Moving from Canada to the United States is exciting. The tax implications are not.
Every year, thousands of Canadians make the move — for work, for family, for business, for the appeal of states with no income tax — and most of them have no idea what’s waiting for them on the tax side until they’re sitting in front of a filing deadline with questions they don’t know how to answer. Which accounts need to be closed? What does Canada still have the right to tax? What does the IRS need to know about your Canadian retirement savings? Are you going to be taxed twice?
This guide is designed to answer those questions in one place. It covers what happens on the Canadian side when you leave, what the US expects from you once you arrive, which accounts need action before you go, and the five planning steps that make all of it manageable. We’ve also included a full asset-by-asset reference chart so you can see exactly how each type of account and investment is treated on both sides of the border.
This is general guidance. Cross-border taxation is complex, and your specific situation — the accounts you hold, the state you’re moving to, your residency timing, your employment income — will affect how every rule applies to you. But the goal here is to give you enough of a foundation that you know what questions to ask, what deadlines to plan around, and where the biggest risks are.
Let’s get into it.
Table of Contents
- Why Cross-Border Tax Planning Matters — and When to Start
- Five Steps Every Canadian Should Take Before (and After) Moving
- Understanding Canadian Tax Residency After You Leave
- The Canadian Departure Tax and Deemed Disposition Explained
- Your Canadian Accounts, One by One: What Happens to Each
- US Reporting Requirements: What the IRS Needs to Know
- Full Asset Reference Chart: Canadian and US Tax Consequences
- Frequently Asked Questions
- Next Steps and How We Can Help
Why Cross-Border Tax Planning Matters — and When to Start
The most common scenario we see at Akif CPA is a Canadian who moved to the US — sometimes months ago, sometimes years ago — and is only now learning that they had tax obligations they didn’t meet. Maybe they kept contributing to their TFSA without realizing it was no longer allowed. Maybe they still have a non-registered investment account in Canada that triggered a deemed disposition the day they left. Maybe they’ve never filed an FBAR because they didn’t know what it was.
These aren’t edge cases. They’re the norm for Canadians making this move without cross-border tax guidance.
Why does it happen? Because the Canadian and US tax systems are fundamentally different. Canada taxes based on residency. The US taxes based on citizenship and residency — meaning the IRS may have a claim on your worldwide income regardless of where you’re living. Add in the US-Canada Tax Treaty, which provides significant protections but only if you know how to claim them, and you have a system that genuinely requires professional navigation.
The good news: most of the worst outcomes are avoidable with planning. The bad news: planning has to happen before you move, not after. Several of the most valuable elections and account strategies are only available on a pre-departure basis. Once you’ve crossed the border without addressing them, your options narrow.
The single most important piece of advice in this entire guide: start the planning process at least six months before your intended move date.
Five Steps Every Canadian Should Take Before (and After) Moving
Here is the framework we use with every Canadian client who is moving to — or has recently moved to — the United States.
Step 1: Understand the Canadian Tax Consequences of Leaving
Before anything else, you need to understand what Canada will tax you on when you leave. This means reviewing every asset you own — retirement accounts, registered accounts, non-registered investments, real estate, shares in private companies — and understanding which ones trigger a tax event on departure.
Some accounts (like RRSPs and LIRAs) are protected by the US-Canada Tax Treaty and have no deemed disposition. Others (like non-registered investment accounts and shares of private corporations) are fully subject to departure tax. Knowing the difference is the foundation of everything that follows.
Step 2: Understand What the US Will Tax You On
Once you understand the Canadian side, you need to understand the US side. The IRS has its own way of looking at your Canadian assets — and in some cases, it’s very different from how the CRA sees them.
For example: a TFSA is a tax-free account in Canada. The US does not recognize its tax-free status. To the IRS, it’s a taxable foreign trust. This creates an immediate mismatch that needs to be planned around.
Understanding what the IRS will tax — and at what rates — lets you make informed decisions about which accounts to close, which to keep, and which require special handling.
Step 3: Determine What Needs to Happen Before You Leave Canada
With both sides of the picture clear, you can now make strategic decisions. Should you crystallize gains in your RRSP before you move? Should you close your TFSA? Should you sell your non-registered investment account and reset the cost basis? Should you repay your Home Buyers’ Plan balance?
