US GC while living in Canada as a PR?

Hello,

Does anyone here have any experience on maintaining a US GC while living in Canada to fulfill the Canadian PR and citizenship residency requirements?

My situation is that I am currently in the US with a US EB2/3 GC priority date of Sept 2012, which it looks increasingly likely will be current for ‘Final Action’ either this fiscal year (ending September) or at the latest by end of the next fiscal year thanks to all the Covid-induced spillover from unused family based GCs (I have well-informed sources for this PD movement I can share if anyone is curious). I have my Canadian PR with 3.5 years left to go since soft landing for me to fulfill my residency obligation there. So far I have not done a single day.

Ideally I would like to get both the US GC and become a Canadian citizen. For the purposes of this post, I am assuming I get the GC soon-ish (i.e. with enough time left on my Canadian PR to do 2 years there after briefly taking up the GC job in the US) and then I move to Canada to do the three years for citizenship.

From an immigration standpoint, my cursory reading suggests that keeping the GC alive is technically / legally possible by applying for a re-entry permit with USCIS which permits one to be overseas for two years at a time without re-entering the US on the GC. This permit can be extended up to 5 years, which in theory should give me 3 years to complete the Canadian citizenship requirement. In practice, I would visit the US a few times a year, but I believe just visiting occasionally is technically not sufficient to keep the GC alive, especially if you have taken up PR elsewhere, and a sharp CBP officer can send you to an immigration judge to determine whether your GC should be revoked. The re-entry permit supposedly gets around this by certifying your intent to maintain your US PR/GC despite the long absences from the US. (That said, I believe this is not a slam dunk either, as USCIS can still make a qualitative judgment that you have abandoned your PR intentions and/or they can reject your re-entry permit application if you say something like ‘completing Canadian PR requirements’. The risk seems low unless you list a stupid reason like Canadian PR, but it does seem possible from what I’ve read, especially if you don’t have a home in the US or a US based job.)

Does anyone have any thoughts or advice on how to keep the GC alive from an immigration standpoint?

My second question concerns taxes. My reading suggests a US GC holder and Canadian PR living in Canada, as I would be, has to file as a tax resident in both countries. As it stands, I would be working for a US employer while in Canada but my US employer has no Canadian base. I can do that as an independent contractor based in Canada or as a US employee on US payroll working in Canada. Any thoughts on which is easier or better from a tax perspective?

I would also have large amounts of US source capital gains income as part of my job (much higher than wage income). Is anyone familiar with taxation on this as a dual resident? I came across this page which suggests that despite the tax treaty, I would be double taxed a US GC. If so, that would kind of make this idea of keeping both the GC and the Canadian citizenship a non-starter.

Up till now, I had resigned myself to moving to Canada since I figured I’d never get my GC any time soon. I never thought I’d be in this situation where I might have access to both Canada and the US! Leaving aside questions about which country is preferable, I’d really appreciate any and all thoughts on how to preserve both options. I am sure there are others in this situation / dilemma this year too!

P.S. - I realize the cleanest way is perhaps to defer the GC to after getting Canadian citizenship, but that may not be an option in my case due to employment reasons.

Edited to add: I am obviously seeking both professional legal and professional immigration advice also.

Your post is quite confusing, you’ve presented a lot of information but it’s not really what your question is, nor what your goal is.

It’s not clear as to why you want to acquire multiple citizenships?

That said, I’ll try to take a stab at the tax question, which I believe is the primary motivation behind the question. US Citizenship and permanent residence has numerous benefits, perhaps unsurpassed in terms of the ability for someone to further their financial life to a degree not possible anywhere else in the world. There is however one drawback in terms of taxes, Uncle Sam will collect taxes from it’s citizens and permanent residents regardless of their country of residence or country where their income is sourced. There’s also an expatriation tax, so there really is no easy way out of this.

I’ll highlight an example to show the most efficient tax strategy for someone wanting the best of both worlds, let’s say Person A (a non US citizen) moves to the US and acquires 1000 stock of Google (now Alphabet) in 2005 at lets say $100. They now hold onto this and for whatever reason aren’t able to acquire Permanent Residency, fast forward to fall 2019 they decide to move to Canada when the stock price is $1000 as a permanent resident.

Next year in 2020, when they’re not a US tax resident they move their stock over into a Canadian brokerage and when the price is $1100 they sell all of the stock. Now here is what their capital gains are going to be -
USA - $0 (Non citizen, non resident) has no tax liability in the USA.
Canada - Gain of 1000 * (1100 - 1000) = $100,000 USD or approx $130,000 CAD (exchange rates may be totally different when someone reads this in the future)
In Canada 50% of Capital Gains are tax free and the remainder is taxed at your marginal tax rate as it’s considered as income.

If this same person also happened to be a US citizen or a permanent resident then the tax liability for Canada remains unchanged but for the US it is going to be a gain of 1000 * (1100 - 100) i.e $1,000,000 USD, taxable at the long term rate of 20% or 15% if you’re in a low income bracket.

So for this particular person from a tax perspective it makes sense to not acquire US Citizenship or permanent residence. You can do the math for your own situation but do note that since you became a Canadian PR 1.5 years ago, the cost basis for calculating the Capital Gains is not going to be todays stock price but the price of the stocks when you had landed in Canada as a PR.

