What US Expats in Canada Need to Know About Financial Planning

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Welcome back to Passport to Wealth.

 

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I'm your host, Arielle Tucker, a certified financial planner and IRS-enrolled agent.

 

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Today, we are joined by Aditi Kapadia, the founder of Wealth IQ and a cross-border

financial planner who specializes in helping globally mobile professionals navigate the

 

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complex financial and tax systems of the United States and Canada.

 

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Aditi brings not only technical expertise, but also deep personal expertise to her work.

 

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She first moved to the US as an expat while continuing to be paid in Canadian dollars and

maintaining Canadian residency and later made a permanent move to the US in 2016, where

 

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she had to learn an entire new financial and tax system from the ground up.

 

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I can relate to that.

 

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I can totally relate to having to learn an entire system.

 

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That lived experience shapes a DTE practical, plain English approach to financial

planning, especially for clients managing cross-border income, investments, and major life

 

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transitions.

 

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Her work focuses on clarity, confidence, and helping clients make smart financial

decisions no matter which side of the border they're on.

 

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Aditi, welcome back to Passport to Wealth.

 

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Thank you for having me.

 

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I'm excited to be here.

 

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Okay, so let's go back to the beginning.

 

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You are Canadian, right?

 

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Yes, I am a dual citizen of Canada and the US now.

 

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But I was born and raised, well, I was born in the Middle East, in Saudi Arabia.

 

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I immigrated to Toronto with my family when I was in high school.

 

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And then as soon as I was done with college, I joined uh General Electric.

 

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And GE at the time was one of the largest companies.

 

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They had so many different divisions ah that I was lucky to be in their finance training

programs.

 

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And that's really what brought me to the US.

 

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ah So two years into my career at GE in Canada, they transferred me uh into their, yeah, I

moved to Connecticut.

 

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uh

 

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At that time, I moved on what we call an L1 visa.

 

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ah So it's a visa that allows inter-company transfers uh into the US.

 

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ah Like you said, I maintained my residency in Canada.

 

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I got paid in Canadian dollars.

 

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ah And I had the opportunity to travel the world with GE for a few years, which was

fantastic, because I got to live in Europe.

 

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I got to live in Mexico and, of course, the US and just see so many different businesses.

 

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from a finance point of view and that really shaped the rest of my career.

 

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Now, what was the US dollar to the Canadian dollar when you first made that transition?

 

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Was that a huge impact for you?

 

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I know right now the US dollar is so much stronger than the Canadian dollar, but I

remember when I was little, because I grew up in New York, but on the other side, we were

 

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only a couple hours away from Toronto, we would go up to Canada all the time.

 

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We lived an hour from Niagara Falls.

 

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So it'd be like, go hang out with your friends in Niagara Falls.

 

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um

 

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And it used to be that it was almost, you know, parody.

 

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So what was it when you moved?

 

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it was 92 cents.

 

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So one Canadian dollar was 92 US cents when I first moved.

 

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Then when I moved back to Canada, so I did a few year, five, six, five year stint outside

of Canada, I moved back.

 

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At that time it was almost at parity.

 

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So in 2009, 10, it was at parity.

 

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And then again, now one Canadian dollar is almost like 70 cents in the US.

 

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The exchange rate has moved a lot.

 

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And that is a big part of financial planning too, is keeping an eye on how these rates

have moved.

 

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Because it's hit a lot of Canadians who have assets in the US or travel to the US.

 

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A lot of the snowbirds that go every year uh to Florida and spend the winters there.

 

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uh But yeah.

 

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your trip just got 30 % more expensive.

 

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Exactly.

 

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And it's been this way for a few years.

 

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ah I think the only reason parity happened for a little bit is because oil prices were so

high and Canada was extracting all this oil.

 

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So that helped with the, it made the Canadian dollar stronger.

 

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uh

 

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Yeah, no, know as cross-border financial planners, it's one of those things that we're

constantly thinking about, right?

 

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It's so important to think where are your assets, what currency are those assets

denominated in, and what currency are you retiring in?

 

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And sometimes those are completely different currencies or multiple currencies, and that

can get really complex.

 

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um

 

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Okay, let's keep staying back because I know we have so much to talk about and I get so

excited I keep jumping around.

 

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But I want to go back to that transition when you first kind of decided to make a more

permanent move to the US and you described that move as feeling really kind of deceptively

 

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easy at first because the US and Canada seem so familiar.

 

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So when did you realize that the closeness actually made that transition for you harder?

 

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Yeah, so I moved to Chicago the second time that I moved to the US.

 

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And Chicago is a one hour flight from Toronto.

 

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ah There is 30 flights a day.

 

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You can literally decide I want to fly within the next hour and there is a flight

available.

 

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So was super easy to move.