This step is where planning generates the most value — and where most people who skip the process lose money they could have kept.
Step 4: Understand Your Canadian Filing Requirements After You Leave
Leaving Canada doesn’t immediately end your Canadian filing obligations. You will need to file a Canadian departure return (a T1 with a departure date) for the year you leave. If you retain Canadian-source income — rental income, pension payments, RRIF withdrawals — there are ongoing reporting requirements, withholding rules, and forms (NR4, S216) that apply.
Deadlines matter here. The T1 departure return has specific due dates. If you miss them, penalties apply.
Step 5: Understand Your US Filing Requirements from Day One
From the moment you establish US residency — which is determined by the Substantial Presence Test at the federal level, and by state-specific rules for state tax purposes — you have US filing obligations.
Beyond the Form 1040, most Canadians moving to the US will have foreign account reporting requirements: the FBAR (FinCEN 114), Form 8938 (FATCA), and potentially Form 8621 for passive foreign investment companies (PFICs). These are not optional, and the penalties for missing them are significant.
Year one is the most complex year. After that, if you’ve made the right pre-departure decisions, ongoing compliance is manageable.
Understanding Canadian Tax Residency After You Leave
One of the most important — and most misunderstood — aspects of leaving Canada is the question of whether you’re actually leaving for tax purposes.
The CRA determines residency based on ties to Canada, not just physical presence. Moving to the US doesn’t automatically make you a non-resident of Canada. If you maintain significant ties to Canada, the CRA can continue to tax you on your worldwide income.
Primary Ties vs. Secondary Ties
The CRA evaluates ties in two categories:
Primary ties are the most significant factors and include:
- A home available for your use in Canada (owned or leased)
- A spouse or common-law partner who remains in Canada
- Dependents who remain in Canada
Secondary ties carry less weight individually but matter collectively:
- Personal property in Canada (vehicles, furniture)
- Social ties (memberships, professional affiliations)
- Economic ties (Canadian bank accounts, credit cards, investments)
- Canadian driver’s license, health card, or passport
- A Canadian mailing address
The date the CRA recognizes as your departure date is typically the date you — and your immediate family — actually leave Canada and establish residency elsewhere. If your family stays behind in Canada, you are likely still considered a Canadian tax resident, which means the CRA retains the right to tax your worldwide income, including your US earnings.
The NR73 Form: When You’re Not Sure
If your ties to Canada are ambiguous — you moved but still have significant connections — you can file Form NR73 with the CRA and ask them to make a formal determination of your residency status. This is a secondary option, not a first step. Before filing NR73, work through your primary and secondary ties with a cross-border tax professional. The CRA’s determination is binding and can sometimes create more problems than it solves if submitted without preparation.
US Residency: The Substantial Presence Test
On the US side, federal residency for tax purposes is determined by the Substantial Presence Test. In simplified terms, you are considered a US tax resident if you are physically present in the US for at least 31 days in the current year and 183 days over a three-year weighted period.
State residency rules are separate and vary by state. The moment you obtain a state ID, sign a lease, or establish a domicile in most states, you may be considered a state tax resident regardless of the federal substantial presence test.
Important implication: There is a period during the year of your move when you may be considered a resident of both Canada and the US simultaneously. This overlap period requires careful attention and is one of the primary reasons year-one cross-border returns are more complex than any subsequent year.
The Canadian Departure Tax and Deemed Disposition Explained
When you become a non-resident of Canada, the CRA treats you as having sold all of your applicable assets at their fair market value on the date of your departure. You didn’t actually sell anything — but for tax purposes, you did. This is called a deemed disposition, and the tax triggered by it is commonly called the departure tax.
What Is a Deemed Disposition?
A deemed disposition is a paper transaction. The CRA calculates a capital gain (or loss) on each applicable asset by comparing its fair market value on your departure date to its original cost. If the asset has increased in value since you acquired it, there is a taxable capital gain — and Canada will tax you on it even though you haven’t sold anything and received no cash.
If the asset has decreased in value, there is a capital loss. Canada is generally not interested in losses and provides limited relief for deemed disposition losses.
