Do I have to pay US taxes if I move to Canada?

If you are a US citizen, yes — the US taxes citizens on worldwide income regardless of where they live. You will file both US (1040) and Canadian tax returns. The Foreign Earned Income Exclusion ($130,000+ in 2026) and foreign tax credits help avoid double taxation, but the filing obligation is permanent unless you renounce citizenship.

What happens to my 401k and IRA if I move to Canada?

You can leave your 401k/IRA in the US and withdraw later under normal rules. Withdrawals are taxable in both countries (with foreign tax credits to avoid double taxation). Do NOT roll a 401k into a Canadian RRSP — you can only do this if you meet specific IRS/CRA conditions, and it is complex.

Is healthcare really free in Canada?

Doctor visits and hospital care are covered by provincial healthcare at no cost. However, prescriptions, dental, vision, and physiotherapy are not covered and require private insurance or out-of-pocket payment. Many employers provide supplemental health coverage.

How is the cost of living different in Canada vs the US?

Housing varies greatly by city (Toronto/Vancouver are very expensive; many other cities are cheaper). Healthcare is free (saving $5,000-$15,000/year). Groceries cost 15-25% more. Income taxes are higher in most brackets. Sales tax (GST/HST 5-15%) is comparable to US state sales tax.

Moving from the US to Canada 2026

Key Financial Differences: US vs Canada

Factor	United States	Canada
Currency	USD	CAD (~$0.73 USD)
Income tax (top rate)	37% federal + state	33% federal + 13-25% provincial
Income tax (middle class)	22-24% federal	20.5-29% federal
Sales tax	0-10% (state)	5-15% (GST/HST)
Capital gains tax	0-23.8%	50% inclusion (effectively ~25%)
Healthcare cost	$5,000-$15,000/year (insurance)	$0 (basic); $2,000-$5,000 supplemental
401k/RRSP limit	$23,500 (401k, 2025)	$32,490 (RRSP, 2025)
IRA/TFSA limit	$7,000 (IRA, 2025)	$7,000 (TFSA, 2025)
Social security/CPP	Social Security	CPP + OAS
Property tax	0.5-2.5%	0.5-1.5% (generally lower)
Student loan interest	Often 5-8%	Often 5-8% (federal Canada loans are 0% interest as of 2024)

Cross-Border Tax Obligations

If You’re a US Citizen Living in Canada

Obligation	Details
File US tax return (1040)	Yes — worldwide income, every year, forever
File Canadian tax return	Yes — Canadian resident, worldwide income
Foreign Earned Income Exclusion (FEIE)	~$130,000+ of earned income excluded from US tax
Foreign Tax Credit (FTC)	Claim Canadian taxes paid against US tax
FBAR (FinCEN 114)	Report all foreign accounts with $10,000+ aggregate
FATCA (Form 8938)	Report specified foreign financial assets
Canadian TFSA	The US does not recognize TFSA tax-free status — gains are US-taxable
Canadian RRSP	US recognizes under tax treaty (tax-deferred)
Canadian mutual funds	Classified as PFICs — punitive US tax treatment
US accountant	Essential — need cross-border tax specialist ($500-$2,000/year)

If You’re a Permanent Resident (Not US Citizen)

Obligation	Details
US tax return	Not required after becoming non-resident
Canadian tax return	Yes — worldwide income
401k/IRA	Leave in US; withdraw under normal rules
US rental property	Report in Canada; claim foreign tax credit
US Social Security	May still be eligible to collect at retirement
Filing	Much simpler than US citizens in Canada

Critical Warning: PFICs (Passive Foreign Investment Companies)

Issue	Details
What are PFICs?	Canadian mutual funds and ETFs (including those held in RRSP/TFSA)
US tax impact	Extremely punitive — excess distribution rules or QEF/Mark-to-Market elections
Solution	Hold US-listed ETFs (VTI, VT, BND) instead of Canadian mutual funds/ETFs
TFSA + PFIC double problem	TFSA gains are US-taxable AND Canadian ETFs in TFSA are PFICs
Best practice	US citizens should avoid TFSA entirely; use RRSP (treaty-protected)

What Happens to Your US Accounts

Account	When You Move to Canada
401(k)	Leave it. Continue to grow tax-deferred. Withdraw at 59.5+ (or earlier with penalty).
Traditional IRA	Leave it or consolidate. Continue tax-deferred.
Roth IRA	Canada recognizes under treaty (if election made). Stop contributing after becoming Canadian resident.
HSA (Health Savings Account)	Canada does not recognize. Don’t contribute after becoming Canadian resident. Can still use for US medical expenses.
529 Education Plan	Canada does not recognize tax-free status. Consider using before moving.
US brokerage (stocks)	Can usually keep. Some brokers restrict non-resident accounts. Notify broker of address change.
US bank accounts	Keep at least one for receiving SSA, managing US investments.
US credit score	Does not transfer to Canada. Build Canadian credit from scratch.

