Cross-Border Move Tax Checklist (Canada ↔ U.S.)

A move across the Canada–U.S. border changes which country taxes your worldwide income and exposes your accounts to a second set of rules. The clean planning window closes the day your residency shifts, so most of the work belongs before the move. This checklist is organised by phase — what to do well ahead, in the months before departure, and in the filing year. It assumes a move from Canada to the U.S.; the same structure flips for the reverse direction.

12–24 months before the move

Early planning is where the real savings live. Decisions made this far out preserve options that disappear once residency changes.

• Confirm the move and a target residency-cessation date — residency is fact-driven (home, spouse, dependants, secondary ties), not a bright-line day count.
• Run a preliminary departure-tax estimate. Under section 128.1 of the Income Tax Act, ceasing Canadian residency triggers a deemed disposition of most property at fair market value.
• Catalogue every asset and classify it as caught by, or excluded from, the deemed disposition.
• Engage advisors on both sides of the border — Canadian departure planning and U.S. inbound planning are different analyses that must align.
• Identify property to sell, hold, or restructure before the residency date.

Confirming when Canadian residency actually ends

The date residency ceases drives the entire timeline — it fixes the departure-tax valuation and the line between Canadian-resident and non-resident filing. Residency is a question of fact, not a single form, so document it carefully.

• Identify the date you sever significant residential ties — home, spouse, and dependants leaving Canada.
• Address secondary ties — driver's licence, provincial health coverage, vehicles, professional memberships, and social ties — around the same time.
• Where the move is to the U.S. (a treaty country), apply the Canada–U.S. treaty tie-breaker in Article IV: permanent home, then centre of vital interests, then habitual abode, then citizenship.
• Keep contemporaneous evidence of the shift — lease or sale documents, new U.S. ties, and dated correspondence — since the timing affects how much tax is owed.
• Coordinate the cessation date with the actions below; moving it by a few weeks can change which year a gain or a deferral election lands in.

Departure tax: what is caught and what is not

Knowing which assets trigger the deemed disposition tells you where the planning effort goes.

• Generally caught: public-corporation shares, most private-corporation shares, mutual fund and ETF units, foreign real estate, most intangibles, and cryptocurrency.
• Generally excluded: Canadian real property, Canadian business property used through a Canadian permanent establishment, and registered plans (RRSP, RRIF, RPP, DPSP).
• Form T1161 — a statutory list of property held at departure is required where the total fair market value of listed property exceeds $25,000.
• Form T1244 — lets you elect to defer payment of the departure tax by posting acceptable security, with the tax payable when the property is actually sold.

Account cleanup before residency changes

Several Canadian account types that are efficient at home become problems once you are a U.S. tax resident. Address them before the move.

• TFSA. The U.S. does not recognise the TFSA as tax-sheltered; its growth is U.S.-taxable and it can carry foreign-trust reporting (Forms 3520 / 3520-A). For many long-term movers, withdrawing the TFSA before departure is the cleaner path — the growth was already Canadian-tax-free.
• RESP. Similarly unsheltered from the U.S. perspective and often treated as a foreign trust. Review whether to wind it down or restructure before the move.
• Canadian mutual funds and ETFs (PFICs). Most pooled Canadian funds are passive foreign investment companies under U.S. rules, subject to punitive default treatment. Liquidating before becoming a U.S. resident and reinvesting in U.S.-domiciled equivalents avoids the trap.
• RRSP / RRIF. Do not close these. The Canada–U.S. treaty (Article XVIII) defers U.S. tax on the growth until withdrawal; lump-sum withdrawal before departure creates full-rate Canadian tax without U.S. mitigation. Plan the timing of any conversion or withdrawal rather than acting in haste.
• Closely held Canadian corporation. It can become a controlled foreign corporation the moment you become a U.S. resident, bringing Subpart F, GILTI, and Form 5471 obligations. Restructuring, a sale, or liquidating passive investments before the move can reduce the exposure.
• Lifetime Capital Gains Exemption. The LCGE on qualifying small-business shares is available only while you are a Canadian resident. If a sale or crystallisation is contemplated, doing it before departure preserves access.

U.S. estate-tax exposure

This is easy to overlook and expensive to ignore.

• U.S.-situs assets — U.S. real estate, tangible personal property in the U.S., and U.S. stock held directly — can attract U.S. estate tax regardless of your residency.
• The Canada–U.S. treaty (Article XXIX-B) provides a prorated unified credit that often, but not always, eliminates the tax for moderate estates.
• Review ownership structures for U.S. real estate before they grow, and coordinate with U.S. counsel where exposure is material. See U.S. estate tax for Canadians.

Filing obligations after the move

Once residency shifts, both countries' reporting machinery engages for the transition year and beyond.

• Canada (departure year): file a part-year T1 reporting Canadian-source income after the cessation date, file T1161, and file any T1244 deferral election.
• U.S. (first resident year): file your first U.S. return as a resident, with the treaty election for RRSP/RRIF deferral where applicable.
• U.S. ongoing foreign reporting: FBAR (FinCEN 114) for foreign accounts over US$10,000 aggregate, Form 8938 for specified foreign financial assets, Form 8621 for any remaining PFICs, Form 5471 for foreign corporations, and Form 3520 / 3520-A for foreign trusts.
• State residency: federal residency is one question; state residency is another. Some states (California, New York) audit residency claims aggressively, while several states levy no income tax at all.

State tax — the second U.S. layer

Federal U.S. residency is only half the picture. Each state sets its own rules, and the difference between them can be large.

• Several states levy no state income tax — including Florida, Texas, Nevada, Tennessee, Wyoming, South Dakota, Washington, and Alaska — which can materially affect where a move makes sense.
• Others (California, New York, New Jersey) apply aggressive residency rules and audit residency claims looking for continued state-level connection.
• If you keep ties to a high-tax state — a home, a driver's licence, registrations — be prepared to document where your residency genuinely sits.
• Factor state tax into the overall plan early; it can change the calculus on timing and on where to establish U.S. ties.

Returning to Canada later

If a return to Canada is possible down the road, a few points are worth keeping in view from the outset.

• Becoming a Canadian resident again brings a deemed acquisition of most property at fair market value — a cost-base reset that shelters pre-arrival growth from later Canadian tax.
• Where you continuously held property assessed under departure tax, the returning-resident rule can let you unwind that earlier departure tax.
• Round-trip moves reward planning: selling departure-assessed property while abroad can forfeit the unwind, so think carefully before disposing of it.

A rough pre-departure timeline

1. 6–12 months before: liquidate or restructure PFICs and TFSAs, restructure the corporation where beneficial, and crystallise the Lifetime Capital Gains Exemption on qualifying shares while still a Canadian resident.
2. 3–6 months before: sever Canadian residential ties at the right time, file the T1244 deferral election where applicable, and establish U.S. ties.
3. Year of departure: file the Canadian part-year T1, T1161, deferral elections, and the first U.S. resident return.
4. Post-departure: maintain compliance on both sides and plan future dispositions with both regimes in mind.

For more detail, see our guides on how departure tax catches your net worth and year-one planning when becoming a U.S. resident, plus the departure tax planning and pre-immigration planning service overviews.

This checklist is general information, not legal advice. Tax rules change and every situation is different — confirm how these items apply to your circumstances with a qualified advisor before acting.