Which Assets Are Subject to Deemed Disposition?
Not all assets are subject to deemed disposition. The key categories are:
- Subject to deemed disposition: Non-registered investment accounts, shares of private Canadian corporations (CCPCs), non-Canadian real estate, most personal property above certain thresholds
- Exempt from deemed disposition: Canadian real estate (land and buildings), RRSP, RRIF, LIRA, RPP (retirement accounts covered by the US-Canada Tax Treaty), CPP and OAS entitlements
- Complicated / gray area: TFSA, FHSA, RESP, Canadian employee stock options, RSUs
Crystallization: A Pre-Departure Planning Strategy
For retirement accounts like RRSPs, there is a strategy called crystallization that can significantly reduce your US tax burden after you move.
An RRSP is a pre-tax account — contributions went in before tax, and the account grows tax-sheltered. When you move to the US, the IRS will treat the entire fair market value of your RRSP at the time of your arrival as a cost basis for US tax purposes — but only to the extent that gains have been crystallized.
Crystallization works like this: before you leave Canada, you sell all the investments inside your RRSP and immediately repurchase them. Nothing leaves the account and there is no Canadian tax consequence (because RRSP transactions are not taxable until withdrawal). But what you’ve done is reset the cost basis of every holding inside the account to its current fair market value. When you eventually withdraw funds in the US, the growth that occurred before your move is treated differently than growth that occurs after — reducing your US tax exposure on the pre-move appreciation.
This strategy requires advance planning and is most valuable for RRSPs with significant unrealized gains. It cannot be done after you’ve already moved.
Your Canadian Accounts, One by One: What Happens to Each
RRSP (Registered Retirement Savings Plan)
Canadian side: No deemed disposition. No tax on departure. You cannot contribute after you become a non-resident of Canada.
US federal side: The US-Canada Tax Treaty protects the RRSP at the federal level. Income earned within the account is not currently taxable in the US — the tax is deferred until withdrawal, consistent with how the CRA treats it. To claim this treaty benefit, you must make a one-time election on your US return (Form 8891 was previously required; current practice uses treaty provisions on the 1040).
State taxes: This is where it gets complicated. A number of US states do not recognize the US-Canada Tax Treaty and will tax income earned inside your RRSP annually. States that do not recognize the treaty include: Alabama, Arkansas, California, Connecticut, Georgia, Hawaii, Kansas, Kentucky, Maryland, Mississippi, Montana, New Jersey, North Dakota, and Pennsylvania. If you move to one of these states, income generated inside your RRSP — dividends, interest, capital gains — will be taxable at the state level each year.
Withdrawals: If you withdraw from your RRSP as a non-resident, Canadian withholding tax of 25% applies to lump-sum withdrawals under the treaty.
Planning opportunity: Maximize RRSP contributions in your final year of Canadian residency. Consider crystallization before you move. If you are moving to one of the non-treaty states listed above, the annual state tax drag on RRSP earnings is a factor in deciding whether to keep the account or begin drawing it down.
LIRA (Locked-In Retirement Account)
Canadian side: No deemed disposition. No tax on departure. Like the RRSP, this is a retirement account covered by the US-Canada Tax Treaty.
US federal side: Same federal treatment as RRSP — income deferred under the treaty. State rules apply the same way as RRSP.
Withdrawal restriction: LIRAs are locked in by definition. You generally cannot unlock and withdraw funds until you have been a non-resident of Canada for at least two years, and even then, the unlocking process requires meeting specific provincial rules.
Planning opportunity: The two-year non-residency requirement for unlocking is a planning consideration for those who want to draw down the account after moving.
RRIF (Registered Retirement Income Fund)
Canadian side: No deemed disposition. Covered by the US-Canada Tax Treaty.
US federal side: Same as RRSP — income deferred under the treaty at the federal level. State exceptions apply.
Withholding on withdrawals: The withholding rate on periodic RRIF payments to non-residents is 15% under the treaty — not 25%. This is a commonly misunderstood point. Lump-sum withdrawals carry a higher rate; periodic payments do not.
Planning note: If you are receiving RRIF payments, ensure your Canadian financial institution is applying the correct 15% withholding rate. We have seen clients being withheld at 25% — overpaying Canadian tax that then creates a complex credit situation on the US return.
