Learn what U.S. citizens and Green Card holders need to know about cross-border taxes, investments, and retirement accounts when moving to Canada.
What You Need to Know About the Financial Implications of Moving North of the Border
Following the result of the recent U.S. presidential election, interest in moving to Canada has surged. Online searches for “how to move from US to Canada” have skyrocketed, reflecting a spike in interest for relocating.
While the reasons for looking for a Canadian province to call home vary, one thing is certain: moving across borders requires more than logistical preparation. The financial implications of an international relocation are far more profound and long-lasting than your choice of international mover.
From navigating complex tax obligations to managing retirement accounts and investments, the support of the right cross-border financial planning services can mean a huge difference for your budget, investments, and retirement savings. Here are some of the most important things to consider to get your finances in order before moving to Canada from the USA:
Navigating Cross-Border Tax Realities
Taxes don’t simply stop at the border. For U.S. citizens or Green Card holders, the IRS requires worldwide income reporting, regardless of where you reside. If you become a Canadian resident, you’ll also be subject to Canadian tax laws. This dual tax reality can lead to overlapping obligations and the risk of double taxation. However, tools like the Foreign Earned Income Exclusion (FEIE) and foreign tax credits (FTC) can help reduce your overall burden.
For Green Card holders moving to Canada, an additional consideration is the tax implications of relinquishing the Green Card–you may trigger a costly expatriation tax. Planning ahead is essential to minimize potential tax liabilities and avoid unpleasant surprises.
Unfortunately, these complex taxation rules mean that some people miss opportunities or make costly mistakes, with real implications for their take-home income. That’s not something anyone wants to risk–consulting a cross-border tax planning specialist is well worth the time and effort.
What Happens to U.S. Retirement Accounts?
U.S. retirement accounts such as 401(k)s, IRAs, and Roth IRAs can present unique challenges when you become a Canadian resident. These accounts are treated differently under Canadian tax laws and may lose their tax-preferred status, resulting in increased taxation.
Some U.S. financial institutions restrict non-residents from holding or managing accounts, complicating access to your funds. This is why you should assess your retirement savings with a cross-border financial planner. Options such as consolidating accounts or implementing tax-efficient rollovers may help mitigate future tax implications, preserving your long-term financial security.
Rethinking Your Investments
Relocating to Canada also requires a careful review of your investment portfolio. Many Canadian mutual funds and ETFs are classified as Passive Foreign Investment Companies (PFICs) under U.S. tax law, creating significant reporting obligations and higher tax liabilities. Conversely, holding U.S.-based investments as a Canadian resident can trigger unexpected tax consequences under Canadian regulations.
Balancing your portfolio for cross-border tax efficiency is essential to avoid unnecessary complexity. A tailored approach, guided by a cross-border financial advisor, helps ensure that your investments remain aligned with the regulatory requirements of both countries.
Navigating Cross-Border Transitions: Green Cards, Canadian Citizenship, and Permanent Residency
Moving to Canada as a U.S. citizen or Green Card holder without proper financial planning can lead to costly mistakes—unexpected tax liabilities, missed opportunities to preserve wealth, and compliance issues that create unnecessary stress.
Potential Concerns for Green Card Holders
Green Cards are not designed for indefinite residency outside the U.S., and maintaining one while living in Canada may not be feasible. Relinquishing your Green Card could trigger an expatriation tax if you meet certain thresholds for income, net worth, or duration of Green Card status.
Canadian Citizenship and Permanent Residency
Applying for Canadian permanent residency (PR) or citizenship brings unique financial planning considerations. Once you are ready to move to Canada and establish Canadian tax residency, your status as a Canadian resident subjects you to Canadian tax laws, which tax worldwide income and treat U.S. retirement accounts like 401(k)s or IRAs differently. Canadian accounts like RRSPs or TFSAs require careful management under U.S. tax rules.
Ready for a Move to Canada from the US? Put Your Finances First
At i2 Wealth, we make cross-border financial planning as simple as possible. We know the unique challenges U.S. citizens face when moving to Canada, and we’re here to guide you through them with confidence. Our solutions aren’t one-size-fits-all—they’re tailored to your specific financial needs and goals.
Thinking about making the move? Let’s talk. Together, we’ll create a financial plan that works for you, ensuring you’re ready for every step of your journey. It’s not just about numbers; it’s about peace of mind. Contact us today to start building a financial plan that supports your move to Canada.