Moving from the United States to Canada can be exciting, but it also comes with financial, legal and logistical considerations that people often overlook. Without proper planning, small mistakes can become costly ones.
In this episode of The Wealthy Life, Sybil Verch speaks with Harp Sandhu, Cross-Border Advisor and founder of Sandhu Wealth at Raymond James and author of Welcome Home Eh? A practical guide on what people should think about before relocating from the U.S. to Canada.
Start with a Plan
One of the most common mistakes people make is waiting until after they move to start asking important questions. This may be partly due to not knowing what to ask – we don’t know what we don’t know! Harp’s book, Welcome Home Eh? is a quick easy read that provides a fantastic overview of the things to consider, ask about, and plan for. A well-thought-out plan can help avoid expensive surprises later.
For many families, one of the first things to deal with is immigration status. While Canadian citizens can return home easily, spouses or children who are not citizens may need to apply for permanent residency before moving.
Planning ahead allows time to organize paperwork, financial accounts, and other important details before the move to ensure a smooth transition and prevent excess taxation.
Understanding Taxes in Both Countries
When you establish residency in Canada, you generally become a Canadian tax resident and need to start filing tax returns in Canada. However, U.S. citizens must continue to file U.S. tax returns as well each year, even if they never return to the U.S.
This means some individuals may need to file taxes in both countries. Tax rules are similar but different in each country, which adds an additional layer of complexity.
The good news is that Canada and the United States have a tax treaty designed to help prevent double taxation. Even so, cross-border tax rules can be complicated, which is why many people choose to work with accountants who specialize in cross-border taxation.
What Happens to Your Investments?
Investment accounts are another important consideration.
Many retirement accounts are recognized across both countries. For example, Canadian RRSPs and U.S. retirement accounts such as IRAs or 401(k)s often receive similar tax treatment, meaning investments are allowed to continue growing on a tax deferred basis and are only taxed in the year of withdrawal.
However, once living in Canada, most of the American investment firms are no longer able to manage your accounts due to regulatory restrictions. To complicate things further, most Canadian investment firms cannot manage U.S. retirement accounts. The good news is that there are a number of cross-border Advisors that are licensed to work with clients on both sides of the border and can manage your Canadian and U.S. retirement accounts. They can guide you on eligible investment options and continue holding your retirement accounts to prevent heavy taxes from being incurred due to an immediate withdrawal.
Mutual funds are another area of concern as they are only available to investors in the country of residence. If living in the U.S., you can only purchase U.S. based mutual funds and if living in Canada, you can only purchase Canadian based mutual funds. If you hold U.S. mutual funds in a regular (non-registered) brokerage / investment account, they will need to be sold and transferred to a Canadian investment account once considered a resident of Canada. This can trigger capital gains taxes which requires further planning.
Working with a cross-border advisor can help ensure accounts are handled properly and remain compliant with regulations in both countries.
Planning for Healthcare
Healthcare coverage is an important consideration when moving to Canada.
Canada’s healthcare system is publicly funded, but coverage may not begin immediately depending on the province. Some provinces require a waiting period before new residents are fully covered.
During that time, many people choose to purchase temporary private insurance to cover major medical expenses until provincial healthcare begins.
Updating Your Estate Plan
If you previously prepared a will or power of attorney in the United States, it’s often a good idea to update your estate plan after moving to Canada.
Legal documents prepared in another country may still be recognized, but they can sometimes create complications or delays during estate administration. Updating your estate plan to reflect Canadian laws and assets can make things much easier for your family in the future.
If you continue to own property in the U.S., you may also want a separate will to handle those assets.
Practical Details People Often Forget
Beyond financial planning, there are also practical logistics that people sometimes overlook when moving between countries.
For example, you may need to:
These smaller details can make a big difference in how smooth the transition is.
The Importance of a Cross-Border Team
Moving between the U.S. and Canada often involves several professionals working together. This may include a cross-border financial advisor, accountant, immigration lawyer, and estate planning lawyer.
When these professionals collaborate, it helps ensure that tax, legal, and financial decisions all align.
Final Thoughts
Relocating from the United States to Canada involves much more than simply packing and moving. Taxes, investments, healthcare, and estate planning can all become more complex without proper preparation.
Taking the time to plan and work with experienced cross-border professionals can help make the transition much smoother.
Watch the full episode of The Wealthy Life to learn more about what to consider before moving from the United States to Canada.
