Canadians returning from US employment who were in the US on a work visa simply need to return to Canada. If their work visa has not yet expired and they are returning to Canada early, it’s important to let United States Citizenship and Immigration Services (“USCIS”) know that you are departing the US. That way, when you return to the US to visit in the future, USCIS is clear that you are returning as a Canadian visitor.
Note that once you re-establish Canadian tax residency, you will not have any US tax obligations regarding your worldwide income. However, you may have other tax and filing obligations regarding US-source income and any US assets that you retain south of the border after you move.
Canadians who worked in the US and obtained a Green Card must consider whether they should give up their Green Card upon moving back to Canada.
Giving up your Green Card can be a difficult decision; by doing so, you lose the right to live and work in the US. However there are several tax benefits to consider when assessing the pros and cons of surrendering your Green Card.
The most attractive reason to give up your Green Card is that you will no longer be a US person subject to the US tax regime. You will gain many freedoms; for example, you will be free to benefit from investing in TFSAs and Canadian mutual funds and ETFs. You will be free of the US estate and gift tax regime, and you will no longer have to comply with the IRS’s often onerous and expensive tax reporting and tax filing obligations.
From a practical immigration perspective, it is challenging to retain a US Green Card once a Green Card holder moves back to Canada after employment in the US. One of the requirements of Green Card holders is that they spend at least half of the year in the US. Generally, Green Card holders moving to Canada who do not plan to spend at least six months of each year in the US lose their permanent residency status. Those who fail to file US tax returns on IRS Form 1040 may also lose their permanent residency status.
Note that in some limited circumstances, high net worth individuals who relinquish their Green Cards may trigger the US expatriation tax rules. When analyzing whether or not to relinquish your Green Card, it is ideal to review your options from both a tax and immigration perspective with the help of a cross-border financial planner.