 

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ah I didn't even pack all my things when I first moved.

 

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I just took a few things.

 

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My husband, uh

 

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wanted, you know, we, he was the, his job is the one that triggered our move uh back to

the U.S.

 

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And he, we had an apartment, we packed up, we moved, and I just kept flying back to

Toronto.

 

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I didn't change anything for the first little bit.

 

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And then the constant back and forth and having to, I think I realized at some point that

I can't keep doing this.

 

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I think I just defaulted back to expat life, which is what I live the first time I moved

to the U.S.

 

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And then I realized this was not gonna cut it in the long term.

 

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So a couple of years later, I finally decided to wrap up all of my affairs in Canada.

 

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ah But this is, you we'll dive into this, because this was one of the mistakes I had made.

 

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And I wish I had made a cleaner exit as opposed to leaving a bunch of things behind to

clean up after.

 

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uh

 

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It was just exhausting to go back and forth and have to transfer money and pay have

multiple bank accounts still that existed in Canada that I was managing my brokerage

 

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accounts and RSPs were still in Canada.

 

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So I I brought it on myself and I would not recommend it to clients anymore that would,

that are considering a move from Canada to the U.S.

 

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I think you make a really good point because you did live the expat life for a while and

when you are an expat, you know that that is going to be a certain or specific amount of

 

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time, right?

 

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That's what an expat is, right?

 

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That's the difference between an expat and an immigrant.

 

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An expat is, it's a set period of time, generally up to five years, and then you are

returning to your home country.

 

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And so in, and you have some kind of protections a little bit uh from your company.

 

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uh

 

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and also just like logistically that you don't have to close up shop on your entire

financial life and move it to another country versus it sounds like the second time your

 

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husband kind of like led that move and you're still trying to like live your life that

you've kind of created.

 

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And so I can understand why that would be like a common mistake, right?

 

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Like how long is this really gonna be for?

 

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you know, are we really gonna be happy in the US?

 

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Like, yeah, I can understand why even though like on paper maybe we haven't optimized

everything, but that's just how life happens, right?

 

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Exactly.

 

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That's so true.

 

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Even my job was so easy.

 

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I called GE and I said I want to move to Chicago and it took two days, three days maybe

like to transfer my role over.

 

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ah However, there were some things that were hard, know, logistically I think the bank

account opening process.

 

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I think I lost my mind when we were...

 

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We walked into a chase, we opened a bank account and I just didn't have enough history to

open a bank account.

 

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And I was like, yeah, that's why I'm opening.

 

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Yeah, yeah, I had to get my husband to co-sign on my account because he had a lot of, he'd

been living in Chicago for over a decade.

 

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So he had enough history.

 

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he had to, we had to open an account together.

 

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He had to show up with me.

 

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I couldn't open one on my own.

 

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um

 

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credit card.

 

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I thought it was a joke in the beginning when they were like, you're approved for $300.

 

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I was like, what?

 

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And then they even recommended getting a prepaid card before I was given the $300 limit.

 

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So that took a bit of time.

 

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I think I was fortunate in that

 

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My husband had enough history that he was just able to add me to a lot of his accounts and

a lot of his credit cards.

 

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So I didn't really have to use my $300 credit card and live with it.

 

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But it was what I needed to do to build up history in the US.

 

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And I've learned over time, it's that five year period that they really wanna see that

you've had a bank account for five years.

 

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Like that's when you start to build credit history in the US.

 

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It's a slow process.

 

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credit history is so important.

 

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Like everything in the US is dependent on your credit history.

 

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And as an American, like I'm so aware of that.

 

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Like I remember like having conversations, do we open, you know, do I become an authorized

user on my parents credit card, you know, in high school and uh or young getting my first

 

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credit cards at 18.

 

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And right.

 

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And so it's just such it's such a big deal in the US.

 

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It's like that number is so important and determines like your entire like financial uh

life in the US.

 

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Is it similar in Canada?

 

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mean, it's nothing like that in Europe.

 

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So I'm curious, like, what do you do in Canada?

 

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it is.

 

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It's very similar in Canada.

 

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I just didn't experience it because I had my first bank account open when I was 16 years

old in Canada.

 

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I had a credit card when I was in college.

 

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So, you know, I never went through this process of having to build it from scratch so

quickly.

 

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Because when I moved the second time around, was moving as an experienced professional.

 

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I was making good money.

 

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I had expenses and I could not cover off all those expenses and using the credit card that

was originally offered to me at $300.

 

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But ah then I had, know, when I moved to Chicago, we had this little community of people.

 

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were...

 

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all these Canadians that had relocated to Chicago and we all would joke about the same

thing.

 

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So it was nice to have a community that experienced similar bureaucracies as we moved to a

new place.

