Visa holders · From Canada
Canada’s departure tax comes first when moving to the US from Canada: taxes fall on your gains as if you sold most assets.
Article XIII(7) of the US-Canada tax treaty lets you use the value Canada taxed as your US cost basis. The US then taxes only the growth after you leave. US tax on your RRSP waits until you make a withdrawal. A TFSA has no treaty protection, so the US taxes its income every year.
Updated · Sources
Leaving Canada for the US
- C$25,000
- is the most your property can be worth when you leave, not counting cash and registered plans, without filing Form T1161.
- 25%
- of an RRSP lump sum is withheld by Canada once you are no longer resident.
- $10,000
- is the most your foreign accounts, RRSP and TFSA included, can hold together at any point in the year without an FBAR.
Personal-use items worth under C$10,000 also stay out of the Form T1161 total. Figures marked C$ are in Canadian dollars.
When does your Canadian tax residency end?
Two dates matter: the day Canada stops treating you as a resident, and the day the US starts treating you as one. Canada’s own rules decide the first, and the US residency tests decide the second.
You cut your residential ties
Canada usually treats you as an emigrant once you leave to live in another country and cut your residential ties. The ties are a home, a spouse or dependants, personal property and social ties.
The latest of three dates
Canada looks at three dates: the day you leave, the day your spouse or dependants leave, and the day you become a US resident. You usually become a non-resident on the latest of them.
Ties you keep in Canada
Keeping ties in Canada can leave you a factual resident, still taxed on your worldwide income. If the treaty makes you a US resident, Canada may treat you as a deemed non-resident instead. Form NR73 asks the CRA for its opinion on your residency status.
Your first day as a US resident
With a green card, US residency normally begins on the first day you are in the US as a permanent resident. Under the substantial presence test, it usually begins on your first US day of the year you meet the test. Up to 10 days of short earlier visits can be left out of that date.
Your arrival year is usually dual-status for US tax: you are a nonresident before your US start date and a resident after it.
The treaty election keeps the US from taxing gain Canada already taxed.
Canada’s departure tax does not reach Canadian real estate, pension plans or registered plans (RRSPs, RRIFs, TFSAs, RESPs and RDSPs). If you lived in Canada 60 months or less of the last 10 years, property you owned on arrival or inherited later stays out too.
Canada’s gain on departure
$60,000
Canada treats the shares as sold at their $100,000 value when you leave.
US gain without the election
$80,000
The US measures from the $40,000 you paid, so it also taxes the $60,000 Canada taxed.
US gain with the election
$20,000
The election sets your US basis at the $100,000 value Canada used.
The example works in US dollars and ignores exchange-rate moves. Without the election, IRC 1012 keeps your US basis at the $40,000 cost. Tax on each gain depends on your rates in each country, which the example leaves out.
Which country taxes your RRSP, TFSA and other Canadian income once you move?
Canada keeps withholding tax on some Canadian income after you leave, and the treaty caps the rate it can charge.
| Canada | United States | |
|---|---|---|
| RRSP or RRIF withdrawals | Withheld at source The treaty caps a periodic pension payment at 15% | Taxed when withdrawn Growth is deferred until then |
| TFSA income | Tax-free No new contributions while non-resident | Taxed each year |
| Interest from a Canadian bank | Not taxed Since the 2007 protocol | Taxed |
| Dividends from Canadian shares | Up to 15% withheld | Taxed A foreign tax credit may offset Canada’s tax |
| CPP and OAS benefits | Not taxed | Taxed like US Social Security |
Tell your Canadian bank, broker and pension payers that you have left, so they switch you to non-resident withholding. Whether an RRSP or RRIF payment counts as periodic is for your Canadian accountant to confirm. The RRSP deferral is a federal rule. California does not apply this treaty, so it can tax the plan’s income each year.
Five things Canadians miss in their first years as US residents.
Form 8938 comes on top of the FBAR
Form 8938 goes with your return once your foreign assets pass $50,000 at year end or $75,000 during the year. On a joint return, both thresholds double. Your RRSP counts toward it, even while its growth is untaxed.
Canadian funds are usually PFICs
US tax law usually classes a Canadian mutual fund or ETF as a passive foreign investment company. In a TFSA or a taxable account, each fund generally needs its own Form 8621 every year. Small holdings can be exempt in a year with no gain and no excess distribution. Held in an RRSP or RRIF, they need no Form 8621.
The saving clause limits what the treaty does
Under the saving clause in Article XXIX(2), the US can tax its residents and citizens as though there were no treaty. The clause’s exceptions mean the basis election and the RRSP deferral still apply on your US return. The treaty’s article for students stops covering a Canadian student once they get a green card.