Lastly, I’ll throw in my personal opinion as well (because why not?). It appears that you have a crystal ball and know exactly when you’re going to get a US GC as well as Canadian citizenship so you can optimize your tax strategy, but for others who don’t have this crystal ball it may not be possible or feasible. If you’re only a few months away from a US GC and plan to live in the US long term then there is really no need for hopping through the Canadian Citizenship process. If you’re looking to maximize your earning potential and your wealth then the US - Canada comparison is a joke, there is only one winner here and it’s America. If however you’re looking to maintain an excellent standard of living (comparable to the USA) and also want the stability and peace of mind which you can’t get by being in a queue of unknown time duration then Canada wins this competition hands down. It’s a perfectly viable strategy to gain Canadian citizenship and then pursue a life in the USA with a fallback option should things go south (or north in this case) but this isn’t the most optimal strategy, you need to realistically budget at-least 5 years to get Canadian citizenship with all the processing times and delays.

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Thanks, it’s not so much that I’m trying to optimize taxes as I am trying to understand what the tax implications (and immigration implications) would be of being a PR resident in Canada while also having a US GC. Specifically, I am not sure whether capital gains (or wage income) are double taxed. You address capital gains taxes and exit taxes when I move (deemed acquisition in Canada steps up the tax basis for Canadian purposes and no exit tax in the US), but I am also wondering about ongoing capital gains taxes as I have a lot of capital gains income as part of my job. My reading suggests a US GC holder resident in Canada as a PR is potentially subject to double taxation on capital gains income as per the link I posted earlier.

Also, are you sure the tax basis of the deemed acquisition is from the date you did the soft landing and not from the date you actually move to settle? My impression is it’s the latter, but I could be wrong.

Thanks

How can you have capitals gains as a part of your job?

Income and capitals gains are two entirely different things. Exercising options or having RSUs vest is not capital gains (unless you’ve made the Section 83(b) election for those assuming that option was available to you).

Yes, I understand. I work for a financial institution that compensates partly in carried interest which in the US partly gets taxed as capital gains (but I think not in Canada, which doesn’t have such a concept of carried interest from what I can tell). Also, I have capital gains income from other personal investments that I make during the course of my job.

Unfortunately, I’m not really familiar with the taxation of carried interest.

@abcx13 one of the biggest reasons people renounce US citizenship is for tax purposes, that should tell you something about the negative effects of US taxation, especially for people who live permanently in other countries.

If you get your GC or alteast have the process started before last 2 years of your PR validity , do you still plan to make the move to Canada? Personally, I would think there is no need. 3 years for Canadian citizenship is only the point where you can apply for citizenship, you would have to be in Canada till you get the citizenship, which might take few months to almost an year more. So, please factor that in your timeline as well.

Also, would appreciate you can share the sources which say there will be spillover from family visa this year with a Democratic gov at helm.

You can leave Canada after applying for citizenship as per IRCC as long as you return for the citizenship test and oath. See here. So you don’t have to wait for the extra year it takes to apply for citizenship.

Regarding spillover from FB GCs, you can refer to this interview with the State Department’s Charlie Oppenheimer who sets the Visa Bulletin every month where he says there will be at least 275k EB GCs available next fiscal year after this year’s 262k. And you can read this thread backward. But even if there is spillover and GCs are available, the big question is how many GCs USCIS will be able to process.

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Even I don’t understand if you are getting GC, then why would you move to Canada?

You can get US citizenship if you spend those 3-4years in US itself after getting US GC.

People who are moving to Canada, are those you are not able to get US GC or would get it in 5 to 10 or 10 to 15 or 15+ years…

Panditji,

Thanks for the nice example!
I just want to add that I have spoken to a cross-border tax specialist and the example given by you is in accordance to what the specialist said.

US does not have an exit/export tax for non-residents/non-citizens and Canada only taxes you on the growth after you move to Canada. So if you have significant gains before moving to Canada, and you become a permanent resident in the US before you move, you will end up paying more tax than if you are not a permanent resident of the US. However this is just a lost tax-avoidance opportunity and not a penalty because you will not be paying any more than what you would have paid had you remained in the US.

Edit: The specialist also mentioned that the Canadian basis only starts when you settle in Canada and not on the day you soft-land unless you have assets in Canada (home etc) which would make Canada consider you to be a resident for tax purposes even if you are not living in Canada.

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I am in a similar boat with priority date of Nov 2012 and my moving to Canada deadline is in next 3 months but it is clear to me that it is going to be a choice between the two. One cannot have their cake and eat it too, at least that’s true in my case.

I am weighing the pros and cons of my choices. There is no right or wrong answer. It’s ultimately a personal choice. But having options is a good problem to have and it is better than feeling helpless.

@katz - here is what I’d do. I had the option to move to Vancouver with the best job in hand - actually my dream job. Anyway, I decided to not take the leap of faith and let it go. You can comeback to USA anytime you want - google and you’ll find a lot of folks who have come back from INDIA let alone Canada. However, you may or may not be able to get the Canadian PR again (based on other factors).

Also, if I had to go back in time, I’d tell myself to not overanalyze everything. You simply can’t make everything right - but in the end You’ll be Okay.

PS - I still have time to decide my move.

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