Cross Border Financial Planning Canada USA Guide

Cross Border Financial Planning Canada USA Guide

Now more than ever, individuals and their families are moving back and forth between Canada and the U.S. for personal and professional reasons.

This creates complex cross-border investment management, wealth and financial planning challenges that require specialized expertise to manage.

Citizens with cross-border tax exposure should invest as efficiently as possible, without sacrificing exposure to a properly customized and balanced set of investments.

While there is no escaping a U.S. citizen’s obligation to file an annual income tax return, steps can be taken to ensure tax efficiency (i.e. – the minimization of the combined taxes paid to both Canada and the U.S.).

People with cross-border exposure require additional planning, because they have to navigate two sets of rules. 

Taxes Cross Border Financial Planning Canada and USA – Retirement Accounts

If you have both U.S. and Canadian retirement accounts, not having a tax strategy is one of the biggest mistakes that you can make.

Not having a tax strategy is very similar to a pilot flying blind.  A long-term retirement tax strategy that keeps your U.S. taxes low.  This may be accomplished by:

A Roth conversion strategy

Selling appreciated stock when tax rates are low

Tax-loss harvesting

Taking advantage of available deductions 

Dual taxation Income Cross Border Financial Planning

Even a temporary relocation requires a calculation by the advisor to determine whether or not they have overstayed their welcome long enough that the IRS can tax them.

There is potential for double taxation in some situations. The IRS tends to tax capital gains made on RRSPs if the holder is residing in the U.S. Worse, if the holder returns to Canada and discharges the RRSP, the holder gets no tax credit for tax already paid in the U.S.

The Canada/U.S. Tax Treaty, revised four times since originally signed in 1980, overrides certain areas of the tax code in both Canada and the U.S. to provide protection from, among other things, double taxation in both countries. 

Well planned cross-border move

First thing you should do is take an absolute inventory of everything you own—your assets, liabilities, dates of birth, net worth, cash flow statements. 

Talk to a cross-border expert USA- Canada

Every financial situation, and portfolio, is different.

And a lot of them can be darn-right complex, especially with the changing nature of the tax code.

It’s worth it, if you can afford it, to seek the counsel of a cross-border tax and finance expert — an American accountant who has lots of Canadian clients would be perfect – who can help you sort out all the minutiae and regulations before you make your move.

Don’t abandon your Cross Border financial plan

Don’t abandon your financial plan just because you’ve moved. Keep on saving. Take advantage of employer-matches — otherwise you’re leaving part of your income on the table. Avail yourself of tax-advantaged accounts no matter where you are.

And then leave it all alone. In America, just as in Canada, we believe that the smartest, least expensive and most effective way to build wealth is passive investing.

Hiring a Cross-Border Financial Advisor

Given the differences in the tax rules, investments and law between the U.S. and Canada, hiring a cross-border financial advisor should be considered. The tax tools that work well in one country, may yield painful results when you move to another. A cross-border financial advisor will be familiar with these nuances.

Need Help from a Cross-Border Financial Advisor?

Our team structure is designed to help you protect your assets, meet financial and legal requirements, limit your tax liabilities, and create a sound financial future for yourself and your family—both here and abroad.

Contact us today!

Office in Buffalo, NY         Call us at 716-565-1300

Office in Tampa, Florida  Call us at 813-964-7100