Canadian real estate usually keeps its old cost
Canada does not tax your Canadian real estate when you leave, unless you elect to on Form T2061A. Without that election, Article XIII(7) cannot reset its US basis. The US then measures any later gain from what you paid, and Canada can tax the sale too.
A posting that keeps you in the CPP
Under the US-Canada Social Security agreement, in force since August 1, 1984, an employer’s temporary posting can keep you in the Canada Pension Plan. It generally covers assignments expected to last 5 years or less, proved by a certificate of coverage. Without one, your US pay owes Social Security and Medicare.
We handle the US side of leaving Canada, starting with your arrival year.
We prepare your US returns after you leave Canada, and an accountant in Canada files your Canadian return.
- We prepare your federal and state returns for your arrival year, split at your residency start date, and each year after. We also apply the Article XIII(7) election on your US return for property Canada taxed when you left.
- We report each account you keep in Canada on your FBAR, and on Form 8938 once its thresholds are met. We file Form 8621 for each Canadian fund that needs one. The instant quote counts each account and fund.
- We figure the estimated payments due on your Canadian interest and dividends.
- We compare keeping your Canadian funds against selling them before your US residency starts.
- We credit the tax Canada withholds on your dividends and RRSP payments on Form 1116, within its limits.
- If a return we prepared draws an IRS or state notice, even one that questions your residency start date, we reply within your fee.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
Tax questions about moving from Canada.
What are the tax implications of moving to the US from Canada?
The biggest implications are Canada’s departure tax as you leave and US tax on your worldwide income once you arrive. Canada taxes your worldwide income until you become a non-resident, and only your Canadian-source income after that. On that day, the departure tax counts most of your property as sold for its fair market value. As a US resident, you list every Canadian account on the FBAR, RRSP and TFSA included, once your foreign accounts total more than $10,000.
Do I still have to pay US income taxes if I move to Canada?
Yes, if you are a US citizen or hold a green card. The US taxes its citizens wherever they live. A green card keeps you a resident alien until it is rescinded or abandoned, for example by filing Form I-407. Moving to Canada does not end it by itself. A green card holder may instead claim treaty residence in Canada on Form 8833 and be taxed as a nonresident. For a long-term resident, that claim can trigger the US exit tax. If only the substantial presence test made you a US resident, your residency usually ends on December 31 of the last year you meet it.
What is the 90% rule in Canada?
The 90% rule is Canada’s test for full federal non-refundable tax credits in the months after you leave. You pass only if Canadian-source income makes up at least 90% of your net world income for those months. If wages from a US job are most of your income after you leave, you usually fall below 90%. Your remaining credits for those months are then limited. The test also covers Americans moving to Canada, for the months before they arrive.
Is there an exit tax to move from Canada?
Yes: when you become a non-resident, Canada’s departure tax treats you as selling most of your property at fair market value. It does not reach RRSPs, TFSAs or pensions. It reaches Canadian real estate only if you elect to report it on Form T2061A. You can defer the tax, interest-free, on Form T1244. If the federal tax on the deemed sale is over C$16,500, you must post security with the CRA. On the US side, Article XIII(7) of the treaty lets that same value become your cost basis.
Does the US tax my TFSA?
Yes, once you are a US resident, because no treaty article covers a TFSA. The US taxes the account’s income every year, even though Canada still exempts it. While you are a non-resident of Canada, you cannot contribute, and your contribution room stops growing. The IRS has not said whether a TFSA is also a foreign trust. If it is, you may need to file Form 3520 for it.
Do I pay tax on a gift from my parents in Canada?
No, a gift is not income for US tax, so you owe no US tax on it. In Canada, a parent who gives you shares that have gained value is taxed as if they sold them. If your parents are not US persons and their gifts pass $100,000 in a year, you report them on Form 3520.
Sources
- US-Canada income tax convention, as amended (IRS text)
- Fifth protocol to the US-Canada convention (2007)
- IRS, Rev. Proc. 2014-55 (Canadian retirement plans)
- Income Tax Act (Canada), s. 128.1, Changes in residence
- Income Tax Act (Canada), s. 212, Tax on income from Canada of non-resident persons
- Income Tax Act (Canada), s. 69, Inadequate considerations
- Canada Revenue Agency, leaving Canada (emigrants)
- Canada Revenue Agency, deemed dispositions of property for emigrants
- Canada Revenue Agency, federal non-refundable tax credits for newcomers and emigrants
- 26 U.S.C. § 1012, Basis of property: cost
- IRS, Instructions for Form 3520 (Rev. December 2025)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- Treas. Reg. § 301.7701(b)-4, Residency time periods
- IRS, Instructions for Form 8938
- Treas. Reg. § 1.1298-1, Section 1298 reporting
- 26 U.S.C. § 1297, PFIC defined
Reviewed and updated September 2026. General information, not advice for your situation.