Moving From Canada To the U.S.

Planning a move south of the border? Picking up and moving to the U.S. from Canada can be an exciting journey that opens 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.

  1. Start Planning Your Move to the U.S. 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.

  1. 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 paycheck 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.

  1. 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.

  1. 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) or accounts such as TFSAs, 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).

  1. Cross-Border Wealth Management:

This is where the expertise of a cross-border financial advisor comes into play. Licensed in both the U.S. and Canada, a cross-border financial advisor helps 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.

Other elements to consider.

  • File the necessary documents to obtain your green card or permanent residence.
  • Social security number: 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.
  • Taking your vehicle with you: you will need to export your vehicle and obtain a driver’s license in the state you are moving to, to get insurance.

Here are 10 more elements to consider before making the move to the U.S. from Canada, from the president of our cross-border division.