Cross-border Wealth Management: Five Things to Know Before Moving from Canada to the U.S.

Cross-border Wealth Management: Five Things to Know Before Moving from Canada to the U.S.

Planning a move south of the border? The charms of the United States are obvious: career opportunities, booming manufacturing industry, top-ranked universities and warmer climate compared to Canada’s. No matter your reasons, picking up and moving to the U.S. from Canada can be an exciting journey that opens up a world of possibilities. But navigating the complexities such a big move brings can be daunting without proper planning or the support of a trusted cross-border financial advisor.

Here are five things you need to consider to ensure your transition to our southern neighbour is as smooth and tax efficient as possible.

Start Planning Your Move as Early as Possible

It’s never too early to get the ball rolling on your move to the U.S. Start with organizing your paperwork, getting your visa approved and researching available healthcare options in the U.S. Decide if you want to purchase a private health insurance plan prior to leaving Canada in case you need medical care before your U.S. healthcare plan kicks in.

Set Up Your U.S. Banking Account

Before you leave Canada, you’ll need to set up a U.S.-based bank account, so you can easily move money across the border, receive your paycheque if you’re moving for work and pay for U.S. purchases without incurring foreign transaction fees. As well, consider getting a U.S.-based credit card, so you establish a credit rating in that country.

Understand the Tax Implications of Your Move

While the U.S. and Canada share more than just a border, there are stark differences between the two. But perhaps nowhere are those differences more complex than in the two neighbours’ tax laws and investment and securities regulations.

For example, the U.S. doesn’t recognize Canada’s tax exemptions. So if you own a primary residence in Canada and decide to sell it, you may have to pay taxes in the U.S. On the other hand, if you buy a primary residence in the U.S. and decide to sell it later, only the first US$250,000 in capital gains may be tax exempt if you’re single or US$500,000 if you’re married and filing jointly.

As you plan your move south of the border, consult with a tax professional who specializes in cross-border taxation to assess the implications of your move and determine your tax filing status in each country.

At Raymond James (USA) Ltd., our tax professionals can help you with preliminary guidance and walk you through what taxes apply to your situation. They’ll explore your options for retaining or severing

Canadian tax residency and compare Canadian taxation to that of the U.S. for your various income sources and assets.

To learn more about how our dually licensed cross-border advisors can help you build a tax-efficient financial plan that spans borders, reach out to us by filling out this online form.

Manage Your Investments with a Cross-border Financial Advisor

Another difference between Canada and the U.S. lies in investment portfolios and how they are taxed. Pitfalls often emerge when Canadians learn the hard way that they can’t transfer their securities, such as Canadian mutual funds, to a U.S. financial institution.

Further complicating your financial picture could be the fact that some Canadian investments, such as Canadian exchange-traded funds (ETFs), may create punitive U.S. tax consequences or tax filing complexities because the Internal Revenue Service (IRS) may view those funds or accounts as passive foreign investment companies (PFICs).

This is where the expertise of a cross-border financial advisor comes into play. Licensed in both the U.S. and Canada, our cross-border financial advisors help professionals smoothly manage their financial assets across the Canada-U.S. border. We perform an in-depth financial analysis that takes into account various factors including options for U.S. healthcare, limitations on funds transfers and taxation on various holdings. As well, we help you take action to transfer your wealth across borders and maximize the tax-efficiency of your portfolio.

With our multi-currency platform, our cross-border financial advisors work in both Canadian and U.S. currencies, enabling you to benefit from favourable exchange rates and invest in your portfolio in the currency of your choice.

Considering a move to the U.S. from Canada? Reach out to us, so we can develop a solid financial plan and strategy that enable you to maintain your lifestyle and meet your financial goals.

Request a Social Security Number

Finally, before you arrive in the U.S., remember to apply for your Social Security number if you are legally permitted to work in the U.S. If not, apply for an Individual Taxpayer Identification Number (ITIN) for you and all family members, which you will need to file taxes, apply for a loan and claim government benefits. You can apply online from the U.S. and then go to a local Social Security office to provide your documentation.

For more tips on how to effectively prepare for your move from Canada to the U.S., check out this YouTube video.

As you pursue your dream in the United States and look forward to starting a new, rewarding life south of the border, keep in mind that effective planning is one of the keys. The old adage applies: “If you fail to plan, you are planning to fail.” So seek the expertise of a Raymond James cross-border financial advisor who can offer you the right level of planning and support to ensure you make a success of the experience.

Raymond James (USA) Ltd. advisors may only transact business with residents of the states and/or jurisdictions for which they are properly registered. The information above is from sources believed to be reliable, however, we cannot represent that it is accurate or complete and it should not be considered personal tax advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related and legal matters. Raymond James (USA) Ltd., member FINRA/SIPC.