Before You Move to the States
The two items you absolutely “must have” before you move to the States is adequate health care coverage and a legal means of residing in the US (a valid visa). Without both of these in place, do not even consider a US move.
Your provincial coverage will be of little or no use to you when you move to the States. You absolutely must have some form of US medical insurance to cover yourself in the event of illness or injury in the US . This coverage is best secured BEFORE you make the transition to the US in the event you, or someone in your family has a “pre-existing” condition and may not be insurable.
Before you move to the States, you must have a legal means (valid visa) of entering and remaining in the US . Working in the US requires the appropriate authorization as well. Because many Canadians come to the US on a “visitors visa” (good for six months), they mistakenly believe that they can enter and work in the US. A visitors visa is not physically issued when you cross the border, leaving some to believe they can stay or work as long as they want. In fact, if you are caught working in the US without a valid work visa, you will be considered an illegal immigrant and could face deportation and lifetime banishment from the US . Scrutiny in this area has increased significantly since 9/11. You can review possible visa options on our Immigration page.
Once you have these two essentials in place, the following must also be considered before moving to the States:
There is much work to be done to minimize these taxes before you move to the States . If you choose not to do it, you can face compliance issues and unnecessary taxes that can be punishing. The Canada/US Tax Treaty is your protection from double (and triple) taxation in both countries. A thorough understanding of it and its application to your situation is the key to not overpaying your taxes. US Tax.
An analogy may help. Imagine you are the owner of a dinner theatre and the Internal Revenue Service (IRS) is sitting in the audience. You have one chance to “set the stage” before the curtains open and the IRS has full view of your “financial stage.” As soon as you move to the States, your entire worldwide income is taxable by the IRS, opening your “financial stage” for the IRS to see. At that point, you can no longer get your “stage” set for their viewing. As a side note, US citizens, derivative citizens and Green Card holders living in Canada must file US income tax returns annually!
Social Security Number or Individual Tax Identification Number
In order to work or live in the US , everyone in your family must have a SSN (for those working) or an ITIN. The SSN will be required by your employer and is required to file a tax return. The ITIN is required for those who are not eligible to work in the US and allows you to reduce your taxes by claiming your spouse and children as dependents.
Despite many thoughts to the contrary, many people just stop filing Canadian tax returns when they move to the States. In fact, there are final filing requirements with the Canadian Revenue Agency (CRA) that could increase your tax bill significantly due to the “deemed disposition” tax when you leave Canada. In addition, if you don’t get your financial house in order prior to, and after your move, the CRA could come back and “deem” you a resident of Canada, leaving you in the unfortunate situation where you would be taxed in both the US and Canada! We can assist you in ensuring you have demonstrated appropriately to CRA that you are no longer a resident of Canada.
The bottom line is…if you haven’t done the prerequisite planning before you move to the States, many planning opportunities may be lost forever and you will find yourself in a situation where you have to pay many financial professionals on both sides of the border to get yourself back into compliance with both taxing authorities.
Simplify Your Life – This is probably one of the most neglected areas we have seen in dealing with Canadians making the transition to the US . Before you move to the States, take the opportunity to consolidate all of your investment accounts, RRSP/RRIF accounts and reduce yourself down to only one checking account and one savings account. You should also sell your home, liquidate as many of your personal assets as possible including your automobiles. Once you are in the US, the management your financial affairs in Canada will be greatly simplified (i.e. one call to a broker to manage all of your accounts, one checking account to deal with). If you are a small business owner, it is typically best to sell or wind-up your entity before you move to the States . If that is not possible, try to set-up your affairs so that you are not required to manage the day-to-day operations of the entity. Having control of a foreign corporation can lead to very punitive tax consequences.