticipate working in the U.S. longer than that, you’d be prudent to renew. EDIT: False statement. I’m not sure if one can renew a passport that has not yet expired/is expiring.

So then what?

Well, your TN-1 status processing will take place in person at a Port of Entry. You can drive, but do check to see what airports process TN-1s Upon Arrival. My application was processed in under 20 minutes at the Minneapolis International Airport. Sources indicate that the process may take up to an hour, depending on your paperwork preparation and any questions they ask (again, depends on the individuals doing the processing, but if your paperwork is in order, it should go smoothly)

Oh, and don’t forget the processing fee: $50 USDs!!

… and the little piece of paper they staple to a page in your passport? That’s your I-94 which tracks your movement in and out of the U.S. Don’t lose it. You will also need it when you apply for your Social Security Number… more about that in a future post.

Overall, I was way more stressed out about going through the TN-1 process than I needed to be. There are some good resources on the web, but still, it all seems overwhelming when everything you need is not at your fingertips.

So if you are thinking about TN-1-ing, prepare: Gather your life papers together in one spot today.

More resources:
(good detail, but may be dated somewhat)
(lawyer site, but some good detail)
(succinct and maybe recent)
(for good measure and with some info every Canadian should have)