Non-resident taxes | General comparisons | Discussion forum

You are getting bad advice from people at banks. The US-Canada tax treaty generally keeps you from paying taxes to both countries. It also includes tie breakers to determine from a taxation perspective whether you are a tax resident of Canada or the USA. Given what you have said, you would be a tax resident of the USA for most/all of 2015 and certainly 2016.

The tax treaty has provisions for withholding tax on certain types of income such as employment income, corporate dividends, and bond interest. However, whatever is withheld in this case by CRA, is a foreign tax credit on your US tax returns. In the case of money market funds and bank interest, and perhaps GIC interest, there will be no withholding taxes per the tax treaty. But as I already said, with some exceptions, whatever is withheld in Canada becomes a foreign tax credit in the USA. In other words, don't worry about it. Make the best financial decision for yourself. Finiki http://www.finiki.org/ and Serbinski's tax forum http://forums.serbinski.com/ have huge amounts of good cross-border tax information.

To respond to your question, only income earned (domiciled) in Canada would possibly be subject to Canadian withholding taxes. None of your US earned (domiciled) income is relevant to Canada when a tax resident of the USA. But all of your world income, including Canadian investment income, is subject to US income taxes because you will be a tax resident of USA.

Example: Earn $5000 investment income in Canada. Pay 10 (or 15) percent Canadian withholding taxes to CRA, e.g. let's say $500. When you do your US income taxes, you would declare $5000 of investment income earned in Canada on your tax return and declare a foreign tax credit of $500 against your US income taxes due. In other words, you get a credit for taxes paid to CRA.

I agree someone at CRA could disagree with non-resident tax status, but it is the US-Canada tax treaty that ultimately overrides both the CRA and the IRS. Look at the tax treaty for tie-breaking rules if the OP wishes to get more comfort. Based on what the OP has said, it seems to be clear cut on having broke 'reasonable' ties with Canada. Keeping a bank account, even an investment account or RRSP, in Canada would not compromise the OP's status. I've kept bank accounts, RRSPs and taxable investment accounts in Canada while a non-resident with no issues... as long as the financial institutions have the proper US postal address on record. The financial insititutions will (should) automatically withhold the proper withholding amounts for submission to CRA.

I had a reverse situation about 15 yrs ago when working single status in Alaska. IRS tried to tax me as a US tax resident (1040) but my accountant pointed to the tie breakers in the tax treaty which said 'no' and IRS backed off and accepted my NR1040.

The OP has not said whether s/he had any other investments subject to capital gains, e.g. stocks and bonds in a 'taxable' (non-registered) investment portfolio, when leaving for the USA. If so, those will have been deemed to be sold at market value on the day of exit from Canada and cap gains (losses) will need to be included on the OP's tax return for the year of departure, e.g. 2015 tax return next April if the OP left Canada this year.