Living in Canada as American
A Quick Guide to Get You Started with Your Cross-Border Move
Written by John Woodfield, Portfolio Manager, CIM® CFP®
During our years working with Americans planning to move or who have already moved to Canada, we have compiled a list of essential tips everyone should know. Living in Canada as an American isn't uncommon, and your move can be easily accomplished with proper planning and advice. Read on to learn more!
TABLE OF CONTENTS
- What Is It Like to Live in Canada as a US Citizen?
- Common Ways Americans Immigrate to Canada
- Important Steps to Take Before You Move from the US to Canada
- Steps to Take Before You Move to Canada:
- Requirements for Americans Moving to Canada
- Living in Canada Part-time vs. Getting Permanent Residency
- How to Get Permanent Residency in Canada as a US Citizen
- Important Investment Considerations for Americans Living in Canada
- Preventing Dual Taxation as an American in Canada
- The Best Places to Live in Canada as an American
- Is the Move Right for You?
- Common Questions About Being an American in Canada
What Is It Like to Live in Canada as a US Citizen?
US citizens living in Canada can have the best of both worlds. They can enjoy Canada's safe and vibrant culture, free healthcare and education, warm summers, and brisk winters. They will also have quick access to the US from many entry points and can maintain their pension plans, US healthcare, and IRAs and Roth IRAs.
Common Ways Americans Immigrate to Canada
US citizens can visit Canada as tourists without requiring a visa. You can stay in Canada for up to six months with your US passport. If you want to immigrate, you must first obtain permanent resident status. After five years, you can apply for citizenship. The most common ways to work towards citizenship are getting a permanent job, family sponsorship, a business startup visa, provincial nominee programs, and Express Entry. (1)
Important Steps to Take Before You Move from the US to Canada
The first thing a US citizen should do before moving to Canada is become familiar with the key differences between the two countries. Canada is a very large country, generally more expensive than the USA, has two official languages, and provides free healthcare. A person moving to Canada from the USA should realize that the Canadian tax and legal systems differ from those in the US. It is vital to review and adjust wills and investment accounts.
Steps to Take Before You Move to Canada:
- Become familiar with the key differences between the two countries.
- Plan for higher expenses in Canada.
- Get health insurance before you move, as you won't be covered in Canada immediately.
- Get a Canadian cross-border accountant and cross-border financial advisor.
- Update your will with a cross-border attorney.
Requirements for Americans Moving to Canada
US citizens can live in Canada for up to six months without becoming permanent residents. Once you have decided to pursue citizenship, you must apply for permanent residence. Once you get your PR card, you qualify to work and get healthcare benefits in your province.
Living in Canada Part-time vs. Getting Permanent Residency
If your goal is simply to enjoy Canada part-time, this can easily be accomplished without becoming a permanent resident. Permanent residency does allow you to work, access healthcare, and receive education. It is a very personal choice whether to pursue permanent residency. If the goal is to live and possibly work in Canada without spending much time in the USA, then permanent residency may be the best option. If you plan on spending time in the USA, then being a part-time resident may make more sense.
Permanent residency application >
How to Get Permanent Residency in Canada as a US Citizen
To become a permanent resident, you have to be present in Canada for at least 1095 days in the five years immediately before your application. You must also have filed taxes in Canada for at least five years. Applicants aged 18 to 54 must prove their proficiency in either English or French. There may also be a citizenship test, depending on your age. (2)
Important Considerations for Americans Living in Canada
The most important items US citizens should consider are healthcare, taxes, and legal matters such as wills and powers of attorney. US citizens in Canada must ensure they have proper healthcare coverage, either from the US or Canada. They must also ensure they are not exposed to double taxation or own investments that they are not permitted to own while being both US and Canadian residents. Finally, they have to ensure their final wishes are properly documented via a will and that they have a power of attorney in place. (3) (4)
Important Tax Pitfalls to Avoid when Living in Canada as an American
Preventing Dual Taxation as an American in Canada
The US and Canadian tax treaties are designed to avoid double taxation. However, this does not mean it is an easy process. Having a cross-border accountant who can ensure things are set up properly is crucial. Additionally, there are many investments that should not be held by a US person living in Canada, which often cause tax headaches and excess taxation. Working with an investment advisor licensed in both countries is essential.