Canadian Accounts to Open

Account	Purpose	Details
Chequing account	Daily banking	Newcomer packages available
HISA (high-interest savings)	Emergency fund	EQ Bank, Wealthsimple (4%+)
RRSP	Retirement savings	US-treaty recognized; use US-listed ETFs if US citizen
TFSA	Tax-free savings	Avoid if US citizen (PFIC issues)
FHSA	First home savings	Only if planning to buy in Canada
RESP	Children’s education	CESG grants; US citizens face PFIC issues

Building Canadian Credit

Step	Timeline	Details
1. Get SIN	Week 1	Required for everything
2. Newcomer credit card	Week 1	CIBC, TD, RBC offer newcomer cards
3. Amex Global Transfer	Week 1	Transfer US Amex history to Canadian Amex card
4. Phone/utility in your name	Month 1	Builds credit
5. Use credit card responsibly	Monthly	Under 30% utilization, pay in full
Expected Canadian score (1 year)		700+ (especially with Amex transfer)

The American Express Global Transfer is the best hack — it transfers your US credit history to a new Canadian Amex card, giving you a head start.

Healthcare Differences

Service	US	Canada
Doctor visit	$150-$400 (without insurance)	$0
Emergency room	$1,000-$5,000+	$0
Surgery	$10,000-$100,000+	$0
Prescription drugs	Expensive without insurance	Not covered (private insurance or pocket)
Dental	Not covered by most plans	Not covered (private insurance)
Mental health	Copays, limited sessions	Partially covered (limited sessions)
Wait times	Low	Can be longer for specialists
Monthly premium	$300-$800/person	$0-$75/month (BC only has premium)
Annual healthcare cost	$5,000-$15,000	$0-$3,000 (supplemental only)

Cost of Living Comparison

Item	US (Average)	Canada (Average)	Difference
Rent (1-bed, city)	$1,500-$2,500	$1,500-$2,500	Similar (varies by city)
Groceries	$300-$500	$400-$700	15-25% more in Canada
Gas (per litre)	$0.75-$1.10	$1.40-$1.80	40-60% more in Canada
Internet	$50-$80	$50-$100	Slightly more in Canada
Cell phone	$30-$80	$40-$80	Similar
Car insurance	$100-$250/month	$150-$350/month	More in Canada (varies by province)
Healthcare (insurance)	$300-$800/month	$0 (public)	Major savings
Post-secondary tuition	$10,000-$60,000/year	$6,000-$12,000/year	Much cheaper in Canada

Situation	Details
Worked 10+ years in US (~40 credits)	Eligible for US Social Security
Canada-US Social Agreement	Can combine US and Canadian work credits for eligibility
Payments delivered to Canada	SSA can deposit to US bank account
Tax treatment	Report as foreign pension on Canadian return; foreign tax credit
WEP (Windfall Elimination Provision)	May reduce US SSA if also receiving CPP
Medicare coverage	Not available if living in Canada — use provincial healthcare

Recommended Financial Setup

Timeline	Action
Before moving	Find a cross-border tax accountant; do not sell Roth IRA
Week 1	SIN, bank account, phone, Amex Global Transfer
Month 1	Start building Canadian credit; set up HISA
Month 1-3	Review 401k options (leave, consolidate, or convert)
Month 3-6	Open RRSP (with US-listed ETFs if US citizen)
First spring	File BOTH US (1040) and Canadian tax returns
Year 1+	Apply for credit products, FHSA if buying home
Ongoing	File US + Canadian taxes annually if US citizen

Cross-Border Financial Professionals

Professional	Why You Need Them	Cost
Cross-border tax accountant	File US + Canadian returns correctly	$500-$3,000/year
Cross-border financial planner	RRSP/401k/IRA optimization	$2,000-$5,000 (one-time plan)
Immigration lawyer	Status, work permits	$500-$5,000
Currency strategy	Efficient USD/CAD transfers	Use Wise or IBKR for best rates

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