10 tips before moving to Canada
The earlier you start, the more tax and planning opportunities you keep. Ten things to do before you become a Canadian tax resident.
- Start planning your move as early as possible so you can maximize tax and financial planning opportunities before becoming a tax resident of Canada. The more tax years you have to plan your move, the more tax opportunities are available.
- Inform your financial, accounting and legal professionals that you are considering a move to Canada.
- Understand the tax implications of the move and the ongoing Canadian tax treatment of foreign assets. A cross-border advisor can give you preliminary guidance.
- Find a Canadian tax accountant who specializes in cross-border tax to assess the tax implications of your move and to determine your tax filing status in each country.
- Consult your tax advisor on possible Canadian residency start dates and the impact on your Canadian and U.S. tax filings.
- Determine the U.S. tax and immigration implications of giving up your U.S. work visa, U.S. lawful permanent resident status (green card), or renouncing U.S. citizenship, which can trigger the U.S. exit tax.
- Discuss the options available for each asset: 401(k)/403(b) and similar employer plans, Roth employer plans, IRAs, Roth IRAs, 529 qualified tuition plans, Coverdell education savings accounts, investment accounts, annuities, bank accounts, life insurance, medical insurance, real estate and personal belongings. Take into account transfer costs, disposition costs, tax, customs, duty and physical moving logistics for each. Certain assets may not be transferable, such as vehicles that are not permitted for import into Canada.
- Consider timing certain types of income to be recognized in the U.S. to avoid Canadian taxation: bonuses, stock option exercises, capital gains dispositions, 401(k) or IRA conversions, employer stock net unrealized appreciation withdrawals, gifting and other tax planning opportunities.
- File the appropriate exit documentation with the Internal Revenue Service and U.S. Customs and Border Protection. Green-card holders and other resident aliens generally need an IRS departure clearance, known as a sailing permit, before leaving; U.S. citizens do not. Anyone exporting a vehicle must give CBP notice before it leaves.
- Ask for help early. If you need a professional, Cross Border Wealth can introduce you to one through the Get connected form.
DisclaimerThis article is provided by Cross Border Wealth for general information and education only. It is not personalized financial, investment, tax, legal, accounting or immigration advice, and it is not an offer or solicitation to buy or sell any security or to use any service. The information comes from sources believed to be reliable, but we cannot guarantee that it is accurate, complete or current. Tax and securities rules in Canada and the United States change often. An article reflects the rules as the author understood them on its publication date, or on the update date shown. Articles are not continuously monitored or revised after publication, so an older article may no longer be current. Check the date and the official sources listed at the end of the article before acting. The views expressed are those of the author, Chris Mills. Cross Border Wealth does not provide advisory services and is not a registered dealer, adviser, accounting firm or law firm. The author writes in a personal capacity, and their views do not represent any firm they are associated with. Obtain independent advice from a qualified cross-border tax, legal or immigration professional before acting on anything you read here. Any investment decision should be reviewed with a licensed advisor to confirm it is suitable for your circumstances, objectives and risk tolerance. Any professional you are introduced to through this site may only conduct business with residents of the jurisdictions in which they are properly registered. Case examples are illustrative and do not guarantee a similar result for anyone else.
Have a situation like this one?
Tell us what you need and we will introduce you to a professional who works across the border every day.
About the author
Chris is a cross-border financial advisor licensed in both Canada and the United States. He helps Americans moving to Canada and Canadians moving to the U.S. keep their retirement accounts intact and build one plan that covers both sides of the border. He writes for Cross Border Wealth in his personal capacity.
Disclosure: Chris writes in his personal capacity; his views do not represent any firm he is associated with. Cross Border Wealth does not provide advisory services. If you need advice, use the Get connected form and we will introduce you to a licensed professional.