I Moved From Canada to the U.S. — How Do I File My Taxes?

If you've moved from Canada to the United States, your first tax season in the U.S. is the complicated one. The year you cross the border is the year both countries have a claim on part of your income — and the rules that decide who taxes what are not intuitive. This guide walks through how the arrival year generally works, what forms exist, and the order things happen in, so you can see the whole picture before you start.

A note before we begin: cross-border tax outcomes depend heavily on your specific facts — when you moved, what you own, whether you kept ties to Canada, your visa or status, and where your income came from. This article explains the framework. It isn't personal tax advice, and the right answer for your situation may differ from the general case described here.

The core idea: you're leaving one tax system and entering another

Canada taxes based on residency. The United States taxes its residents and citizens on worldwide income, and determines residency differently than Canada does. In your move year, you generally stop being a Canadian tax resident at some point and start being a U.S. tax resident at some point — and each country wants a return covering its slice of the year.

That means two returns for the arrival year, not one. People who file only on the U.S. side, assuming they're "done with Canada," are the ones who get a letter from the Canada Revenue Agency (CRA) two years later.

Step 1: Your Canadian departure return

When you leave Canada and sever your residential ties, you file a departure return (a regular T1, but filed as a part-year resident with a departure date). Two things make the departure return different from a normal Canadian return:

You report your worldwide income up to your departure date — after that date, Canada generally taxes you only on Canadian-source income (such as Canadian rental income or RRSP withdrawals, often via non-resident withholding).

Departure tax (deemed disposition). This is the one that surprises people. When you stop being a Canadian resident, Canada treats you as if you sold certain property at fair market value on your departure date — even though you didn't actually sell anything — and taxes the resulting gain. Some assets are exempt (Canadian real estate, RRSPs, registered plans, certain pension interests), but investment portfolios held outside registered accounts are commonly caught. The point of departure tax is that Canada wants to tax the gain that accrued while you lived there before you leave its system.

If you owe departure tax but don't want to sell the assets to pay it, there's an election to defer the tax until you actually dispose of the property — but it has to be elected properly and on time.

Step 2: Figuring out your U.S. residency for the year

The U.S. side starts with a question: were you a U.S. tax resident for the year, and if so, from when?

Two tests determine U.S. residency: holding a green card, or meeting the substantial presence test — a weighted formula that counts your days in the U.S. over a three-year period. (It's not a simple 183-day count; the formula weights prior years, so you can trigger it with fewer current-year days than you'd expect.) The date you become a U.S. resident under these tests sets up how your arrival year is taxed.

Step 3: The dual-status return (the arrival-year special case)

In the year you move, you're often a dual-status alien for U.S. purposes: a nonresident for the part of the year before you became a U.S. resident, and a resident for the part after. A dual-status return taxes you differently for each part of the year — worldwide income for the resident portion, generally only U.S.-source income for the nonresident portion.

There are also elections that can change this — for example, choosing to be treated as a full-year resident, which sometimes produces a better result because it unlocks the standard deduction and joint filing with a spouse. Whether an election helps depends entirely on your numbers, and this is one of the places where getting it modeled before you file genuinely matters.

Step 4: The reporting forms people don't know about

Becoming a U.S. tax resident switches on a set of foreign asset reporting obligations that didn't apply when you lived in Canada. The big ones:

FBAR (FinCEN Form 114). If your Canadian (and other non-U.S.) financial accounts together exceeded US$10,000 at any point in the year, you report them. This includes Canadian chequing, savings, investment accounts, and often more than people assume. The penalties for missing it are severe, which is why it's worth getting right from year one.

Form 8938 (FATCA). A separate, overlapping foreign-asset disclosure with higher thresholds, filed with your tax return.

RRSPs and TFSAs. Your RRSP gets favorable treatment under the Canada–U.S. tax treaty — the tax deferral on growth inside it now generally applies automatically for eligible individuals, though the accounts themselves still have to be reported (FBAR and, where thresholds are met, Form 8938). The TFSA is the trap: the U.S. doesn't recognize it as tax-free, often treats it as a foreign trust with its own onerous reporting, and the tax-free status you enjoyed in Canada simply doesn't carry over. Many new arrivals are better off understanding their TFSA's U.S. treatment before they assume it's still a tax-free account.

Step 5: Avoiding double taxation

The reason you don't get taxed twice on the same income is the Canada–U.S. tax treaty and the foreign tax credit system. Where both countries have a claim, the treaty and the credits coordinate so that tax paid to one country offsets tax owed to the other. But this coordination only works if both returns are prepared together, with the timing and credits aligned. Filing them in isolation — a Canadian preparer who doesn't see your U.S. return, a U.S. preparer who's never looked at your T1 — is exactly how double taxation and missed credits happen.

The order of operations, in one place

1. Determine your Canadian departure date and sever ties properly.
2. File your Canadian departure return, including any departure tax (and the deferral election if you want it).
3. Determine your U.S. residency start date (green card or substantial presence test).
4. File your U.S. arrival-year return — usually dual-status, unless an election to file as a full-year resident produces a better result.
5. File FBAR and Form 8938 if your foreign accounts cross the thresholds.
6. Handle RRSP treaty elections and understand your TFSA's U.S. treatment.
7. Coordinate foreign tax credits and treaty positions across both returns so nothing is taxed twice.

Why the arrival year is worth getting right

Your first year sets the baseline for everything that follows — your treaty elections, your RRSP positions, your foreign-reporting history. Mistakes made in year one (a missed FBAR, a botched dual-status return, an unclaimed departure-tax deferral) tend to compound, and fixing them later is more expensive than doing them right the first time.

The framework above is the same for everyone. What differs — and what decides your actual tax bill — is your specific mix of income, assets, ties, and timing. That's the part worth getting professional eyes on.

If you've recently moved from Canada to South Florida and want to know exactly what your arrival year looks like, our cross-border practice handles both sides of this — the Canadian departure return and the U.S. arrival-year filing, coordinated together. We start with a cross-border assessment that maps out precisely what you need to file and what it will cost, before you commit to anything.