RPP (Registered Pension Plan)
Canadian side: No deemed disposition. Covered by the US-Canada Tax Treaty.
US side: Same treatment as RRSP and LIRA. Federal deferral under the treaty; state rules vary as noted above.
TFSA (Tax-Free Savings Account)
The TFSA is the most complicated account for Canadians moving to the US — and the one that causes the most problems.
Canadian side: No deemed disposition when you leave. No tax on departure. However, you cannot contribute to a TFSA after you become a non-resident of Canada. Any contributions made after your departure date will be subject to a 1% per month penalty. We have seen clients accumulate $10,000–$15,000 in TFSA penalties simply because they didn’t know this rule and kept making automatic contributions after moving.
To stop a penalty from accruing, all excess contributions must be withdrawn.
US side: This is where the TFSA becomes a serious problem. The US does not recognize the TFSA’s tax-free status. To the IRS, the TFSA is a taxable foreign grantor trust. That means:
- All income earned inside the TFSA — dividends, interest, capital gains — is taxable to you in the US each year
- The account may require trust reporting on the US return (Form 3520 and/or Form 3520-A)
- If your TFSA holds Canadian mutual funds or ETFs, those investments are likely classified as Passive Foreign Investment Companies (PFICs), which carry their own complex and punitive US reporting requirements
Recommendation: Close your TFSA before you move to the US. This is our strong recommendation for the vast majority of clients. The US tax and reporting complexity associated with keeping the account open generally outweighs any benefit from continued Canadian tax-free growth. If you have a large balance and complex investments, consult a cross-border professional before liquidating to plan around any disposition consequences.
If you have already moved and still have a TFSA open, contact us. The situation is fixable but requires attention.
FHSA (First Home Savings Account)
Canadian side: No deemed disposition on departure. You cannot contribute after you leave Canada. Withdrawals after you become a non-resident are subject to 25% withholding.
US side: Like the TFSA, the IRS does not recognize the FHSA’s registered status. Investment income earned inside the account is taxable in the US. Reporting requirements apply.
Recommendation: Close your FHSA before moving. If you were planning to use these funds for a home purchase, coordinate with a cross-border professional to time the withdrawal correctly relative to your departure date.
RESP (Registered Education Savings Plan)
Canadian side: No deemed disposition. Not subject to departure tax.
US side: Investment income is taxable in the US. Government contributions and grants are taxable in the US if the beneficiary is a non-resident.
Planning note: If the RESP balance is small, consider closing it before you move. If it is a substantial account with years of growth ahead, consult a professional about how the ongoing US tax on earnings and any future withdrawal tax treatment will affect the account’s net value.
Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP)
Both the HBP and LLP allow Canadians to borrow from their RRSP for specific purposes — a first home purchase or education costs — with the expectation that the borrowed funds will be repaid to the RRSP over time.
Critical rule: Any outstanding balance in your HBP or LLP at the time you leave Canada must be repaid before your departure. If you do not repay the outstanding balance, the CRA will add the entire remaining balance to your income on your final T1 tax return — treating it as a taxable RRSP withdrawal in the year you leave.
This is a rule that catches many people off guard. The repayment requirement does not go away because you’re moving. Plan for it.
CPP (Canada Pension Plan) and OAS (Old Age Security)
If you are receiving CPP or OAS payments when you move to the US, these continue. The important tax change is on which side pays.
Canadian side: Once you become a non-resident of Canada, the CRA no longer taxes your CPP and OAS income (other than through withholding at source, which is then credited).
US side: CPP and OAS payments are reported as income on your US return. Under the US-Canada Tax Treaty, a portion may be excluded from US taxable income. The net result is generally a lower effective tax rate than if Canada were taxing the same income — which is a benefit for those moving to lower-tax US states.
Non-Registered Investment Accounts
Canadian side: Non-registered investment accounts (taxable brokerage accounts) are fully subject to deemed disposition when you leave Canada. The CRA calculates a capital gain or loss on every holding in the account based on the difference between fair market value on your departure date and the adjusted cost base.
