Moving from the US to Canada: The Arrival Tax Guide (2026)

Becoming a Canadian tax resident

Canada decides residency on residential ties, not visas or citizenship:

• Primary ties — a home in Canada (owned or long-term leased), a spouse or common-law partner in Canada, dependants in Canada. Establishing any of these generally makes you a resident from that date.
• Secondary ties — Canadian driver's licence, bank accounts, health insurance, car, club memberships, personal property moved to Canada. A cluster of these supports residency.

Your arrival date — the day you establish those ties — goes on page 1 of your first T1 return. From that date, Canada taxes your worldwide income: US salary, US investment income, everything.

Two special cases:

• The 183-day rule: if you sojourn in Canada for 183 days or more in a calendar year without establishing primary ties, you are deemed a resident for the whole year. Snowbirds and extended visitors, take note.
• Dual residency: if both countries claim you (common in the arrival year), the Canada-US tax treaty tie-breaker (Article IV) decides: permanent home first, then centre of vital interests, then habitual abode, then citizenship, then mutual agreement between the tax authorities. Most newcomers win this on "permanent home" once the Canadian lease or purchase is signed.

You can ask the CRA for certainty with Form NR74 (Determination of Residency Status — Entering Canada), the mirror image of the NR73 used when leaving.

Your first Canadian tax return

File a T1 for the arrival year reporting worldwide income from your arrival date onward. Income earned before arrival while you were a non-resident is generally not taxable in Canada (except Canadian-source income like rent from a Canadian property).

Key first-year items:

• Foreign tax credit (Form T2209): US tax you paid on the same income (for example, US withholding on dividends, or US tax on salary earned before the move) is creditable against your Canadian tax. Canada is the residence country now — it taxes the income and gives you credit for US tax paid.
• Form T1135 (Foreign Income Verification Statement): if at any time in the year you owned specified foreign property with a total cost over $100,000 CAD (US bank accounts, US brokerage, US real estate), you must file it. Penalties start at $25/day up to $2,500.
• Principal residence: if you buy a Canadian home, the principal-residence exemption will shelter future gains — but only for years you are resident.
• Provincial health coverage: apply immediately on arrival. Rules vary by province — Ontario eliminated its 3-month waiting period in 2020, but British Columbia still has a waiting period (coverage starts after the balance of your arrival month plus two full months). Keep US coverage until the Canadian plan kicks in.

Deadlines: April 30 (June 15 if self-employed, balance still due April 30). If you owe no Canadian tax the first year, file anyway — benefits like the GST/HST credit and Canada Child Benefit are calculated from your return.

The US does not let go: citizens and green-card holders

This is the part Americans underestimate. The US taxes its citizens and green-card holders on worldwide income regardless of residence. Moving to Canada does not end your IRS obligations:

• You must keep filing Form 1040 every year, reporting worldwide income, and claim either the Foreign Earned Income Exclusion (for 2026, up to about $130,000 of earned income — the figure is inflation-adjusted annually) or the Foreign Tax Credit (Form 1116). Because Canadian tax rates are generally higher than US rates, the credit usually wipes out US tax on the same income — but the filing obligation never goes away.
• FBAR (FinCEN Form 114): if your non-US financial accounts (now including your Canadian bank and brokerage accounts) exceed $10,000 in aggregate at any point in the year, file by April 15 (automatic extension to October 15).
• Form 8938 (FATCA): if you live abroad and your specified foreign assets exceed $200,000 at year-end or $300,000 at any time (single; double for joint filers), attach it to your 1040. This is separate from FBAR — you may need both.
• State exit: file a final part-year return in your old state and deliberately sever ties. California, New York, and a few others are aggressive about claiming you never left. Surrender the driver's licence, unregister to vote, close local memberships, document the move.

Green-card holders who leave the US long-term should consider formally abandoning the card (Form I-407) — otherwise the worldwide filing obligation continues indefinitely, and long-term holders can face the expatriation tax.

Your accounts cross the border — with strings attached

401(k) / Traditional IRA: Canada recognizes these as pensions under the treaty (Article XVIII). Growth stays tax-deferred in Canada too, and withdrawals are taxed in Canada as pension income with a foreign tax credit for US withholding. Do not roll a 401(k) into anything exotic before getting cross-border advice — the treaty protection depends on the account keeping its character.

Roth IRA — act in year one: By default, the CRA taxes income accruing inside your Roth IRA annually — the US tax-free treatment does not automatically carry over. The fix is a one-time, irrevocable election under Article XVIII(7) to treat the Roth as a pension, filed by April 30 of the year after you become a Canadian resident. Miss the deadline and the Roth's growth becomes taxable in Canada every year. Also: never contribute to a Roth IRA while a Canadian resident (a "Canadian contribution" contaminates the account's pension status).

TFSA — the American trap: If you are a US citizen or green-card holder, think twice before opening a TFSA. The IRS does not recognize it; most practitioners treat it as a foreign grantor trust requiring annual Forms 3520/3520-A, and the income is taxable in the US every year. For US persons in Canada, the RRSP is almost always the better vehicle.

US brokerage accounts: Many US brokers restrict or close accounts for Canadian residents (regulatory licensing). Check before you move — you may need to transfer to a cross-border-friendly broker.

RESP: If you have kids, the RESP's education savings grants (CESG) are generous, but for US-citizen parents the RESP is another foreign-trust headache. Model it before contributing.

The 183-day commuter trap

Some people try to live in Canada while "staying" US tax residents, or vice versa. The treaty tie-breaker usually defeats this: once your permanent home and daily life are in Canada, Canada wins. Split years get expensive fast — two full tax systems, two sets of foreign-reporting forms, and professional fees to match. Pick a side deliberately, document the arrival date, and file cleanly in both countries for the transition year.