A Simple Guide to Moving to the US from Canada
Tips to Make the Cross-Border Move Easier
Written by John Woodfield Portfolio Manager, CFP®, CIM® and Tiffany Woodfield, TEP, Associate Portfolio Manager, CRPC®, CIM®
Are you planning on moving to the US from Canada?
It's a big step with lots of planning involved. From sorting out visas to understanding tax changes, there's much to consider. This simple guide will walk you through everything from immigration tips to financial advice to make your cross-border move as smooth as possible.
This article is not intended as tax or immigration advice and is general in nature. We recommend you speak to a cross border advisor, accountant and lawyer about your particular situation.
Planning Your Move to the US from Canada
Embarking on a move from Canada to the US involves more than just packing your bags and finding a new home.
It requires meticulous financial and legal planning to ensure a seamless transition. Before you start dreaming about your new life in the US, it's crucial to understand the legal requirements for living and working there.
Early consultation with a cross-border accountant and cross-border financial advisor is key to navigating the complexities of tax residency and asset management. This guide lays out basic steps for determining your Canadian tax residency and strategizing your investments and real estate holdings.
However, remember that this guide is no substitute for working with a cross-border professional. We hope this guide will provide you with the basics, but we strongly recommend you assemble your cross-border team well before moving.
RELATED READ: Canadians Living in the US: Visas, Taxes, and Financial Planning
TABLE OF CONTENTS
- Key Steps When Planning a Move to the US from Canada
- Steps to Take Before Moving to the US
- What to Expect When Moving from Canada to the US
- Requirements to Immigrate to the US from Canada
- How to Apply for US Citizenship as a Canadian
- How to Apply for a Green Card as a Canadian
- How to Plan Your Living Costs in the US
- What to Consider Before Buying Real Estate in the US as a Canadian
- Basic Tax Considerations for Canadians Living in the US
- Investment Pitfalls for Canadians Living in the US
- Managing Your Investments as a Dual-Citizen
- Moving Your Investments vs. Keeping Your Investments in Canada
- Work with a Cross-Border Financial Advisor
- Put Together a Cross-Border Team Before You Move
- Common Questions about Moving to the US from Canada
Key Steps When Planning a Move to the US from Canada
These are a few of the key steps that you should consider taking when planning your move to the US:
- Determine any requirements to live in the US lawfully and prepare visa documents if you plan to work there.
- Consult with a cross-border accountant two years before your move to discuss the implications of relinquishing your Canadian tax residency.
- Understand the consequences of becoming a non-Canadian tax resident, as you could be subject to a deemed disposition of your assets at fair market value. Additionally, different non-resident withholding taxes apply to registered accounts and real estate.
- Your cross-border accountant will help you plan how to maximize the benefits of your RRSPs and RDSPs.
- You will likely need to close your TFSA, as US residents cannot hold these accounts.
- Claiming your Principal Residence Exemption (PRE) will be easier if you complete the sale of your principal residence while still living in Canada.
- If you are becoming a "US person," consider any gifting strategies before your move to the US.
- It's important to know the fair market value of your investments on your departure date; request this information from your financial advisor and provide it to your accountant.
Disposing of Your Principal Residence
Steps to Take Before Moving to the US from Canada When You’re Close to Your Departure Date
Everyone should take four steps before moving to the US from Canada, particularly if you have substantial assets.
Make sure you do these when you’re close to your departure date.
1 - Let your cross-border tax professional know the date of your departure so they have the necessary information to prepare your Canadian exit return and your US entry tax return.
2 - Inform your financial advisor, financial institutions, banks, and pension administrator of your new address for documentation and tax forms.
3 - Confirm the FMV (fair market value) of all your investments owned on your date of departure so your accountant can accurately report the final Canadian resident tax return.
4 - Record the FMV of all your non-registered investments in US dollars, using the exchange rate on your date of departure, so your accountant can use this as your cost basis when reporting US taxes.
What to Expect When Moving from Canada to the US
Moving from Canada to the US is exciting—promising new opportunities and experiences.
However, it requires careful financial planning and adaptation to different tax systems and living costs.
