Financial Planning as a US Citizen Living in Canada

Did you know that the United States is one of only two countries in the world that requires citizens to file tax returns on their worldwide income even if they don’t live there anymore? 

Yes, Canada and the US have a tax treaty (for now, I guess?) that protects people who file taxes in both countries from paying twice, among other things, but each and every year Canadians with US citizenship have to file a return in both countries.

They also have to submit a report detailing every bank account they own, who it's joint with, and the highest balance it got up to over the year, for every year that their combined balance across every account was more than $10,000 USD. 

These folks can open Registered Retirement Savings Plans without too much trouble, although they have to take a few extra steps to keep the IRS happy about it.

Tax Free Savings accounts and Registered Education Savings Plans are trickier, so much so that lots of cross-border financial planners advise their clients not to bother with them at all. 

US citizens who have lived most of their lives in Canada will have the IRS interested in their estate when they die, which can be a huge headache for whoever’s administering their estate. If they owned a principal residence at the time of their death, the Canada Revenue Agency doesn’t tax the capital gain, but the Internal Revenue Service does if it’s grown by more than $250,000 (US) since it was purchased. 

There are plenty more tricky little rules like these, and they change often enough to be difficult to stay on top of, if you ever get on top of them in the first place. I’m not on top of them and never will be, which is why I specifically ask if people are US citizens before agreeing to an Introductory Call, and refer them to colleagues who have demonstrated over and over again that this kind of planning is their thing.

If you’re a US citizen, please for the love of all that’s holy find and work with a financial planner who knows cross-border planning in and out. You don’t want them learning on the job if you’re the job they’re learning on; the consequences of getting it wrong are too high.