Once you become a non-resident, you technically cannot operate a Canadian non-registered investment account. If you keep it open, the account must be converted to a non-resident account or managed through a specific type of arrangement.
US side: US short-term and long-term capital gain rates apply to any gains recognized after your US residency begins. Your US cost basis in these investments is generally reset to fair market value as of your arrival date.
Recommendation: Close your non-registered investment account before you move, or liquidate and transfer the funds. If you have significant unrealized losses that you want to use to offset gains, coordinate the timing carefully. If you have significant unrealized gains, consider crystallizing before departure to reset the cost basis — the departure tax may be lower than future US capital gains tax on the same appreciation.
Canadian Employee Stock Options (ESOs)
Canadian ESOs are one of the more complex cross-border situations.
At departure: No deemed disposition on unexercised options when you leave Canada.
Post-departure exercises: When you exercise stock options after becoming a non-resident, the benefit is considered Canadian-source employment income. A T4 will be issued by the employer. This income is reportable on both your Canadian non-resident return and your US return.
CCPC vs. non-CCPC: Options granted by a Canadian-Controlled Private Corporation are taxed differently than options from a publicly traded company. The timing of the taxable event differs, and the deductions available differ. Do not assume that rules you know about from working at a public company apply to CCPC options.
If your options vest over multiple years after you’ve left Canada, you may have ongoing Canadian filing obligations each time a tranche vests. This is not a one-time filing situation.
Recommendation: If you hold Canadian ESOs, talk to a cross-border professional before you move and before you exercise. The decisions you make — and the timing of them — have material tax consequences on both sides of the border.
Canadian RSUs (Restricted Stock Units)
RSUs are more straightforward than ESOs in some ways, but they create their own complications for cross-border situations.
RSUs are tied to the services that earned them. When an RSU vests after you’ve moved to the US, the taxable employment income it generates is allocated between Canada and the US based on where you were working when the services were performed — not based on where you live when it vests.
In practical terms: if you worked three years in Canada and one year in the US before a four-year RSU vests, 75% of the benefit may be Canadian-source income. A T4 will be issued for the Canadian portion. Both the Canadian portion and the US portion will appear on your US return, and you’ll need foreign tax credits to avoid double taxation.
For employees at large companies that operate on both sides of the border, this situation is common. The double withholding that sometimes occurs — Canadian payroll tax withheld on the T4 portion and US payroll tax withheld on the full amount — requires careful reconciliation at filing time.
Recommendation: Same as ESOs — consult a professional, and do it before you move.
Shares of a CCPC (Canadian-Controlled Private Corporation)
If you own shares in a private Canadian company, those shares are subject to deemed disposition when you leave Canada. The CRA will tax you on the capital gain based on the fair market value of your shares on your departure date versus your cost.
Lifetime Capital Gains Exemption: The Lifetime Capital Gains Exemption (LCGE) is available to offset capital gains on qualifying small business shares. The LCGE has a significant dollar limit (adjusted periodically) and can substantially reduce or eliminate the departure tax on CCPC shares. However, the shares must qualify as Qualified Small Business Corporation shares, and the eligibility conditions must be met.
Do not assume the LCGE will cover everything. We have worked with clients who moved expecting the exemption to fully shelter their gain, only to find that partial shares didn’t qualify or that the gain exceeded the available exemption — resulting in unexpected departure tax bills of hundreds of thousands of dollars.
Recommendation: If you own shares in a private Canadian company, get a valuation and a tax analysis done well before your move. The planning window for CCPC share situations can require structural changes to the company or to your ownership — changes that take time to implement properly.
Canadian Real Estate
Canadian real estate is not subject to deemed disposition. This is one of the most important exemptions in the departure tax rules. Land and buildings on Canadian soil are excluded from the deemed disposition rules — the CRA will tax you on those assets when you actually sell them, not when you leave the country.
Primary residence: If the property was your principal residence, you can claim the Principal Residence Exemption on your final Canadian return to eliminate or reduce the capital gain. Make sure this is done properly on the T1 departure return.
Converting to a rental property: If you’re keeping your Canadian home and renting it out after you move, non-resident rental rules apply. The tenant (or their representative) is required to withhold 25% of gross rent and remit it to the CRA monthly. You can file a Section 216 election to pay tax on net rental income instead of gross — this is almost always the better option, but it requires filing a specific Canadian return each year.
