Moving to Canada from the US: What Are the Tax Consequences?

Moving from the US to Canada sets two clocks. Canada starts taxing your worldwide income the day you establish a home and family ties here, and it treats everything you own as bought that day at fair market value, so earlier gains never see Canadian tax. The US clock doesn’t stop for a citizen or green card holder: you keep filing a full-year US return, and the foreign tax credit is what keeps the two from stacking. A non-citizen who gives up US residence files a split-year US return, and a long-term green card holder can face the exit tax.

When do I become a Canadian tax resident?

The day you arrive with a home to live in and your family with you, in most cases. Canada doesn’t count days for this; it looks at residential ties, and the CRA’s position is that someone who enters Canada and establishes those ties is resident from the date of entry. Your first Canadian return then covers only the part of the year after that date, and it reports your worldwide income for that part. If you keep a US home and travel back a lot, the treaty’s tiebreaker decides which country you’re resident in for treaty purposes.

• The CRA’s Folio S5-F1-C1, ¶1.28: “Where an individual enters Canada and establishes residential ties with Canada … the individual will generally be considered to have become a resident of Canada for tax purposes on the date the individual entered Canada.” The ties that “will almost always be significant” are “the individual’s: dwelling place (or places); spouse or common-law partner; and dependants” (¶1.11). The statutory hook is ITA 250(3): a resident “includes a person who was at the relevant time ordinarily resident in Canada.” Detail in how the CRA decides residency.
• ITA 114 computes the taxable income of “an individual who is resident in Canada throughout part of the year and non-resident throughout another part of the year” so that only income from the resident part, plus Canadian-source income from the non-resident part, is taxed. The return is due “the following April 30” under ITA 150(1)(d).
• If your facts are mixed, Article IV(2) of the treaty deems you resident where “he has a permanent home available to him,” then where “his personal and economic relations are closer (centre of vital interests),” then habitual abode, then citizenship. You can also ask the CRA for a ruling with Form NR74, though most people just file on the arrival date.

What happens to the cost of what I already own?

Canada treats you as having sold and rebought everything at fair market value the moment before you became resident, so your Canadian cost base is that day’s value and only gains after arrival are taxed here. The rule skips Canadian real estate and a few other Canadian assets you already held, because Canada could already tax those. The US doesn’t reset anything: your basis stays what you paid. The two countries will therefore measure a different gain on the same sale, which is normal and is what the treaty credit is for.

	Canada	United States
When residence starts	The date you enter with a home and family ties (Folio S5-F1-C1 ¶1.28)	Citizens and green card holders never stop being US taxpayers (treaty XXIX(2))
First-year return	Part-year: income from the arrival date forward (ITA 114)	Full calendar year, worldwide income
Cost base of what you owned on arrival	Reset to fair market value at arrival (ITA 128.1(1)(b) and (c)), except taxable Canadian property	Unchanged: what you paid (IRC 1012)
Gain on a later sale	Only the gain since arrival, half of it taxable (ITA 38(a))	The whole gain from original cost
Return deadline	April 30 (ITA 150(1)(d))	April 15, automatically June 15 for someone living abroad, October 15 on Form 4868
Who credits whom	Canada credits US tax on income arising in the US (treaty XXIV(2))	The US credits Canadian tax (treaty XXIV(1)), carried back one year and forward ten (IRC 904(c))
Information returns	Form T1135 once foreign property costs over $100,000 (ITA 233.3)	FBAR over $10,000; Form 8938 at the abroad thresholds

• ITA 128.1(1)(b): “where at a particular time a taxpayer becomes resident in Canada … the taxpayer is deemed to have disposed, at the time … that is immediately before the time that is immediately before the particular time, of each property owned by the taxpayer, other than, if the taxpayer is an individual, (i) property that is a taxable Canadian property, (ii) property that is described in the inventory of a business carried on by the taxpayer in Canada … for proceeds equal to its fair market value at the time of disposition,” and under (c) “the taxpayer shall be deemed to have acquired at the particular time each property deemed by paragraph 128.1(1)(b) to have been disposed of by the taxpayer, at a cost equal to the proceeds of disposition of the property.” Taxable Canadian property starts with “real or immovable property situated in Canada” under ITA 248(1).
• Get statements and appraisals dated to the arrival day, in the original currency, and keep them. Every future Canadian gain is measured from those numbers, converted at the rate on that day; see cost basis versus adjusted cost base across the border and currency conversion for cross-border tax.
• On the US side, IRC 1012(a): “The basis of property shall be the cost of such property.” Nothing in the move changes it.
• If a large gain is sitting in a US brokerage account, selling before you arrive keeps it a US-only event; selling after means Canada taxes the post-arrival slice and the US taxes all of it with a credit. The example below runs the numbers. Planning moves that only work before the crossing are in pre-move tax planning.

