4 tax tips for American-Canadians

By Staff | February 3, 2016 | Last updated on September 15, 2023
2 min read

Americans living in Canada well know — or should well know — that just because they’re living outside the U.S. doesn’t mean they don’t owe Uncle Sam.

While Canadians are beginning to to think of topping up their RRSPs and collecting their T4 slips to stay in CRA’s good graces, U.S. persons have extra responsibilities down south. Here are some tips for keeping cross-border clients on track.

1. Consider renouncing U.S. citizenship

This is the only way to end American tax obligations, and a growing number of Americans living abroad are doing it, writes Cooper Xu of Moodys Gartner Tax Law. In fact there’s so much demand that it takes a while to get an appointment at the U.S. consulate. Added to the months it takes to issue an official renunciation certificate, and your client may still be considered a U.S. citizen for tax purposes if she doesn’t get the paperwork done by June 1.

Read: Low Loonie = Opportunities for U.S. real estate

2. Realize capital gains

The low Canadian dollar means it could be a great time to sell U.S.-denominated stock and bring the proceeds north. Xu points out that different capital gains regimes, tax brackets and the exchange all combine to give thoughtful tax planners opportunities to save money for clients.

Read: CRA makes it easier to file for trusts

3. Plan U.S. gifts

In 2016, U.S. persons can give a gift of up to $14,000 per person without reducing their lifetime exemption or having to file taxes on the gift. The non-resident spouses of U.S. persons are also entitled to $148,000, says Xu.

Read: Fewer plan RRSP contributions

4. Plan U.S. vacations

Your clients may know exactly what they want to do next time they’re in the U.S. — but if they spend a lot of time there, make sure they know exactly how many days they’ll be there too. If they spend more than 183 days in the U.S. in 2016, they’ll be treated as U.S. residents for income tax purposes.

For even more tips for cross-border clients, click here.

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.