Selling after you’ve moved: When you sell Canadian real estate as a non-resident, the CRA withholds a portion of the sale proceeds until you file a Certificate of Compliance (T2062). Without this certificate, the buyer’s lawyer is required to withhold 25% of the gross proceeds. Processing times for T2062 certificates have stretched significantly in recent years — in some cases to 11–12 months. Plan accordingly. If you’re selling property as a non-resident, start the process well before the sale closes.
Non-Canadian real estate: If you own real estate outside of Canada — vacation properties in the US, investment properties in other countries — those are subject to deemed disposition. Ensure they are captured in your departure tax planning.
US Reporting Requirements: What the IRS Needs to Know
Beyond filing a regular Form 1040, Canadians moving to the US typically have several additional reporting obligations because of their Canadian financial accounts. These are often overlooked — and the penalties for missing them are severe.
FBAR (FinCEN Form 114)
If you have a financial interest in, or signature authority over, foreign financial accounts with an aggregate value exceeding $10,000 at any point during the calendar year, you must file an FBAR. This includes Canadian bank accounts, brokerage accounts, RRSP, TFSA, and other registered accounts.
The FBAR is filed separately from your tax return through the FinCEN system, and the deadline is April 15 with an automatic extension to October 15. Willful failure to file carries civil penalties of up to $100,000 per violation. Non-willful penalties are up to $10,000 per violation. These penalties are real and are assessed.
Form 8938 (FATCA — Statement of Specified Foreign Financial Assets)
Form 8938 is filed with your 1040 and reports specified foreign financial assets above certain thresholds ($50,000 for single filers at year-end, or $75,000 at any point during the year — higher thresholds apply if you live abroad). This form overlaps with the FBAR but is not identical — both must be filed if both thresholds are met.
Form 8621 (PFIC Reporting)
If you own Canadian mutual funds or Canadian ETFs — in your TFSA, FHSA, non-registered account, or any other account — those investments are very likely classified as Passive Foreign Investment Companies (PFICs) under US tax law.
PFIC rules are punitive by design. Income from PFICs is taxed at the highest marginal rate, and the calculation methodology is extremely complex. Form 8621 must be filed for each PFIC, and the form cannot realistically be completed by a non-specialist.
This is the primary reason we recommend closing accounts that hold Canadian mutual funds and ETFs before moving to the US. Once you are a US person, these holdings become a compliance burden that costs more in professional fees and potentially additional tax than the investments are worth.
The US-Canada Tax Treaty Elections
The US-Canada Tax Treaty provides several elections and exemptions that can significantly reduce your US tax burden on Canadian income and assets. These include the deferral of tax on RRSP, RRIF, LIRA, and RPP income; reduced withholding rates on Canadian-source income; and protections against double taxation.
The treaty benefits are not automatic. You must claim them. Many US tax preparers who don’t specialize in cross-border work miss these elections entirely — we have reviewed dozens of returns where this was the case. If your US accountant has never prepared a Canadian-American cross-border return, they may not know these elections exist.
Dual-Status Return: The Year You Move
In the year you move to the US, you will likely file a dual-status return — part of the year as a non-resident alien (before you established US residency) and part of the year as a resident alien (after). The rules governing what income is taxable in each period, and at what rates, are different from a standard 1040. Year one requires specific expertise.
