Financial Planning for Canadians Moving to the U.S.

Did you leave your heart in San Francisco? Is the Big Apple calling your name? Perhaps you are bound for Austin, Texas, the “Silicon Valley of the South.” If the U.S. is your destination—and you plan to stay for a while—there are critical steps to take to ensure your short- and long-term financial wellbeing.

Canadians moving to the U.S. may view the similarities—language, customs, culture and even cuisine—and imagine a seamless move. What many people don’t realize is that, in terms of investments and taxation, the two countries are very different. As you plan your move, make sure to have a financial plan in place. Many people think of “financial planning” as something to do after having made one’s fortune. In fact, having your financial house in order makes sense no matter where you are in your life, and it’s especially important if you are preparing for a cross-border move.

Start where you are. First things first, take an inventory of your finances in Canada: your bank accounts, credit cards and savings accounts including: Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund (RRIF), and Tax-Free Savings Account (TFSA). The rules governing the use of these accounts are different for non-residents. For example, a non-resident’s contribution to a TFSA would be subject to a monthly penalty. Because these rules are complex, expert help can prevent you from simple, yet expensive mistakes.

Plan the transition. As soon as possible, apply for a Social Security number in the U.S. You will need this to work, open a bank account and even to apply for credit. On the topic of credit, find out whether your Canadian credit cards will charge you a fee on transactions made in the U.S. You may wish to apply—before you move—for a card provided by a company that does business in both Canada and the U.S.

Buying health insurance is another important part of the transition from living in Canada to living in the U.S. If you do not have employer-provided health benefits, you can shop for the coverage that best suits you and your family. Legally, you must have health coverage or face penalties (not to mention costs of care, which can be very high in the U.S.!).

Stay on top of things. There’s an old saying, “Out of sight, out of mind.” It’s up to you to keep your financial picture in focus—even when aspects of it are thousands of miles away. Working with a financial planner is the simplest way to keep track of your accounts and to stay informed of your tax liability. The right advisor will work with you to let you decide how often you want to be contacted. It’s better to hear about changes in policy and tax laws before they affect your finances, back home or in the U.S.

Financial security is a cornerstone of freedom. When you know that you have the best information available about how to handle the money you make, and have taken care to protect yourself from being taxed twice on the same income, you can enjoy the wealth you are working so hard to create. No one expects you to be an expert on one country’s tax laws, let alone two. At Cardinal Point Wealth Management, our cross-border expertise can help keep you in the know about your Canadian and U.S. tax liability and your investments. Our experience on both sides of the border lets us provide you with the information you need, for your big move and every move after that.

John McCord is the Director of Private Wealth Services at the Cardinal Point, a cross-border wealth management organization with offices in the United States and Canada. John specializes in providing Canada-U.S. cross-border financial, investment, tax, transition, and estate planning services.
This piece is for informational purposes only.