Moving from the United States to Canada as an American

Video Script

When you’re moving from the USA to Canada, there are so many things to take care of that financial planning can end up last on the list.

But nobody wants a hefty tax hit the first year they’re living in a new country.

To prevent that from happening, you need to avoid the most common cross-border pitfalls and put together the right cross-border team.

In this video, I’m going to go over the top 3 questions every American or Green Card Holder should answer before moving to Canada to avoid expensive mistakes.

I’m Tiffany Woodfield, a cross-border advisor, associate portfolio manager, and the co-founder of SWAN Wealth Management.

As a cross-border financial advisor, I’m constantly speaking with Americans and Green Card holders who are planning a move to Canada.

Over the years, I’ve noticed that the same mistakes come up over and over again.

So, let’s get into it!

You need to answer these three questions:

1. Who will be your cross-border quarterback?

2. Who will help you with tax planning now and as you prepare for retirement?

3. Who will manage your investments after you cross the border?

I often tell clients they need a quarterback to coordinate their cross-border financial picture. They need someone who can provide an overview of their situation and knows when to bring in other specialists.

We’ve had many clients come to us after things have already gone sideways. And I’ve seen that the most significant mistakes happen when someone has a disjointed team and only gets advice in one area of their finances.

When things go wrong with your cross-border finances, it can be costly and time-consuming to get the proper guidance and fix the situation. Unlike a bad haircut, you can’t just let it grow out. To be onside with the IRS and the CRA, you need to fix any problems that come up.

At SWAN, we’re cross-border specialists. We are dual-licensed portfolio managers and retirement planning specialists. We have a CFP, CRPC, and TEP on our team. We have analysts and a cross-border accountant who can help create a plan for you. We also work with a network of cross-border lawyers and other cross-border accountants.

We refer our clients to the right people so they have a team working for them.

It’s essential to have a cohesive team that works together so you can feel confident that all the various parts are being taken care of correctly. Tax planning is an important part of your cross-border financial planning. It can get complicated with non-registered investment accounts if you don’t plan properly.

When you become a Canadian tax resident, your taxable investment accounts will need to be reported in two countries with two different currencies.

You’ll also need to track the cost base of your investments so that when you sell them, you don’t underpay or overpay taxes on capital gains or losses.

In addition, you need advice for your registered investment accounts. For example, it’s rarely tax-neutral to roll over an IRA to an RRSP.

In addition, when it comes time to make withdrawals from your Social Security and CPP, you need to time the withdrawals to minimize tax.

The solution is to speak to a cross-border team ahead of your move. A dual-licensed advisory team can manage your US and Canadian investments, no matter which side of the border you live on.

Over the past few years, many US banks and advisory firms have stopped providing service to Americans living abroad. This is partially due to increased compliance requirements under FATCA - the Foreign Account Tax Compliance Act.

But what does this mean for you?

After moving to Canada, you may get a letter from your brokerage firm advising that you have 30 to 60 days to move your retirement accounts, or they’ll liquidate them.

If they do liquidate your accounts, this will cause a major taxable event.

The solution is to start working with a cross-border advisor before you move. You need a plan in place so you don’t panic and make the wrong move. When you work with an advisory team licensed in Canada and the US, your life will be simpler.

At SWAN, we can manage an IRA, Roth IRA, or RRSP, whether you live in Canada or the US. We create your financial plan considering assets and pensions on both sides of the border. And we customize your investment portfolio based on your goals, risk tolerance, and residency.