Full Asset Reference Chart: Canadian and US Tax Consequences
| Account / Asset | Deemed Disposition (Canada)? | Canadian Tax on Departure | US Federal Treatment | State Tax Issues | Close Before Moving? | Key Planning Action |
|---|---|---|---|---|---|---|
| RRSP | No | None | Deferred under treaty; income not currently taxable | Yes — 14 states tax RRSP income annually | No — keep open | Crystallize before moving; maximize contributions in departure year |
| LIRA | No | None | Deferred under treaty | Same states as RRSP | No — keep open | Cannot unlock until 2 years as non-resident |
| RRIF | No | None | Deferred under treaty | Same states as RRSP | No — keep open | Periodic withdrawals: 15% withholding (not 25%) |
| RPP | No | None | Deferred under treaty | Same states as RRSP | No — keep open | Ensure treaty election is made on US return |
| TFSA | No | None | Fully taxable — treated as foreign grantor trust | Fully taxable in all states | Yes — strongly recommended | Close before moving; PFIC issues if holding Canadian funds |
| FHSA | No | None; 25% withholding on post-departure withdrawals | Income taxable in US; no recognized status | Fully taxable | Yes — recommended | Close before moving |
| RESP | No | None | Income taxable; government grants taxable if non-resident beneficiary | Fully taxable | Case by case | Consult professional; small balances may be better closed |
| HBP / LLP | N/A | Outstanding balance added to income on departure T1 if not repaid | No ongoing US consequence once closed | None | Yes — required | Repay all outstanding balances before departure |
| CPP / OAS | No | Withholding at source; no longer taxed by Canada after departure | Taxable in US; partial exclusion available under treaty | Varies | N/A — cannot close | Update CRA with new address and residency status |
| Non-Registered Investments | Yes | Capital gain/loss on departure — departure tax applies | US cost basis reset to FMV at arrival; short/long-term rates apply to post-arrival gains | Fully taxable | Yes — recommended | Crystallize or liquidate before moving; harvest losses where available |
| CCPC Shares | Yes | Capital gain — departure tax; LCGE may offset | US cost basis reset to FMV at arrival | Varies | Case by case | Obtain valuation; review LCGE eligibility; plan corporate structure |
| Canadian ESOs | No — at departure | T4 issued when exercised post-departure; Canadian source income | Taxable in US; credit for Canadian tax paid | Varies | N/A | Consult professional before exercising; CCPC vs. non-CCPC rules differ |
| Canadian RSUs | No — at departure | T4 issued on vest; allocated by service period in Canada | Full RSU value taxable in US; foreign tax credit for Canadian portion | Varies | N/A | Prorate allocation between countries; consult professional on timing |
| Canadian Primary Residence | No | Principal Residence Exemption available | Taxable when sold; foreign tax credits may apply | Varies | No obligation to sell | File T2062 before selling as non-resident; file PRE on departure T1 |
| Canadian Rental Property | No | NR4 withholding on gross rent; S216 election for net income | Rental income taxable in US; foreign tax credits apply | Varies | No obligation to sell | Arrange NR withholding; file annual S216 return |
| Non-Canadian Real Estate | Yes | Capital gain — departure tax applies | US cost basis reset to FMV at arrival | Varies | Case by case | Include in deemed disposition planning |
Frequently Asked Questions
Do I have to file a Canadian tax return after I move to the US?
Yes, for at least one more year. You must file a T1 departure return for the year in which you become a non-resident. This return includes a departure date, reports all Canadian income up to that date, and triggers any applicable departure tax calculations. If you retain Canadian-source income after leaving (rental income, RRIF payments, CPP/OAS), you may also have ongoing Canadian filing obligations through non-resident returns or specific elections like Section 216.
Will I be taxed twice on the same income?
In most cases, no — but it requires planning. The US-Canada Tax Treaty and US foreign tax credit rules are designed to prevent double taxation. Where Canada taxes income, you generally receive a credit on your US return for the Canadian tax paid. However, double taxation can and does occur when the treaty benefits are not properly claimed, or in situations involving state taxes in the 14 states that don’t recognize the treaty for retirement accounts.
What happens to my TFSA if I don’t close it before moving?
The US will treat your TFSA as a taxable foreign grantor trust. Income earned inside the account — dividends, interest, capital gains — will be taxable on your US return each year. You will also have reporting obligations (FBAR, Form 8938, potentially Form 3520). If the account holds Canadian mutual funds or ETFs, PFIC reporting applies, which is complex and expensive to prepare. You also cannot continue to contribute to the TFSA as a Canadian non-resident. If you do contribute, the CRA charges a 1% per month penalty.
What is the FBAR and do I need to file it?
FBAR stands for Foreign Bank Account Report (FinCEN Form 114). If the aggregate value of all your foreign financial accounts — including Canadian bank accounts, RRSPs, TFSAs, and brokerage accounts — exceeds $10,000 at any point during the year, you are required to file an FBAR. It is separate from your tax return and filed through the US Treasury’s FinCEN system. Penalties for non-filing start at $10,000 per violation for non-willful failures and go significantly higher for willful violations.