Related Post: Basic PFIC Reporting Rules and Guidelines
The Best Places to Live in Canada as an American
Choosing where to live depends on various factors. Large Canadian cities such as Vancouver or Toronto offer a vibrant culture, while smaller cities and towns provide quiet and friendly environments. The west coast is more temperate, while the east coast experiences broader weather swings. In short, there is something to suit almost every preference.
Is the Move Right for You?
When weighing the pros and cons of a move to Canada, consider many personal, political, and economic factors. Many people make the move due to family ties, while others do so because they feel comfortable in a more socialist political landscape. In all cases, economics must be considered—the price for socialism's benefits, such as safe cities and free healthcare, comes with higher costs and taxes.
Common Questions About Being an American in Canada:
Q: How hard is it for an American to move to Canada?
A: Any US citizen can live in Canada on a short-term basis, but pursuing permanent residency is time-consuming and can be tricky. Before permanently moving to Canada, you should fully consider and explore all the pros and cons. Moreover, I recommend seeking professional assistance as you plan your move.
Q: How long can a US citizen live in Canada?
A: On a temporary basis, a US citizen can live in Canada for six months. To stay longer than six months, you may apply for temporary permanent residency.
Q: What is the Easiest Way to Become a Canadian Resident?
The easiest way to immigrate to Canada is through the Express Entry system. Other ways include provincial nominee programs, business sponsorship, and family sponsorship. The Express Entry system can be challenging since you have to be a highly skilled individual, and the system is points-based.
Q: How Can I Ensure I Don't Overpay My Taxes or Get Into Trouble with the IRS?
The best way to protect yourself from excess tax is to work with a cross-border accountant and a cross-border investment advisor. The accountant you choose must be skilled in both Canadian and US taxes, and the advisor you choose to manage your investments must be licensed in both Canada and the USA.
Q: Is it Possible to Start a Business if I Move to Canada?
Yes, starting a business as an immigrant in Canada is common. US citizens who start a business must be mindful that they will be taxed in both Canada and the USA. This means that business structure is vitally important, and a skilled cross-border accountant is needed to guide you through the process.
Summary of Key Points:
- Common ways to immigrate include permanent jobs, family sponsorship, and Express Entry.
- Before moving, plan for expenses and update your legal documents.
- US citizens can live in Canada for six months without permanent residency.
- Permanent residency allows you to work and access healthcare and education.
- Residency requires that you be in Canada for 1095 days out of the previous 1825 days.
- Work with a cross-border accountant and investment advisor to prevent dual taxation.
- Temporary residency in Canada for a US citizen is six months.
- Starting a business in Canada is possible but requires cross-border tax planning.
Next Steps
If you’re a Canadian resident or are planning on moving to Canada and need assistance with moving and optimizing your investments, estate planning, wealth management and portfolio management, please get in touch. At SWAN Wealth, we specialize in Canadian financial planning, cross-border financial planning and cross-border wealth management.
More Canadian Financial Planning Articles & Guides
If you’re planning a cross-border move, these articles and guides will help you simplify your move and ensure you’ve covered everything.
How to Choose a Financial Advisor in Canada
How Capital Gains are Taxed in Canada
Cross-Border Estate Planning Guide
About the Authors
John Woodfield is a Financial Management Advisor (FMA), a Chartered Investment Manager (CIM), and a Certified Financial Planner (CFP), and in 2007 was inducted as a fellow of the Canadian Securities Institute (FCSI). As a portfolio manager and CFP®, he works with clients across Canada. John Woodfield’s clients are families, individuals and business owners who understand the importance of comprehensive wealth and investment plans driven by the lifestyle they want to lead.
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