What Should I Do Before Moving to the U.S. for Tax Purposes?

Leaving Canada for the United States is really two tax events happening at once: Canada treating you as an emigrant — with a deemed disposition of most of your property — and the U.S. beginning to tax you on worldwide income, whether under the substantial presence test or the green card test described in IRS Publication 519.

The planning window is entirely front-loaded. Account restructuring, asset decisions, and elections that are simple before the move become expensive, or impossible, after it. This guide addresses the tax and reporting dimensions only; it is not immigration advice, and residency for tax purposes is a separate question from immigration status.

On the Canadian side, emigration triggers a deemed disposition at fair market value of most property — triggering the so-called departure tax — with key exceptions including Canadian real property and registered plans. Your final Canadian return reports the departure date, Form T1161 lists property over $25,000, Form T1243 computes the deemed gains, and Form T1244 allows the tax to be deferred by posting security. Severing or maintaining residential ties deliberately determines when this happens.

On the U.S. side, the pre-arrival checklist is about what you will be holding when the U.S. system starts counting: Canadian mutual funds and ETFs become PFICs with punitive reporting; TFSAs and RESPs lose their tax-free status and may attract trust-style information reporting; a Canadian corporation you control becomes a controlled foreign corporation with Form 5471 obligations. Reviewing each holding before residency begins — and understanding the treaty's coordinating provisions, including the election that can align U.S. basis with Canada's deemed disposition — is the core of good preparation.