Capital gains on Canada/US

[nazgul86]

Hello,
I moved from US to Canada at the end of 2019 and hold both a US Green Card and Canadian PR. I have been living and working in Canada since then and hold a few RSUs (Restricted Stock Units) from my employer. When selling vested RSUs, would the capital gains be only paid in the country of residence, in this case Canada? Or would I have to deal also with the US side since I’m technically a permanent resident there as well?
Thanks,
A*

 

[scylla]

Hello,
I moved from US to Canada at the end of 2019 and hold both a US Green Card and Canadian PR. I have been living and working in Canada since then and hold a few RSUs (Restricted Stock Units) from my employer. When selling vested RSUs, would the capital gains be only paid in the country of residence, in this case Canada? Or would I have to deal also with the US side since I’m technically a permanent resident there as well?
Thanks,
A*

You need to declare your full income and capital gains in both returns. So yes, you'll need to deal with that on the U.S. side too. However you get credit in your U.S. tax return for any taxes already paid to Canada.

 

[nazgul86]

You need to declare your full income and capital gains in both returns. So yes, you'll need to deal with that on the U.S. side too. However you get credit in your U.S. tax return for any taxes already paid to Canada.

Thanks, yes that is my understanding as well however reading this article https://fullerllp.com/blog/tax-trap-for-us-green-card-holders-resident-in-canada-with-us-investment-income/ kind of confused me, specifically this part:

But a Green Card holder living in Canada who has US sourced capital gains for example may pay tax to both Canada and the US. This is because the Treaty sources certain income, such as most capital gains, to the country of residency. Without Treaty benefits, a US Green Card resident in Canada who files a resident return in the US and Canada will source that income to the US and to Canada resulting in double tax since no foreign tax credit would be available.

In my case the RSUs awarded are from a US company and were awarded and vested while in US (not sold yet), so not too sure. When I asked to the HRBlock person I worked with to do the taxes this year, he was under the impression that capital gains are only paid to the country of residence, and in my case it would be Canada. Since taxation on capital gains is higher in Canada than US, according to him there would be little to nothing left to pay to US using the tax treaties, but just wanted to have a double opinion on this.

 

[canuck78]

Thanks, yes that is my understanding as well however reading this article https://fullerllp.com/blog/tax-trap-for-us-green-card-holders-resident-in-canada-with-us-investment-income/ kind of confused me, specifically this part:
In my case the RSUs awarded are from a US company and were awarded and vested while in US (not sold yet), so not too sure. When I asked to the HRBlock person I worked with to do the taxes this year, he was under the impression that capital gains are only paid to the country of residence, and in my case it would be Canada. Since taxation on capital gains is higher in Canada than US, according to him there would be little to nothing left to pay to US using the tax treaties, but just wanted to have a double opinion on this.

Most H&R block employees are only able to do basic Canadian taxes and nothing that involves cross border taxes.

 

[scylla]

Thanks, yes that is my understanding as well however reading this article https://fullerllp.com/blog/tax-trap-for-us-green-card-holders-resident-in-canada-with-us-investment-income/ kind of confused me, specifically this part:
In my case the RSUs awarded are from a US company and were awarded and vested while in US (not sold yet), so not too sure. When I asked to the HRBlock person I worked with to do the taxes this year, he was under the impression that capital gains are only paid to the country of residence, and in my case it would be Canada. Since taxation on capital gains is higher in Canada than US, according to him there would be little to nothing left to pay to US using the tax treaties, but just wanted to have a double opinion on this.

Worldwide income has to be fully declared in both tax returns. Income includes capital gains.

Agreed that Canad taxes higher than the US. You almost certainly won't have to pay tax on these gains in the US tax return, but you still have to declare them.

If you want advice on this, HRBlock will be useless. You will need to find a tax specialist who understands filings on both sides of the border and is an expert on filing dual returns.

 

[nazgul86]

Thanks for the info, and just to clarify, certain HRBlock locations have specialists that know how to do cross-border taxes: https://www.hrblock.ca/tax-scenarios/us-tax-returns/

 

[scylla]

Thanks for the info, and just to clarify, certain HRBlock locations have specialists that know how to do cross-border taxes: https://www.hrblock.ca/tax-scenarios/us-tax-returns/

In my personal experience they say that - but they don't actually have the expertise to handle anything but extremely simple returns with zero complexity. We tried them and they were useless. Lots of "I thinks" and "let me research that". We have rental properties in the US and various investments in the US (including dividend and capital generating investments) and they couldn't navigate through all of that. To provide one example, they couldn't tell us on the spot how the different classes of dividends in the US equate to Canada in terms of taxation. If you can't tell me on the spot and "need to check that", then you shouldn't be providing advice in this space.

In my experience you need someone very highly specialized where this is their main focus and you're not going to find this person at HRBlock

Anyway, just my experience.