Moving To The US From Canada: Top 10 Things To Consider
If you are planning on moving to USA from Canada you’ll need to consider multiple factors to help prepare you for the switch. Of course, traveling south of the border may look pretty appealing if you’re a Canadian citizen; especially since you’ll find individuals that share the same language and a similar culture. However, trading your Canadian lifestyle for an American one is not easy. We’ve created this brief guide to help give you more insight on the process, because it pays off to be as informed as possible on this subject. By understanding the requirements beforehand, you’ll have a much easier time settling over the border.
TOP 10 THINGS TO CONSIDER WHEN MOVING FROM CANADA TO THE US
#1 Understanding Departure Taxes
Before you take off from your current Canadian residence and moving to the United States, you should be aware of the tax implications. In virtually any case, the Canadian federal government taxes you if plan on leaving the country for an indefinite period. This tax is referred to as “departure tax” and it involves your capital gains or return on assets. Think of a departure tax as a fee paid to exit the country that comes into play when you’re no longer a Canadian resident. Although some amount must certainly be paid, regardless if you choose to sell/hold your investment portfolio, the taxed amount is not black and white.
Managing Departure Tax
Some of your investments are exempt from departure tax, such as exercisable Canadian assets that are held within a registered account (like an RRSP or RRIF). You may also be exempt from departure tax if you plan on keeping your Canadian residency (to pay Canadian federal taxes) while south of the border. Please note that this is a fairly complex topic, and ideally you should consult with tax advisors to discover your optimal tax duties.
#2 Dealing With Your Canadian Home
Keeping versus selling your home is entirely dependent on your personal needs. If you’re planning on going to the states for only a few years (such as a work term) then selling your home is probably not the best option. On the other hand, if you can’t see yourself returning to Canada in the distant future then selling it off would make more financial sense. In any case, you should consider the tax implications of this issue:
Home Tax Implications: To Keep Or To Sell
If your goal is to keep your Canadian home while you’re south of the border, know that this can easily be viewed as maintaining Canadian residency. In other words, you’ll still need to pay taxes on any income (domestic or abroad) to the Canadian government. The Canadian federal tax rate paired with any American tax obligations can result in a sizeable chunk of your earnings lost to taxation. You might find some relief from the Canada-US Tax Treaty Act, but in most cases being taxed twice is a heavy matter. By making the decision to sell your home instead you’ll likely be losing your Canadian permanent residency in the process, with the trade-off being a lower tax burden. Much like your departure tax situation, it’s a good idea to consult with a tax expert prior to leaving the country.
#3 Choosing Where To Live
Since you’re already likely to move south of the border, you should take the time to plan out where and how you’d like to occupy a residence. In the majority of cases, renting when you first move to the US from Canada might be the more suitable option. When you rent you’re not fully committed to the first city you visit – you will be able to scope out the area to see if you like the feel of it. Alternatively, if you have a solid idea of where you’re going to be living in the US (maybe due to past visits or having family nearby) you can opt to purchase a home right away. When you’re financing an American residence, try to deal with a realtor that has some experience with Canadian clients. It would also help to find a bank which specializes in cross-border mortgages so they can guide you through the process efficiently.
#4 Taking Care Of The Kids
One of the key driving factors when deciding on a permanent residence is an area’s educational reputation. Assuming you are a parent, living in a zone that is close to quality schools is probably one of the biggest concerns you have for your children. A few things you might want to also want to consider in terms of education quality: a good degree of ethnic diversity, class sizes, and teacher’s effectiveness track record.
#5 Handling the Documentation
Although it’s never fun to do paperwork, you need to provide a significant amount of personal information if you want to move to another country. When moving to the US from Canada, you should acquire specific visa approval; your visa conditions will depend on your purpose for moving, each one has its own requirements. As a rule of thumb, you should be prepared to provide family passports, some sort of visa, a “194 document” which relates to customs, and relevant “HS7 documents” which describe any cars that you plan on bringing in to the US.
#6 Finding Banks And Getting Credit
As soon as you’re able to, try to open up an American chequing account upon arrival. Some financial institutions in Canada will even offer you cross-border US dollar accounts that you can sign up for prior to departure. This is a very important step when making the switch because you may need to make necessary payments in US dollars. Whether or not you choose to maintain your Canadian banking services while in the US (for the purpose of money transferring), it’s widely regarded as a good idea to register for a US credit card. The advantages of a US credit card include: avoiding foreign exchange dues on purchases, building American credit history, and US-based credit card rewards like travel and cash back.
#7 Reorganizing Investments
The best advice we can give you on this matter is to consult with a certified investment advisor who has experience working with Americans and Canadians alike. Truthfully, handling your investments properly is a complicated issue, and you would need a professional to guide you through both registered/non-registered asset allocations. In an ideal world, you can hire an expert to help you pay a lower tax rate on your investments during the transition.
#8 Being Properly Insured
Since you’ll no longer be covered by your provincial health plan in Canada, we highly recommend that you shop for healthcare policies in your area. Although healthcare in the United States is tied to insurance premiums, it’s worth paying to be covered in a medical situation. If you really want to take extra precautions, you can purchase Canadian travel insurance before you leave – that way, you won’t have to wait for your US health insurance application to be approved before you can be covered.
#9 Packing Pets
If you’re planning to bring along your family pet you’ll need to acquire proof of good health from a veterinarian (this generally applies to dogs/cats). Animal health documentation typically states whether or not the pet is up to date on vaccinations and necessary treatments.
#10 Doing The Research
While this article should serve as a guideline, don’t view it as a complete summary. It’s strongly suggested that you supplement your research from as many sources as possible in order to stay properly informed. Moving to USA from Canada is a complicated topic that has so many factors to take account of.
FINAL THOUGHTS: IS IT WORTH MOVING TO USA FROM CANADA?
At the end of the day it really just depends on your personal preference. If you see more beneficial opportunities south of the border, you shouldn’t rule out living there instead for a change. Of course the process can be a bit daunting, so we strongly recommend taking the time to review your moving plan and working things out. That way, when you finally get to the border you’ll be relatively free of worry.
If you’re seeking to visit the United States temporarily before jumping into a huge lifestyle commitment, check out our guide to snowbird travel insurance so you can stay protected during your trip!