Financially, moving from Canada to the US brings challenges, including navigating two tax systems, managing currency exchange rates, and understanding the US's more complex healthcare costs.
Canadians must adapt to different banking and investment regulations, potentially facing taxes on retirement accounts like RRSPs not recognized in the US.
Establishing US credit can also be difficult without a local financial history. These challenges require careful planning and advice from cross-border financial experts to mitigate financial risks and ensure a smooth transition.
Requirements to Immigrate to the US from Canada
To immigrate to the US from Canada, you must apply for an immigrant or nonimmigrant visa.
An immigrant visa allows you to move permanently to the US. An employer, a US citizen spouse, or a relative usually sponsors these types of visas. A nonimmigrant visa is for those moving temporarily to the US for school or a job.
Your prospective employer must first file a petition with the US Citizenship and Immigration Services before you can apply for a work visa. The school or program sponsor must first accept you for a student visa.
The usual steps involve completing the online visa application, printing the application form, and then scheduling an appointment for a visa interview with the US Embassy or Consulate in the country where you live.
Remember that to travel to the US, you will need a valid Canadian passport.
How to Apply for US Citizenship as a Canadian
There are four primary pathways for anyone who wishes to apply for US citizenship as a Canadian.
Each has specific eligibility criteria.
- Being a US permanent resident for at least five years and meeting other requirements.
- Being married to a US citizen and holding a permanent resident Green Card for at least three years.
- Being a child of a US citizen.
- Serving in the US military.
Additional prerequisites include taking an oath of allegiance to the United States possessing the ability to read, write, speak, and comprehend basic English. An understanding of US history and government is also required. Each pathway has unique specifications, and it's advised to consult the USCIS for detailed information.
Citizenship Resource Center | USCIS
How to Apply for a Green Card as a Canadian
The steps you need to take to apply for a green card will vary depending on your situation.
The first thing to determine is the immigrant category under which you will apply. See the link below to determine all the categories.
To immigrate to the US from Canada, you must apply for either an immigrant or nonimmigrant visa. An immigrant visa allows you to move permanently to the US and is typically sponsored by an employer, a US citizen spouse, or a relative.
A nonimmigrant visa is for those moving temporarily to the US for school or a job. Your prospective employer must first file a petition with US Citizenship and Immigration Services before you can apply for a work visa.
First, you must generally be accepted by the school or program sponsor for a student visa. The usual steps include completing the online visa application, printing the application form, and scheduling a visa interview with your country's US Embassy or Consulate.
Remember, you'll need a valid Canadian passport to travel to the US.
Green Card Eligibility Categories | USCIS
How to Plan Your Living Costs in the US
Planning your living costs in the US requires a detailed approach.
Start by researching the cost of living in your target city, including housing, utilities, groceries, healthcare, transportation, and taxes. Factor in significant differences in healthcare costs. Use online cost-of-living calculators for estimates.
Additionally, consider lifestyle choices and their financial impact. Budget for initial setup costs like furniture and deposits.
Check out all of the following when planning your living costs:
- Housing costs, including rent or mortgage payments
- Utility bills such as electricity, water, and internet
- Grocery and dining out expenses
- Healthcare premiums and out-of-pocket costs
- Transportation costs, including public transit and car ownership
- State and local taxes
- Initial setup costs for new home
- Lifestyle expenses like entertainment and fitness memberships
- Savings and emergency fund contributions
What to Consider Before Buying Real Estate in the US as a Canadian
Before buying real estate in the US as a Canadian, consider currency exchange rates, property taxes, and differences in mortgage processes.
Understand the implications for non-resident buyers, including potential tax obligations in both countries. Consulting with a cross-border real estate expert can help you navigate these complexities and make informed decisions.
Basic Tax Considerations for Canadians Living in the US
Basic tax considerations for Canadians living in the US include understanding dual tax obligations.
You'll need to file tax returns in both countries, potentially benefiting from the Canada-US Tax Treaty to avoid double taxation. Be aware of the Foreign Account Tax Compliance Act (FATCA) requirements, state taxes, and how Canadian investments are taxed in the US. Consulting with a cross-border tax professional is crucial to navigating these complexities and ensuring compliance while optimizing your tax situation.