Do I still file a US return after I move?

Yes, every year, if you’re a US citizen or hold a green card. The treaty can’t switch that off, because the saving clause lets the US tax its citizens as if the treaty weren’t there. What changes is the credit: once you pay Canadian tax, you claim it on Form 1116 against the US tax on the same income, and because Canadian rates on earned income are generally higher the US tax usually goes to nil, with unused credit carried forward. You also pick up the FBAR and Form 8938 the first year your Canadian accounts cross the thresholds.

• Article XXIX(2)(a): “this Convention shall not affect the taxation by a Contracting State of its residents … and, in the case of the United States, its citizens.” Article XXIV(1): the US “shall allow to a citizen or resident of the United States … as a credit against the United States tax on income the appropriate amount of income tax paid or accrued to Canada.” Under IRC 904(c) the excess is carried to “the first preceding taxable year and in any of the first 10 succeeding taxable years.” Mechanics in Form 1116 for Canadian tax.
• Deadlines. The IRS page for citizens abroad: “If you are a U.S. citizen or resident alien residing overseas … on the regular due date of your return, you are allowed an automatic 2-month extension to file your return without requesting an extension,” so “the automatic extended due date would be June 15,” and “you can request an additional extension to October 15 by filing Form 4868.” Interest still runs from April 15. The FBAR is “due April 15 following the calendar year reported,” with “an automatic extension to October 15,” once “the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year.” All the dates side by side are in US filing deadlines for Americans in Canada.
• Form 8938 applies to “a taxpayer living abroad” filing alone once foreign assets are “more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year,” and on a joint return “more than $400,000 … or more than $600,000.”
• The foreign earned income exclusion is the alternative to the credit, at “$130,000” for 2025 and “$132,900” for 2026 (IRS 2025, IRS 2026), for someone who meets the IRC 911(d)(1) tests: “a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year,” or “at least 330 full days” abroad in twelve months. In Canada the credit almost always does better; FEIE versus the foreign tax credit shows why.
• An RRSP you open later is sheltered from current US tax by Article XVIII(7), and Revenue Procedure 2014-55 makes the election automatic for an “eligible individual,” who “will be treated as having made the election in the first year in which the individual would have been entitled to elect the benefits.” The same procedure says the plan doesn’t go on “Form 8891, Form 3520, or Form 3520-A,” though the FBAR still applies. A TFSA gets no such shelter; the checklist for US citizens covers the accounts to open and avoid.

What if I’m not a US citizen and I’m leaving the US for good?

Your US filing ends with a dual-status year: resident up to the day you leave, non-resident after. If you hold a green card, giving it up is an expatriation for tax purposes, and if you held the card in at least 8 of the last 15 years you’re a long-term resident who can be a covered expatriate. That happens if your net worth is $2,000,000 or more, your average US tax over the prior five years topped $211,000 (2026), or you can’t certify five years of compliance. A covered expatriate is taxed as if everything were sold the day before, above an exclusion of $910,000 for 2026.

• Publication 519: “You have a dual-status tax year when you have been both a resident alien and a nonresident alien in the same year,” and “The most common dual-status tax years are the years of arrival and departure.” Also: “If you do not fall into one of the categories listed earlier under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local TAC office before you leave the United States.”
• IRC 877(e)(2): a long-term resident is “any individual (other than a citizen of the United States) who is a lawful permanent resident of the United States in at least 8 taxable years during the period of 15 taxable years ending with the taxable year during which the event described in paragraph (1) occurs,” and a year in which you’re treated as a Canadian resident under the treaty and don’t waive the treaty doesn’t count. IRC 877A(g) applies the exit tax to “any long-term resident of the United States who ceases to be a lawful permanent resident.”
• The tests are in IRC 877(a)(2): average annual net income tax “greater than $124,000” indexed, net worth “$2,000,000 or more,” or failure “to certify under penalty of perjury that he has met the requirements of this title for the 5 preceding taxable years.” The indexed tax figure is “$206,000” for 2025 per the IRS expatriation page and “$211,000” for 2026 per Revenue Procedure 2025-32. The deemed-sale exclusion is “$890,000” for 2025 (Revenue Procedure 2024-40) and “$910,000” for 2026 (Revenue Procedure 2025-32).
• The IRS page also warns that you “continue to be treated as U.S. citizens or long-term residents for U.S. tax purposes until they have notified both the Internal Revenue Service (via Form 8854) and … the Department of Homeland Security (for long-term permanent residents).” So the card doesn’t lapse quietly. The decision is worked through in giving up a green card and the exit tax; keeping it while living in Canada has its own rules, in green card holders living in Canada.

