How to Move to the U.S. From Canada: Your Guide to a Successful Transition

Whether you’re moving south of the border for work, family, school, retirement or simply a change in lifestyle, moving to the U.S. from Canada is not a small event. While Canada and the U.S. share a border, a language and a love of sports, there are several differences between the two countries — a fact that’s all the more amplified when you actually start living in the States.

How to move to the U.S. from Canada: 10 things to know and plan for

1. The tax implications of immigrating to the U.S. from Canada

While tax planning may not be the most interesting or exciting place to start when planning your move south of the border, it’s important to cover it off early as it takes some advance preparation if you want to a) be on the right side of the CRA (Canada Revenue Agency) and IRS (Internal Revenue Service), and b) minimize the taxes you are responsible for after your move.

When immigrating to the U.S. from Canada it’s a good idea to speak with a tax specialist to ensure you have your obligations taken care of for your specific situation. In the meantime, here are some general guidelines to be aware of:

• Resident status: When you leave Canada to settle in another country, you usually become a non-resident of Canada for income tax purposes. This “non-resident status” shapes your tax responsibilities and next steps. 

• Income tax: It’s likely you will still be required to file a Canadian tax return for the year that you leave Canada. As per the Government of Canada website, a Canadian tax return is necessary if you either owe tax or want to receive a refund because you paid too much tax in the tax year. 

  • You will need to report your world income (in Canadian dollars) for the part of the year you were considered a resident of Canada. World income includes income from all sources inside and outside of Canada. After leaving, you will only be taxed on your Canadian source income. Not all types of income qualify, so it’s best to review your tax obligations online or consult with a tax specialist. 

• Departure tax:  When you cease being a Canadian resident for tax purposes, the Canadian government can charge a departure tax (also known as a deemed disposition tax) on accrued gains on many of your assets.

  • Some assets are exempt from departure tax rules, such as real estate and registered accounts, including an RRSP, TFSA or RRIF.  In the case of these assets, you only need to pay Canadian tax when you actually sell them, receive distributions or exercise them.  On the other hand, real estate outside of Canada, shares of companies, and non-registered investments such as stocks and mutual funds are subject to departure tax. 

    (Note: Departure tax will not apply if you maintain Canadian tax residency while you are abroad).

It may be a good idea to meet with a tax advisor well ahead of your move so you can work together to consider your residency status in Canada and strategies to either reduce or defer your tax obligations. If you will cease Canadian residency, managing the departure tax is one area where it’s particularly important to start planning early so you and your advisor have enough time to put together a plan for your assets.

2. Determining what to do about your home

Depending on the reason for your move to the U.S., the decision to sell or keep your home in Canada might be an easy one. For example, if you won’t be returning to Canada any time in the near future, then selling your home likely makes good sense. But if you have a one- to two-year U.S. contract and plans to return, keeping your Canadian home may be a better long-term option.

As you may expect, each decision comes with its own set of tax consequences:

• Maintaining a home in Canada is a significant tie to Canada, so it may indicate to the government that you are still a Canadian resident. As such, you will be required to continue paying Canadian tax on your worldwide income. And if you’re physically living and working in the U.S. at the same time, you may also have a U.S. income tax obligation. The positive news is that the Canada — U.S. Tax Treaty may offer relief from having to pay taxes in both countries.

• By selling your home, you will sever a tie that may indicate to the government you no longer intend to be a resident of Canada. As a non-resident of Canada, you will be subject to tax in Canada only on income you earn from within Canada. 

  • If you’re thinking about keeping your home and renting it out while you’re gone, there are some tax implications potentially in both countries beyond the departure tax to consider. Once again, it’s important to talk to a financial advisor or tax professional about how this decision could affect your finances. Either way, it’s best to make your decision before you leave.

3. Finding a place to live

As you look ahead to your move to the U.S., one of your first decisions will be whether you want to buy or rent. Many Canadians choose to rent first to get a feel for their new city before buying.

Others decide to buy right away. 

The great news is that it’s not difficult to purchase a home as a Canadian in the U.S. once you’re ready. In fact, financing is an effective way to buy a U.S. home as it enables you to reduce the one-time, upfront impact of foreign exchange costs – when you finance a home, you can choose to convert just 20% of the down payment, plus closing costs. When you finance a home in the U.S., you also have the option of making penalty-free lump sum payments at any time – there are no pre-payment restrictions south of the border, which offers you some flexibility.

Finding a U.S. bank that works with Canadians — and uses your Canadian credit history — is key to financing your property.

4. Getting your paperwork together

Getting the ball rolling on your move means organizing all the necessary documentation the U.S. government needs to let you in. Since you’ll require a particular type of visa depending on the purpose of your move, be sure to review your individual visa requirements with the U.S. Department of State.

