Blog post

Question

Hi Phil,

I hope this email finds you well. I came across your website while searching for advice on moving from the U.S. to Canada, and I really appreciate all the helpful content you’ve shared. I have a few questions about my specific situation and was hoping you might be able to guide me.

I’m originally from Canada but have been living in Texas with my American spouse for the past 15 years. We’re planning to move back to British Columbia next year, and I’m feeling a bit overwhelmed with everything we need to consider, especially when it comes to our finances.

Here’s a quick rundown of our situation:

1. We both have IRAs and 401(k)s in the U.S. (mine totals about $350,000, and my spouse’s is closer to $900,000). What are our options for managing or moving these accounts when we become Canadian tax residents?
2. We own a home in Texas valued at around $600,000. We’re debating whether to sell it or rent it out. How would either option affect our taxes in both countries?
3. We have a revocable trust in the U.S. with some investments inside it. I’ve heard that these can cause issues under Canadian tax rules. Is it better to dissolve the trust before we move?
4. My spouse will continue to work remotely for their U.S. employer for a year after we move. How do we handle income taxes in this case?

We’re also planning to consolidate our investments once we settle in Canada, but our current advisor says they can’t help us once we’re Canadian residents. I’d love to hear your thoughts on how to manage this transition smoothly.

Thanks so much for taking the time to read this. I’d be happy to schedule a call if that’s easier to discuss everything.

Looking forward to your advice!

Best regards,

XXXXXX

Answer

Hi XXXXXX

Thanks for the email.

I can give you some general thoughts on the above, however you’ll likely want to schedule a proper cross-border consultation with the team here.

1. You’ll want to have a firm that has both a Canadian and US investment license to help to ensure you can have everything under one roof (we have this). Before moving there could be some real efficiencies in converting some of the IRA/401k to a ROTH to save on future Canadian tax. You’ll also want to ensure proper beneficiaries are setup on the plans.
2. In most cases it makes sense to sell the primary residence before entering Canada. If you wait too long (often more than 2 years), you could lose your $500,000 principal residence exemption for US purposes.
3. Unless your US estate will be significant you’ll likely want to considering winding up the US trust. Once you become a Canadian tax resident the trust will be considered a Canadian trust and therefore subject to Canadian reporting.
4. It’s always best that the US employer put employees on Canadian payroll if they live and work in the US. This is not always possible for the company and she might need to remain on a W2. This could cause double tax issues
5. Yes, most US brokers will not be able to service Canadian residents. Hence the reason why working with a firm like Beacon Hill is advisable.

I hope the above has been helpful. As mentioned early setting up a proper consult with the team would likely result in further guidance.

Cheers

Phil