What is the Substantial Presence Test?
The Substantial Presence Test is how the IRS determines whether a non-US-citizen is a US tax resident for federal purposes. You meet the test if you are present in the US for at least 31 days in the current year and at least 183 days over the current year and the two preceding years (using a weighted formula: current year days × 1, prior year × 1/3, year before × 1/6). Once you meet this test, you are taxed as a US resident on your worldwide income for the full year, subject to special rules for the year of arrival.
Can I contribute to my RRSP after moving to the US?
No. You cannot make new RRSP contributions after you become a non-resident of Canada. Any contribution room you have accumulated does not carry over to a US account. Your RRSP can remain open and continue to grow on a tax-deferred basis (federally) under the US-Canada Tax Treaty, but new contributions are not permitted.
What is crystallization and should I do it?
Crystallization is a pre-departure strategy for RRSP accounts (and other registered accounts). It involves selling all holdings inside the account and immediately repurchasing them, which resets the cost basis to the current market value. Since the RRSP is tax-sheltered in Canada, there is no Canadian tax consequence. The benefit is on the US side — when you eventually withdraw funds, the pre-move appreciation is treated as cost rather than income, reducing your US tax on withdrawal. Whether crystallization makes sense depends on your RRSP balance, the amount of unrealized gain, and when you plan to withdraw. It requires advance planning before your departure date.
What states should I avoid moving to if I have a large RRSP?
Fourteen US states do not recognize the US-Canada Tax Treaty and will tax income earned inside your RRSP annually: Alabama, Arkansas, California, Connecticut, Georgia, Hawaii, Kansas, Kentucky, Maryland, Mississippi, Montana, New Jersey, North Dakota, and Pennsylvania. If you are moving to one of these states and have a significant RRSP balance generating ongoing income, the annual state tax drag is a real cost to factor into your planning. States with no income tax (Texas, Florida, Nevada, Washington, etc.) have no state-level issue with RRSP income.
How long does it take to process a T2062 certificate when selling Canadian real estate as a non-resident?
Processing times for Certificate of Compliance (T2062) applications have increased substantially in recent years. It is not unusual for the process to take 11–12 months from application to receipt. Without this certificate, the buyer’s lawyer must withhold 25% of gross sale proceeds. If you are planning to sell Canadian real estate after moving to the US, start the T2062 application process well before your expected closing date.
Next Steps: Making Cross-Border Taxes Manageable
Cross-border taxation between Canada and the US is genuinely complex — there is no version of this guide where it becomes simple. But it is manageable, and the difference between “overwhelming and expensive” and “planned and under control” is almost always whether you engaged a cross-border professional before your move rather than after.
Here is what a well-planned move looks like:
- Six or more months before departure: Initial consultation, asset inventory, account review, residency planning
- Three months before departure: Account closures or crystallization where recommended, HBP/LLP repayment, RRSP maximization
- Departure date: Documented clearly, ties severed appropriately, residency established in the US
- Year of move: T1 departure return filed in Canada, dual-status 1040 filed in the US, FBAR and Form 8938 filed, treaty elections made
- Ongoing: Annual US return with appropriate foreign account reporting, Canadian non-resident returns as needed for Canadian-source income
If you have already moved and are catching up, don’t wait. The penalties for missed foreign reporting forms compound over time, and the IRS has expanded enforcement in this area. Most situations — even those that look complicated — are resolvable with the right professional support.
At Akif CPA, cross-border taxation for Canadians moving to the United States is a core part of what we do. We work with clients at every stage — those who are planning ahead, those who are in the middle of the move, and those who moved years ago and are just now addressing the tax side. We also have resources available on our website, including a downloadable tax checklist for Canadians moving to the US.
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⭐ info@akifcpa.com
This guide reflects general tax principles as of early 2026. Cross-border tax law changes frequently, and individual circumstances vary significantly. Nothing in this article constitutes legal or tax advice for your specific situation. Consult a qualified cross-border tax professional before making any decisions.
