Blog post

If you’re planning a move from the US to Canada, there’s a window of opportunity that most people don’t know about — and once you’ve crossed the border and become a Canadian tax resident, it closes permanently. We’ve been doing a lot of planning lately for clients in exactly this situation, and I wanted to share two specific strategies we’ve been implementing that can save you a significant amount of tax over your lifetime.

These aren’t complicated concepts, but the timing is everything. Let’s get into it.

Strategy #1: Equalize Your Investment Accounts Before You Leave

This one comes up constantly with couples moving from the US to Canada, and it’s something we implemented for clients just a few months ago.

Here’s the situation: in the US, you file jointly. So when you have a taxable investment account in your name and your spouse has one in theirs, it doesn’t really matter which account is bigger — all that income flows onto a single joint 1040, the dividends and capital gains get split, and your combined tax liability is what it is.

The moment you move to Canada, that all changes.

Canada doesn’t have joint filing. You and your spouse each file your own return, and you’re each taxable only on your own accounts. So if one spouse has a significantly larger investment account than the other, that spouse is going to have much higher investment income on their Canadian return — and all those lower tax brackets on the other spouse’s return are just sitting there unused. You’re essentially leaving money on the table every single year.

The fix is straightforward: equalize the accounts before you move. In the US, there’s an unlimited spousal gifting exemption, which means you can transfer assets between spouses without triggering any tax. So if one of you has a $2M taxable account and the other has $200K, you can rebalance those before you leave so you’re starting from roughly equal footing in Canada.

Why does this have to happen before the move? Because once you’re Canadian tax residents, Canada’s attribution rules kick in. If you transfer investment assets to your spouse after becoming a resident, the income earned on those transferred assets gets attributed back to you — the transferor. The whole point of the exercise is defeated. The window to act is while you’re still US residents, where there are no such restrictions.

This is exactly what we did for a couple earlier this year. She had a large taxable account, he had a smaller one. Before they crossed the border, we equalized the balances. Now in Canada, that investment income is split between two returns, both spouses are using their brackets efficiently, and the annual tax savings are meaningful year over year.

Strategy #2: Convert Your IRA to a Roth Before You Become a Canadian Resident

This one I just talked through with a client this morning and it’s a great example of the kind of planning that can make a massive difference — especially if you happen to have a low-income year before your move.

I was speaking with a woman relocating from California to Canada at the end of May. She stopped working in February, so her 2026 income is going to be quite low. And she’s coming up with a fairly large IRA.

When we started talking through the planning, the opportunity became obvious. She’s in a low-income year, she’s not yet a Canadian resident, and she has an IRA that — if left alone — is going to generate substantial Required Minimum Distributions (RMDs) in retirement. Based on the size of the account, we’re talking somewhere in the range of $250,000 to $300,000 a year in RMDs. And in Canada, where tax rates tend to be higher than the US, those distributions would be fully taxable on both sides.

The strategy: pull some of that money out of the traditional IRA and convert it into a Roth IRA before she becomes a Canadian tax resident. Yes, she’ll pay US tax on the conversion now — but at a much lower rate, because her income this year is minimal. And once that money is in the Roth and she becomes a Canadian resident, she’ll file the Roth IRA elections on the Canadian side to keep the account tax-free under the Canada-US Tax Treaty.

From that point forward, the money in the Roth grows tax-free, and when it comes out in retirement, it’s tax-free for both Canadian and US purposes. Those future distributions that would have been taxed at the top marginal rate in Canada? Now they come out at zero.

The savings on this kind of planning can be enormous. The exact number depends on how much we can push into the Roth and what her income looks like during retirement, but even converting a fraction of a large IRA at a low marginal rate now versus paying top rates on $300K a year in RMDs for decades — the math is compelling.

The key condition here is the low-income year. If you’re earning $400K right now and you convert $200K of IRA, you’re just adding to an already high tax bill and the math gets murkier. But if you’re between jobs, transitioning to a new role in Canada, taking time off, or retiring before you move — that’s your window. Use it.

The Bigger Picture

Both of these strategies share the same underlying logic: there are tax advantages available to you as an American that disappear the moment you become a Canadian tax resident. Once you’re Canadian, the attribution rules restrict spousal income splitting, and Roth conversions become far less attractive because you no longer have the same US filing flexibility.

The window to act is in the months — ideally the year or two — before your move. That’s when the planning happens. That’s when we can execute strategies that are completely legal, above-board, and can save you tens or hundreds of thousands of dollars over the course of your time in Canada.

If you’re planning a move and you want to talk through what your pre-departure planning could look like, reach out to us at Beacon Hill Wealth Management. This is exactly what we do.