Keeping Canadian Bank Accounts After Moving to the US

Keeping a Canadian bank account after moving to the US is common. You may need it to receive Canadian pension payments, manage a Canadian rental property, hold funds for trips back to Canada, or simply because closing the account is inconvenient. Canadian banks generally allow non-residents to maintain accounts, though some products (like a TFSA or high-interest savings account) may be restricted. The tax implications are not about whether you can keep the account, but about the reporting obligations that come with it.

Will the bank let me keep the account?

Most Canadian banks (RBC, TD, BMO, Scotiabank, CIBC) allow non-residents to maintain chequing and savings accounts. However:

• TFSA. You cannot contribute to a TFSA as a non-resident. Existing TFSA balances can remain, but any growth is subject to a 1% per month penalty tax on contributions made while non-resident. Most advisors recommend collapsing the TFSA before leaving Canada.
• RRSP. You can keep your RRSP as a non-resident. Withdrawals are subject to Part XIII withholding (25% lump sum, 15% periodic under the treaty). The RRSP withdrawal strategy guide covers the options.
• Investment accounts. Canadian brokerages may restrict trading in a non-resident account (some limit you to selling existing positions only, no new purchases). The FBAR reporting applies to the brokerage account as a foreign financial account.
• FATCA disclosure. Canadian banks are required under the Canada-US IGA to identify and report US-person account holders to the CRA, which transmits the information to the IRS. When you notify the bank of your US address (or the bank identifies you as a US person through its due diligence), the bank reports your account balances annually. This is the FATCA mechanism.

What are the FBAR obligations?

Any US person with a financial interest in, or signature authority over, one or more foreign financial accounts must file an FBAR if the aggregate value of all foreign accounts exceeds $10,000 at any point during the year.

• The FBAR reports the maximum value of each account during the year (not the year-end balance).
• All foreign accounts count toward the aggregate: chequing, savings, RRSP, TFSA (if still open), brokerage, and any other financial account.
• The penalty for non-willful failure to file is up to $10,000 per account per year (adjusted for inflation). Willful failure can reach 50% of the account balance or $100,000, whichever is greater.
• The FBAR is filed electronically through the FinCEN BSA E-Filing System, due April 15 with an automatic extension to October 15.

Even a single Canadian chequing account with $15,000 in it triggers the FBAR requirement if you have no other foreign accounts. If you have multiple Canadian accounts (chequing, savings, RRSP), the aggregate almost certainly exceeds $10,000.

What income do I report on the US return?

All income from the Canadian accounts is reportable on the US return:

• Interest. Canadian bank interest is reported on Schedule B (Form 1040). The interest is paid in CAD and converted to USD using the exchange rate on the date received (or the annual average rate).
• Dividends. Canadian dividends are reported on Schedule B. The gross-up and dividend tax credit that apply on the Canadian return do not apply on the US return. The actual dividend received (the “actual amount,” not the grossed-up amount) is reported.
• Capital gains. If you sell investments in a Canadian brokerage account, the capital gain is reported on Schedule D and Form 8949. The cost basis is the original USD-equivalent purchase price (not the ACB from the Canadian return).

Canadian interest paid to a non-resident by an arm’s-length payer (a bank) is generally exempt from Part XIII withholding, so there is no Canadian tax to credit. Dividends paid to a non-resident are subject to Part XIII withholding (25%, reduced to 15% under the treaty), and the FTC on Form 1116 credits the withholding against US tax.

What about currency conversion?

The Canadian accounts are denominated in CAD. For US tax purposes, all amounts must be converted to USD:

• Income. Interest and dividends are converted at the exchange rate on the date received (or the annual average rate, which the IRS accepts for recurring income).
• Account balances (FBAR). Convert at the US Treasury’s end-of-year exchange rate for the maximum account value.
• Capital gains. The gain or loss includes the FX component. If the CAD appreciated against the USD between the time you bought and sold an asset, the FX gain is part of the capital gain. The currency conversion guide covers the mechanics.

Should I close the Canadian accounts?

The decision depends on whether you need the accounts and whether the compliance burden is manageable:

Reasons to keep them:

• Receiving Canadian pension payments (CPP, OAS, employer pension) in CAD without conversion fees.
• Managing a Canadian rental property (collecting rent, paying expenses).
• Holding funds for visits to Canada.
• Maintaining a Canadian credit history.

Reasons to close them:

• Eliminating the FBAR and Form 8938 filing burden.
• Avoiding the annual FATCA reporting by the bank to the CRA/IRS.
• Simplifying the US return (no foreign income to convert and report).
• Avoiding potential PFIC issues if the accounts hold Canadian mutual funds.

The FBAR filing requirements guide covers the ongoing obligations in detail.

What should I do next?

If you are keeping Canadian bank accounts after moving to the US, set up the FBAR and Form 8938 filings for the first year. Notify the bank of your new address (the bank’s FATCA compliance requires it). Determine whether the accounts hold any investments that create PFIC exposure. Close the TFSA. Decide whether to keep or collapse the RRSP based on the withdrawal strategy.

• FBAR filing requirements, who needs to file and the thresholds
• Form 8938 vs FBAR, the two overlapping reporting obligations
• FATCA explained, how the bank reports to the IRS
• Is my TFSA a foreign trust?, the TFSA problem for US persons
• Keep my US brokerage after moving to Canada, the reverse direction

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.