Investment Pitfalls for Canadians Living in the US
You will want to avoid investments penalized or not taxed favourably in the US, such as a TFSA.
You cannot transfer all your investments to the US, so you will want to plan to dispose them off tax-efficiently. Examples are Canadian mutual funds and Canadian ETFs. Although an RRSP is tax-deferred federally in the US, some states consider it taxable.
Before moving, ensure you understand how the state will tax your RRSP and perhaps crystallize capital gains. You will also want to reduce your withholding taxes when possible.
With an RRSP, if you convert to an RRIF, it may qualify for periodic payments and a lower withholding tax of 15% versus 25%. If you want to keep an RESP, you may want to change to a Canadian-only subscriber because the US doesn’t consider it tax-free.
Guidelines to Consider:
- Avoid investment tools like TFSAs that are not favoured by US tax laws.
- Plan tax-efficient disposal of non-transferable investments.
- Understand state-specific taxation on RRSPs and consider crystallizing gains pre-move.
- Perhaps convert RRSPs to RRIFs for lower withholding taxes, which is beneficial in the US.
- Consider switching to a Canadian-only subscriber on an RESP.
Managing Your Investments as a Dual Citizen
Managing investments as a dual citizen involves navigating the US and Canada's tax laws and investment regulations.
Understanding how each country treats various investment vehicles, like RRSPs, TFSAs, and mutual funds, is crucial to avoid unintended tax consequences. Engaging with a financial advisor knowledgeable in cross-border finance can help optimize your investment strategy, ensuring compliance and tax efficiency. Regularly review your investment portfolio to align with the evolving tax landscape and your financial goals, considering currency exchange rates and the potential for double taxation.
Moving Your Investments vs. Keeping Your Investments in Canada
As a dual citizen, managing investments requires understanding the tax implications and regulatory differences between the US and Canada.
Strategize whether to move investments to the US or keep them in Canada based on taxation, accessibility, and investment goals. US residents face specific tax treatments for Canadian investment products, such as TFSAs and RESPs, which may not be tax-deferred in the US. Consult with a cross-border financial advisor to make informed decisions, ensuring your investment strategy aligns with your long-term financial planning and complies with tax regulations in both countries.
Work with a Cross-Border Financial Advisor
Working with a cross-border financial advisor is essential when managing finances between the US and Canada.
These professionals specialize in understanding the financial and tax implications for dual citizens or those planning to move. They can guide you in optimizing your investments, retirement planning, tax efficiency, and compliance with laws in both countries. A cross-border advisor ensures you make informed decisions, avoid common pitfalls, and take advantage of opportunities available to individuals with financial ties to both countries, maximizing your financial health across borders.
Put Together a Cross-Border Team Before You Move
Before moving from Canada to the US, assembling a cross-border team is a strategic step towards ensuring a smooth transition.
This team should include a cross-border financial advisor, tax professional, real estate agent, and immigration lawyer. Each member brings specialized knowledge to navigate the complexities of moving across borders, from tax implications and investment strategies to legal residency requirements and property acquisition. Early collaboration with these experts can help you avoid costly mistakes, optimize your financial planning, and ensure legal compliance, setting the foundation for a successful new chapter in the US.
Common Questions about Moving to the US from Canada
What are the best US cities to move to as a Canadian?
The best US city to live in as a Canadian depends on your lifestyle preferences. However, for many, the best US cities often include those with strong job markets, cultural diversity, and favourable climates, such as Seattle, San Francisco, Miami, and Austin.
Can Canadians move to the US easily?
Canadians can move to the US by obtaining the appropriate visa, such as work, student, or family visas. The process requires careful planning and documentation. While it’s not necessarily easy, it’s possible if you meet the requirements.
Does the US allow dual citizenship with Canada?
The US, including Canada, allows dual citizenship, enabling individuals to hold citizenship in both countries without having to choose one over the other.
How do I apply for immigration to the US if I’m Canadian?