In general, you will need to have:

• Passports for all family members

• Your approved visa

• Copy of your I94 document (U.S. customs officials will provide this form when you cross the border)

• Completed HS7 form for every vehicle you’re importing

5. Setting up your banking and credit

Since you may only be able to pay your U.S. bills in U.S. dollars, one of the first things you’ll need to set up is a U.S. bank account — even before you leave Canada. As you set up your U.S. banking, there are a few key things to look for. The ability to easily transfer money to and from Canada online, the costs and speed associated with moving money and ATM access are critical factors to consider. If you’re still planning to have Canadian income, savings or investments, a cross-border bank that caters to U.S. banking for Canadians will simplify the money side of your U.S. stay.

While you’re setting up your U.S. bank account, it’s a smart idea to get a U.S.-based credit card as well. That way, you can avoid foreign transaction fees when paying for U.S. purchases. A U.S. credit card will also help you build a credit rating, which will be important if you’re planning to stay in the U.S. for a while. Look for a U.S. credit card that comes with travel benefits such as travel accidents, trip cancellations, auto rental insurance and rewards.

6. Organizing your investments

Your Canadian investments have likely formed the foundation of your financial plan so far. So, while you’re leaving Canada behind (at least for a while), you want to keep your Canadian investments working hard for you.

Dealing with your investments prior to your move from Canada to the U.S. may get a little complicated. When you’ve made the decision to move, it’s wise to meet with an advisor who is licensed to work with both Canadian and U.S. residents. What to do With Canadian Investments When Moving to the U.S. offers additional information into how to handle specific types of investments, what you can keep, what you can keep contributing to, and how to grow your total net worth.

What’s more, a cross-border advisor who can work in both Canadian and U.S. currencies may help you to take advantage of favourable exchange rates and build up your portfolio in the currency of your choice.

7. Preparing for your physical move

While much of your planning efforts involve the financial side of things, you can’t overlook the move itself. You want it to be as smooth as possible! To achieve this, you’ll want your mover to have everything they need to get your possessions across the border. If all your documents are in order, you don’t need to travel in the same vehicle as your mover and your stuff. This means they need to be equipped with all the necessary directions and paperwork before you pull out of your Canadian driveway. Such documents include:

• A completed 3299 customs form. This is the Declaration For Free Entry of Unaccompanied Articles

• Your work or study visa and letter of offer of employment (if applicable)

• Your valid passport

• Your I-94 document (stamped when you cross the border)

Keep in mind that you need to arrive in the U.S. before your possessions do and be reachable in case there are questions at the border.

8. Finding health insurance

U.S. healthcare is generally either provided by your employer, purchased privately or obtained through government programs such as Medicare (for retirees) or Medicaid (for those with low income).

If you’re under 65 and have secured U.S. employment, signing up for group coverage through work is generally the most efficient route to having U.S. healthcare. If you don’t have access to an employer plan, you can buy private individual coverage through the Health Insurance Marketplace.

If you’re a first-time visa holder, it’s important to buy a visitor health insurance plan before leaving Canada in case you need medical treatment before your U.S. health plan takes effect.

9. Signing your kids up for school

If you have kids, the neighbourhood you choose will likely be based on its proximity to good schools. Greatschools.org reviews schools in areas across the U.S. and shares data about the diversity of a school, teacher experience and student-to-teacher ratios. Once you’ve selected a neighbourhood and a school, be sure to find out how to enrol your child.

Generally, you’ll need to provide:

• Proof of residency

• Proof of your child’s birthday

• Your child’s immunization records

• A record of your child’s most recent medical exam

• Your photo ID (i.e., your driver’s licence or passport)

10. Bringing along your pets

Your pets are part of your family! As they join you on your cross-border move, you’ll want to ensure their paperwork is in order, too. Here’s what is required.

Dogs:

Canada is considered a dog-rabies-free or low-risk country, and as such, there are minimal requirements for bringing your dog across the border. If you’re bringing your dog from Canada to the U.S., you will need to complete the CDC Dog Import Form and have a printed or online receipt to show U.S. customs officials. The receipt is valid for six months and each dog requires their own form.  Other requirements include: 

• Dogs must appear healthy upon arrival

• Dogs must be at least six months old at the time of entry to the U.S.

• Dogs must have a microchip that can be detected with a universal scanner to identify them

Cats and other pets:

There are no specific animal health requirements related to bringing a pet cat into the United States. The CDC however, requires cats appear healthy upon arrival. They may be subject to inspection at ports of entry and might be denied entry into the U.S. if they show evidence of a disease transmitable to humans (i.e., rabies). 

While cats are not required to have proof of rabies vaccination before entering into the United States, it might be a good idea to vaccinate your cat — in fact, some U.S. destinations may require vaccinations, among other requirements.

For most other pets, the CDC does not require you bring along health certificates. However, some states and some airlines do. Before your move, be sure to check state regulations.

Moving to the U.S. takes advance planning and preparation. Getting a head start on your research, paperwork and logistics can help ensure a smooth transition to life across the border. 

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