Canada departure tax when you move to Seattle
When you leave Canada, the CRA treats you as having sold most of what you own at fair market value on your departure date.
You pay the departure tax Canada charges on that gain with your final return, even if you sold nothing.
- What it applies to.
- Shares, funds and other capital property. The CRA excludes Canadian real estate, RRSPs, TFSAs and pensions.
- Forms.
- You report the gain on Form T1243, and list your property on Form T1161 when your reportable property totaled more than $25,000 in fair market value.
- Deferral.
- You can defer the tax on Form T1244 by April 30 of the year after you leave, then pay it without interest when you sell. The CRA asks for security when the deferred federal tax is more than $16,500.
You supply the value of each holding on your departure date.
Tax returns in the year you move from Canada to the US
In the year you move, Canada and the US each apply their own residency rules to decide when they tax your worldwide income.
Canada. If you become a nonresident, you report world income up to your departure date on your final T1, plus the departure tax.
Your departure date. The CRA usually sets it as the latest of the day you leave, the day your spouse or partner and dependents leave and the day you become a US resident.
Ties you keep in Canada. If you keep a home or a spouse in Canada, the CRA can treat you as still resident. If the IRS also treats you as resident, the CRA applies the tie-breaker test in the Canada US treaty, starting with where you have a permanent home. You can end up resident in either country.
United States. The IRS applies its residency tests to decide whether you file as a nonresident, a resident or a dual status taxpayer. You file a dual status return for a year spent partly as each.
TN visa taxes. The IRS does not exempt TN professionals from the substantial presence test, the day count it uses to decide whether you are a US tax resident.
A cross border tax accountant Seattle clients use files both returns from the same move date.
Canadian citizen living in US taxes: what you file each year
Once you are a US resident, you report worldwide income on Form 1040, Canadian income included.
FBAR.
You file one when your accounts outside the US were worth more than $10,000 combined at any time in the year.
Form 8938.
You file it when you hold foreign financial assets above $50,000 at year end or $75,000 at any time. Joint filers use thresholds of $100,000 and $150,000.
RRSP and RRIF.
The IRS gives automatic deferral on RRSP and RRIF growth under Rev. Proc. 2014-55 to eligible taxpayers, who must file every required US return and report each withdrawal. The IRS then taxes each withdrawal, less any part it has already taxed.
RRSP and RRIF withdrawals.
Your plan issuer withholds 25% for the CRA on RRSP withdrawals and on RRIF payments above a yearly ceiling. Under the Canada US treaty, it withholds 15% on RRIF payments within the ceiling. We work out the US tax on the same withdrawal and whether to take it before or after the move.
TFSA.
The IRS taxes the income each year on your 1040. We check whether you must file Forms 3520 and 3520-A for your TFSA as a foreign trust, and file Form 8621 for each Canadian fund inside it above the IRS filing threshold.
CPP and OAS.
The IRS taxes these benefits as US social security under the Canada US treaty.
If you missed earlier filings through non-willful conduct and meet the other IRS conditions, we handle the catch up through our Streamlined Domestic Offshore Procedures service.
Canadian property you still own after moving to the US
As a nonresident of Canada, you owe the CRA tax on Canadian rent, and on any taxable gain when you sell Canadian property.
Rent. Your tenant or agent withholds 25% of the gross rent for the CRA.
NR6 and section 216. With an approved NR6, your agent withholds on net rent, and you file a section 216 return by June 30 of the next year.
Selling. You notify the CRA on Form T2062 within 10 days of the sale.
No certificate of compliance. The buyer is liable for 25% of the purchase price, or 50% on depreciable property such as a rental building.
The IRS taxes the same rent and gain, so we claim the Canadian tax as a foreign tax credit on your 1040.
Departure tax estimate before you leave Canada
Send a list of what you hold and its value. We price the departure tax so you can decide what to sell or defer.
Ask for a departure tax estimateCross border tax accountant pricing factors
We quote a fixed fee once we know your move date and what you earn and own in each country.
You approve the quote before we start.
Your move year. A departure tax calculation and a dual status US return.
Canadian property. Each rental, and any sale that needs a T2062.
Accounts and plans. The accounts on your FBAR and Form 8938, plus RRSP, TFSA and pension income.
Equity and business income. RSUs, stock options or self employment on either side of the border.
- Filings prepared
- 500+
- filings prepared
- Average response time
- < 24h
- average response time
“Extremely nice staff. Very helpful and spent as much time as I needed to understand both the process and options.”
Other Maris & Associates CPAs tax services
Individual tax preparation in Washington.
Streamlined Domestic Offshore Procedures for missed filings.
Tax services in Everett, WA and IRS notices.
Pick the service that matches the return or IRS notice you have.
Book a Canada US tax consultation
You can book before you receive your slips. We start with your move date.
Book a Canada US tax consultationYou speak with a senior member of our tax team, in confidence.