Emigrating from Canada to the United States

As a Canadian PhD student, a few of my classmates asked whether there were tax considerations when moving from Canada to the United States. There are quite a few considerations. This guide is written for Canadian PhD graduates moving to the U.S. for work.

This may not apply to your particular situation, and it is not a general guide to Canadian emigration or U.S. immigration law. Your residence, visa or immigration status, family, investments, and travel dates can all change the result. Speak with a cross-border tax specialist before making a significant decision.

Canada and the U.S. apply their own tax residency rules. Do not assume that leaving Canada automatically ends Canadian tax residency, or that starting a U.S. job automatically makes you a U.S. tax resident.

Last reviewed: August 2026

General information only. This guide is not tax, legal, investment, or immigration advice. Cross-border residence and reporting are highly fact-specific, and guidance changes. Consult qualified Canadian and U.S. advisers about your circumstances.

Canadian tax obligations

Determine whether you have severed Canadian residential ties

Canadian tax residency is a question of fact. The most important ties generally include a home in Canada and the location of your spouse/common-law partner and dependants. Secondary ties—such as bank accounts, credit cards, a driver's licence, health coverage, personal property, and social ties—also contribute to the overall picture. Critically, you should consider do you have any plans to return to Canada.

If you need the CRA's opinion on your status, you can submit Form NR73, Determination of Residency Status (Leaving Canada). The form is optional, and most don't need to fill this out if they have a relatively simple clean break from Canada. It essentially requests CRA to make a determination on the date you have left Canada. Note that you are asking a government agency on their opinion whether you still have a tax obligation to them — the tax agency naturally has an interest in you remaining a tax resident.

Canadian Departure tax return

Your Canadian tax return for the year of departure should report your date of emigration, most tax software will ask if you are an emigrant for the year (click yes). Report worldwide income for the Canadian resident portion of the year (before emigration) and the Canadian-source income only for the non-resident portion (after emigration). Generally you are not able to EFILE most tax returns if you are an emigrant — I highly recommend sending the package by registered mail if you mail it.

Canadian Departure tax

When you cease Canadian tax residency, Canada generally treats you as having sold and immediately reacquired most types of property at fair market value. This deemed disposition can create a gain even though you did not actually sell anything. Important exceptions include Canadian real property and many registered plans.

If you have more than $25,000 (CAD FMV) of assets, you will be required to complete Form T1243 amd Form T1161 to list your assets and calculate your capital gains respectively.

U.S. tax residency

For federal income tax, a non-U.S. citizen is generally a resident alien after meeting either the green card test or the substantial presence test. Immigration status and tax residence are related but are not the same thing.

The substantial presence test generally requires at least 31 days in the United States in the current year and 183 weighted days across the current and two preceding years. The calculation counts all qualifying days in the current year, one-third of qualifying days in the prior year, and one-sixth of qualifying days in the second prior year.

Dual tax residency

It is possible that both countries may consider you to be a resident for tax purposes.

If you have been in Canada for more than 183 days, you may be considered a deemed tax resident of Canada (meaning that you will be considered to be a tax resident for the entire year).

This means that although you may have physically left Canada, you will still be subject to Canadian taxes for for worldwide income earned during the entire year. This is generally not an ideal situation for graduate students who are working in the U.S. You will have paid the IRS for your portion of U.S. taxes, but since you will be considered a Canadian Tax resident, you also owe the CRA taxes (of which you have not made any withholdings). Although you would likely be entitled to foreign tax credits, since Canada generally taxes at a higher marginal rate than the U.S, you'll probably still owe a substantial amount to the CRA. Anecdotally, I have seen potential exposure of CAD $40,000 for first-year accounting professors who moved from Canada to the U.S.

The Canada - U.S. tax treaty provides relief, where if you establish residential ties in the U.S., and you are considered to be a resident of that country for tax purposes, you may be considered a deemed non-resident of Canada.

Here's the problem. If you start your job in August in the U.S., you will not have met the substantial presence test in the U.S, and will not be considered a resident of the U.S. until the following year. Consequently, you remain a Canadian tax resident in the year of the move (read: taxed more).

In order to avoid this treatment, you must plan for the "First Year Choice" election.

First-Year Choice

If the requirements are met, the First-Year Choice under IRC §7701(b)(4) can treat the person as a U.S. tax resident from a qualifying residency starting date through the end of that year. The result is generally a dual-status year: non-resident before that date and resident afterward.

Eligibility

At a high level, you must:

Filing the election

Attach an election statement to Form 1040 (your tax return). The statement identifies the election, prior-year non-residence, following-year substantial-presence qualification, current-year days in the United States, the qualifying 31-day and continuous-presence periods, and any permitted absences treated as present.

You cannot file the election-year Form 1040 and statement until you have actually met the substantial presence test in the following year. If that has not happened by the filing deadline, the IRS directs taxpayers to request a filing extension using Form 4868 first, and then filing the election with the deferred tax return.

A template is provided below.

First-Year Choice Election Statement Template

A template to adapt and attach to Form 1040. Confirm that every placeholder and requirement fits your facts before filing.

⬇ Download .docx

Read the IRS First-Year Choice guidance alongside the template.

Canadian registered accounts after departure

Canada may continue to give an investment account favourable treatment after you leave, while the United States may tax it under ordinary U.S. rules. The account itself, and the investments held inside it, can also trigger information returns.

Common U.S. reporting questions

TFSA

Canada: You can keep a TFSA after becoming a non-resident (for Canadian tax purposes). Canada continues to exempt its investment income and withdrawals, but you cannot contribute tax-free as a non-resident and your TFSA contribution room does not grow for a full non-resident year.

United States: The United States does not provide the TFSA with the same general tax exemption. Income and gains may therefore be taxable in the United States, and Canadian tax slips may not provide all the information needed for U.S. reporting. Many accountants are of the opinion that TFSA are considered foreign trusts and therefore triggers FBAR and FATCA reporting. It is generally recommended to close your TFSA before leaving Canada.

RRSP and RRIF

Canada: Withdrawals remain subject to Canadian tax. A Canadian financial institution will withhold non-resident tax, with the rate depending on the type of payment and treaty relief. A section 217 return can sometimes produce a better result than treating the withholding as final tax. Special rules apply to the Home Buyers' Plan and Lifelong Learning Plan.

United States: Eligible individuals generally receive federal income deferral on undistributed income in an RRSP or RRIF under Revenue Procedure 2014-55. The account can still be reportable on the FBAR and Form 8938. State treatment is not uniform, so check the law of the state where you move to.

FHSA

Canada: An existing FHSA can generally remain open after you leave. However, Canadian tax residence is one of the conditions for a qualifying home withdrawal, and non-resident payments can be subject to withholding tax of 25%. Consider whether contributing after departure will create a useful Canadian deduction in your circumstances.

United States: There is no FHSA-specific U.S. tax exemption, and the IRS has not made a statement on whether it treats the FHSA as a tax-advantanged investment. Its income, holdings, and legal structure may create the same kinds of income and information-reporting questions that arise with a TFSA. Because the FHSA is comparatively new and U.S. guidance is limited, you may wish to close this account before you leave Canada.

A quick guide to U.S. tax-advantaged accounts

Once you start a U.S. job, you will encounter several tax-advantaged accounts. Annual limits and income phase-outs change regularly, so use the IRS contribution-limit pages for current figures.