Are you a Canadian living, working, or planning to retire in the United States? Managing income, investments, retirement savings, and taxes across two countries involves navigating complex financial systems, but with the right guidance, it is possible to achieve clarity and success. With over 800,000 Canadians residing in the U.S., cross-border financial planning plays a vital role in securing their financial future.
In this video, John McCord, Vice President and Portfolio Manager at Cardinal Point Wealth Management, shares valuable insights on cross-border financial planning. John delves into important topics such as tax implications, investment strategies, retirement planning, and estate planning. He explains how the Canada-U.S. Tax Treaty can help reduce double taxation and outlines strategies for managing accounts like RRSPs and 401(k)s across borders.
Thoughtful financial planning is essential to optimize investments and avoid costly mistakes. Cardinal Point’s team provides personalized solutions, multicurrency reporting, and the specialized support needed to align financial strategies with your goals while navigating the complexities of cross-border finances.
For Canadians balancing life between Canada and the U.S., this video offers practical guidance. Watch to hear John McCord’s perspectives and learn how Cardinal Point can help you achieve financial success across borders.
Transcript of Video
[ 00:00:08 ]If you’re a Canadian who lives, works, or plans to retire in the U. S., you are likely concerned about the best way to effectively manage your cross-border finances. It’s important to recognize that significant differences exist between Canada and the United States when considering financial planning and investment matters. Canadians living in the U. S. are tasked with managing their income, investments, retirement, savings, and tax obligations in both countries. Interestingly, there are approximately 800,000 Canadians who live in the U.S. Cross-border financial planning is a process to help them navigate multiple countries’ tax, legal and regulatory requirements. Cardinal Point Wealth Management brings many direct and immediate benefits to those in this situation. Partnering with our firm streamlines cross-border finances while enabling Canadians living in the U. S. to focus on their families, professions and life goals.
[ 00:01:09 ] Here’s why cross-border financial planning is so essential and helpful. Both Canada and the U. S. have their own tax systems, and it’s common for Canadians living in the U. S. to file their returns and accrue tax liabilities in Canada and the U.S. In addition, state tax rates and rules often have material differences from one another. For example, California’s maximum income tax rate is 13. 4%, while Nevada has no income tax. There are also various compliance responsibilities on foreign accounts and income. For instance, it’s common for Canadians living in the U. S. to file a FinCEN Form 114 to the Department of the Treasury as well as an FBAR (Form 8938) to the IRS because they own Canadian bank accounts or registered retirement savings plans.
[ 00:01:56 ] Failing to file these forms can result in significant penalties, so it’s important for you to understand your obligations. One key element of cross-border financial planning is understanding the Canada-US Tax Treaty. This treaty is designed to prevent double taxation, ensuring that taxes are not paid on the same income in both countries. The treaty outlines which country has the right to tax certain types of income, such as pensions, dividends, and capital gains. By properly applying the treaty’s provisions, you can often significantly reduce your overall tax liability. Cardinal Point has a deep understanding of both tax systems and understands the importance of careful planning around the Canada-US Tax Treaty.
[ 00:02:51 ] A thoughtful and well-communicated plan will help you optimize your cross-border investment allocation to account for risk and avoid costly mistakes. It’s important to understand how each investment holding is treated in Canada and in the U. S. For example, residents of California are subject to annual income tax on interest, dividends, and capital gains within their Canadian registered retirement plans. The primary reason for this dynamic is that California is not a party to the Canada-US tax treaty. A method to minimize the annual liability in this case is to tax manage these plans through thoughtful trading and investment selection.
[ 00:03:36 ] It’s permissible for Canadians living in the U. S. to have Cardinal Point oversee their Canadian registered accounts in conjunction with their U. S.-based investment and retirement accounts. A key advantage of this approach is that decisions on investments and/ or withdrawal strategies can be made according to yearly circumstances. For example, a suitable plan might include the gradual redemption of an RRSP, which often results in tax efficiencies.
[ 00:04:11 ] Cross-border estate planning is a sophisticated field and is subject to frequent change. The estate planning laws in Canadian provinces and in U.S. States are not uniform, which can lead to different interpretations. Tax ramifications, ease of administration, and financial objectives should all be considered when constructing a cross-border estate plan. Cross-border estate planning is essential to ensure that assets are distributed without unnecessary delay, tax, and according to the benefactor’s wishes.
[ 00:04:49 ] Cardinal Point has offices in both Canada and the U. S. and serves clients on both sides of the border. Our advisors are legally licensed and registered in the jurisdictions where our clients reside. For example, Cardinal Point can simultaneously manage Canadian assets such as RSPs, TFSAs, pensions, and taxable accounts as well as U. S. assets such as IRAs, 401ks, and trusts. Our flexible structure provides clients with an integrated cross-border investment strategy, multi-currency reporting that lists all Canadian and U. S. managed accounts for each valued client. Our firm has a unique platform that is tailored to support the needs of Canadians living in the U. S. It’s actually very challenging to locate an advisor who is properly licensed to provide financial advice on both sides of the border.
[ 00:05:38 ] Most Canadian advisors are only authorized to provide advice on Canadian investment accounts and to a Canadian domiciled client. The same dynamic is applicable for U. S.-based advisors. Cardinal Point has the experience and platform to help navigate the complexities of cross-border financial planning and can align your strategy with your unique financial situation and personal goals. A knowledgeable advisor from Cardinal Point can help you avoid financial pitfalls such as triggering unintended tax consequences or penalties. Our team of specialists can help you manage your cross-border financial life and avoid the stress of navigating these intricate systems alone.
[ 00:06:30 ] Whether you’re planning to live, work, or retire in the U. S., utilizing cross-border financial planning is vital to your financial success. It helps to maximize financial well-being and avoid costly financial, taxation, and legal pitfalls. If you found this information helpful, please like, share, and subscribe for more insights. I’m John McCord with Cardinal Point Wealth Management. Thanks for watching.