What happens to my 401(k), IRA, Roth and Social Security?

Leave the 401(k) and traditional IRA where they are. Canada taxes withdrawals as pension income once you’re resident, the US keeps its right to tax them too, and the treaty caps US tax on periodic payments at 15% with a Canadian credit for it. A Roth IRA stays tax-free in Canada only if you file a one-time election with the CRA by the due date of your first resident-year return and never contribute to it while resident. US Social Security is taxable only in Canada once you live here, with 15% of it exempt.

• Article XVIII(1) and (2)(a): pensions “arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State,” and “may also be taxed in the Contracting State in which they arise … but if a resident of the other Contracting State is the beneficial owner of a periodic pension payment, the tax so charged shall not exceed 15 per cent of the gross amount of such payment.” Canada includes the payment as “a superannuation or pension benefit” under ITA 56(1)(a)(i) and credits the US tax under ITA 126(1). The lump-sum and timing choices are in what happens to a 401(k) when you move to Canada and getting the 15% treaty rate on an IRA.
• Moving a US plan into an RRSP is possible under ITA 60(j)(i), which allows a deduction for “a superannuation or pension benefit … payable out of or under a pension plan that is not a registered pension plan, attributable to services rendered by the taxpayer … in a period throughout which that person was not resident in Canada.” The US still taxes the withdrawal under Article XVIII(2)(a), so the Canadian deduction and the US tax land in different systems and the maths rarely works without careful sequencing; see transferring a US pension to an RRSP.
• Roth IRA. Under Article XVIII(3)(b) a Roth IRA is a pension for treaty purposes, but “from such time that contributions have been made to the Roth IRA … by or for the benefit of a resident of the other Contracting State … to the extent of accretions from such time, such Roth IRA … shall cease to be considered a pension.” The CRA’s Folio S5-F3-C1: without the election “the income accrued in a Roth IRA is generally taxable in Canada on a current, annual basis” (¶1.3); “Any individual resident in Canada who wishes to defer taxation in Canada of income accrued in a Roth IRA should file a one-time irrevocable Election for each Roth IRA that they own” (¶1.15), “on or before the individual’s filing-due date for the tax year in which the individual became resident in Canada” (¶1.16). See does a Roth IRA stay tax-free in Canada and, for the timing question, a Roth conversion before the move.
• Article XVIII(5): social security benefits “paid to a resident of the other Contracting State shall be taxable only in that other State,” and “a benefit under the social security legislation in the United States paid to a resident of Canada shall be taxable in Canada as though it were a benefit under the Canada Pension Plan, except that 15 per cent of the amount of the benefit shall be exempt from Canadian tax.” More in US Social Security taxed in Canada.

What does the deemed acquisition actually save?

It takes every gain that built up before you arrived out of Canada’s reach. For a US citizen the US still taxes the whole gain, so the saving shows up as a smaller Canadian bill and a credit on the US side, and the household ends up paying roughly the higher of the two taxes on the post-arrival slice and only US tax on the rest.

• ITA 38(a): the taxable capital gain “is ½ of the taxpayer’s capital gain.” IRC 1(h)(1)(C) sets the 15% rate on the middle band of long-term gains; the rate is 0% or 20% at other income levels, which is why the example states its assumption.
• Article XIII(4): “Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.” Article XXIV(3)(b): gains of a resident “which may not be taxed in the other Contracting State in accordance with the Convention (without regard to paragraph 2 of Article XXIX (Miscellaneous Rules)) … shall be deemed to arise in the first-mentioned State.” How the two countries measure gains differently in general is in capital gains tax, Canada versus the US.

What should I do next?

Before you cross: decide which gains to take while you’re still a US-only taxpayer, clean Canadian-listed mutual funds out of taxable accounts, and note the Roth election deadline. On the day: value everything and keep the paper. After: file the Canadian return from the arrival date and the US return for the full year, claim the credit on Form 1116, and add the FBAR and Form 8938 to the calendar. If you’re arriving on a green card rather than as a citizen, read the exit tax rules before you hand the card in.

• US citizen moving to Canada: the tax checklist, the ordered steps and the accounts to avoid
• Your first US year as an American in Canada, the RRSP election and the first dual filing
• Moving from the US to Ontario, the provincial layer, with sister pages for the other provinces
• State income tax after a cross-border move, the state you’re leaving
• What to look for in a cross-border accountant, if you’re hiring one

Related guides:

• Moving from the US to Canada: Tax Checklist for the Year You Immigrate

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