To apply for immigration to the US as a Canadian, start by determining the right visa category for your situation, then complete the required applications and attend any necessary interviews.
What health insurance options are available to Canadian citizens who are moving to the US?
After moving to the US with immigration approval, Canadian citizens can access health insurance through employer plans, private marketplaces, or state exchanges under the Affordable Care Act.
What steps do Canadian citizens moving to the US need to take to ensure they have appropriate immigration approval?Canadian citizens moving to the US should first determine their eligibility under specific visa categories, complete the required application forms, gather necessary documentation (such as a valid passport and proof of Canadian citizenship), and apply for a visa through the U.S. embassy or consulate.
How can Canadian citizens participate in the diversity visa lottery? Is that an immigration option?
Canadian citizens can participate in the Diversity Visa Lottery by applying online through the official U.S. Department of State website during the specified entry period, ensuring they meet the eligibility requirements related to education or work experience.
What are the requirements for maintaining valid passports and Canadian citizenship documentation throughout the immigration process?
Throughout the immigration process to the US, Canadian citizens must ensure their passports remain valid for at least six months beyond their planned date of entry into the US and keep their Canadian citizenship documentation current and readily accessible.
How do the immigration laws of the US differ for Canadian citizens seeking permanent residency compared to foreign citizens from other countries?
US immigration laws offer Canadian citizens unique provisions under the USMCA (formerly NAFTA) for certain types of work visas, but for permanent residency applications, Canadians generally follow the same legal requirements and processes as citizens from other countries, including eligibility for green cards through family, employment, or other qualifying categories.
What are the necessary steps to enroll children in elementary and secondary education?
Canadian families moving to the US must provide proof of residency in the school district, immunization records, and sometimes proof of the child's age and legal guardianship. Their immigration status generally does not affect the enrollment process, as public schools are required to provide education to children regardless of their immigration status.
What are the available immigration options for Canadian citizens wishing to become permanent residents in the US.
Canadian citizens wishing to become permanent residents in the US can explore immigration options such as employment-based visas, family sponsorship, or the Diversity Visa Lottery; acquiring a green card is the process of obtaining permanent residency, so these options are steps towards achieving that status, not separate from it.
How can Canadian citizens ensure a smooth and successful transition when moving to the US?
Canadian citizens can ensure a smooth transition to the US by researching job markets, networking, understanding the local real estate market, and securing temporary housing before finalizing a permanent home. This approach helps in both securing employment and finding suitable housing, contributing to a successful move.
What is the process for applying for marriage visas for Canadian citizens married to American citizens or permanent residents?
Canadian citizens married to American citizens or permanent residents can apply for a marriage visa by filing Form I-130 (Petition for Alien Relative) through the U.S. citizen or permanent resident spouse.
For Canadian permanent residents (not citizens) moving to the US, what additional steps or considerations are there in the immigration process compared to Canadian citizens?
Canadian permanent residents moving to the US must ensure they have a valid permanent resident travel document if returning to Canada. They might face different visa requirements and procedures for entering the US, including obtaining a visa in categories that require a petition or application in advance, as their eligibility for certain visa exemptions available to Canadian citizens does not apply.
NEXT STEPS
If you’re a Canadian resident or are planning on moving to Canada or the US 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.
READ MORE
If you’re planning a cross-border move, these articles and guides will help you simplify your move and ensure you’ve covered everything.
Cross-Border Estate Planning Guide
Certified Financial Planner in Canada - Finding a Fiduciary
ABOUT THE AUTHORS
Tiffany Woodfield is an Associate Portfolio Manager licensed in Canada and the USA, a Chartered Investment Manager (CIM), a Chartered Retirement Planning Counselor (CRPC) a Trust and Estate Practitioner (TEP) and the co-founder of SWAN Wealth Management, along with her husband, John Woodfield. Tiffany advises clients who live in Canada and the United States and want to simplify their cross-border financial plan, move their assets across the border, and optimize their investments to minimize their tax burden. Together Tiffany and John Woodfield help their clients simplify their cross-border finances and create long-term revenue streams that will keep their assets safe whether they live in Canada or the U.S.
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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