 

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It's important to be able to laugh at it because there is bureaucracy everywhere.

 

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And it's also why when you're moving abroad, like you just have to have more cash.

 

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Like you have to have a much bigger cushion.

 

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Because even us here, when we first moved, you know, I had a good job, my husband had a

good job, and they were still like, your credit card limit is 500 francs a month, right,

 

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about $500.

 

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And you have to pay that off every month.

 

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like it's not like it was acted more almost like a debit card than a credit card.

 

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And we were like, what?

 

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You know, coming from the US where you had like 20, 30, $40,000 in credit.

 

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It's like, this is crazy.

 

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No one is using credit in the same way.

 

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There's no point.

 

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It's a completely different system, even though it's a credit card.

 

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Is that was do you think credit scores and and that is that one of the biggest

misconceptions that Canadians kind of have about how maybe things will be easy when they

 

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plug into that?

 

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into the U.S.

 

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financial system.

 

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There's a couple more things.

 

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There is your financial life, which is a bit of a starter.

 

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You're starting over.

 

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For me, I thought the biggest challenge was navigating health care and health insurance.

 

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The systems are so different between Canada and the US.

 

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In Canada, our health expenses are paid for by the government.

 

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And that's why there's higher taxes in Canada.

 

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but you walk out with the doctors from the doctor's office, you show your health guard,

you're done.

 

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In the US, what surprised me in the beginning was I would go to a doctor's visit and then

I would get a few different bills from the same doctor's visit because there is different

 

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providers within the same office.

 

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There is copays, deductibles, out-of-pocket taxes.

 

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These things didn't exist for me.

 

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So I had to learn that healthcare system from scratch, which was, I think, harder than the

financial system for me.

 

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Maybe because of other history.

 

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agree with that.

 

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I mean, we moved back to New York for a couple of years and it was when we, you know, in

our early thirties and we hadn't really had to deal with US healthcare as like adults yet

 

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before.

 

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And I was shocked at how difficult it was and how frustrating it was and how much time I

would have to spend on the phone basically advocating for myself or advocating for my

 

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insurance to like bill correct or like the doctors wasn't billing correctly.

 

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We were, like, I had to, like, it was like, uh I don't know, what is it, a beautiful mine

where you, like, lays everything out and there's, the lines connected.

 

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I mean, I felt like a crazy person trying to keep everything organized with two working

adults and two children.

 

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It was just, it was a full-time job to manage US healthcare.

 

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And I think it's important because at this point, you're working for GE, right?

 

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So you have good health, like, my husband worked at GE, so I know they have, like, a

pretty good health plan, like.

 

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you're kind of already coming in at like a higher tier than someone who's.

 

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Yeah, it's a great health plan.

 

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I'm now uh on my husband's uh health plan, very similar.

 

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It's amazing when you're working with a company and you're moving over as an employee

that's well paid, you're in a good health insurance, but even still, you still have

 

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deductibles, out-of-pocket maxes, and understanding in network, outside of network.

 

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That was so new to me.

 

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I remember thinking, wait, so some doctors can only build a certain insurance company?

 

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Now that all feels normal.

 

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But in the beginning, yeah, it was all brand new and a lot to figure out.

 

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Yeah, no, I agree.

 

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It's like one of the things that I'm so thankful for with our life outside of the US is

that I don't have to deal with like the insurance nearly as much oh as we did when we when

 

203

00:15:43,949 --> 00:15:44,710

we used to live there.

 

204

00:15:44,710 --> 00:15:48,041

So good for you for figuring that out.

 

205

00:15:48,042 --> 00:15:51,124

I want to shift now to make sure we cover this.

 

206

00:15:51,124 --> 00:15:55,547

uh You're kind of you've land you've laid out some landmines.

 

207

00:15:55,547 --> 00:15:59,986

So let's shift into what you call the high efficiency low cost mistakes.

 

208

00:15:59,986 --> 00:16:03,149

that people don't realize are costing them the most.

 

209

00:16:03,149 --> 00:16:07,332

So the first landmine that you talk about is leaving finances as is.

 

210

00:16:07,332 --> 00:16:18,420

So talk to us about what happens when people are leaving their accounts untouched after

moving, especially, and we've talked about P-Fix on this podcast so many times, um but

 

211

00:16:18,420 --> 00:16:26,076

thinking about different foreign, and when I say foreign, I mean non-US investments, or

even estate planning gaps.

 

212

00:16:26,210 --> 00:16:39,134

Yeah, you know uh when people move across the border, I feel like the simplest or some of

the biggest mistakes they make are they're not complicated tax strategies, but they're

 

213

00:16:39,134 --> 00:16:47,193

really simple, simple things that, you know, one is just not consolidating all of your

accounts and moving.

 

214

00:16:47,193 --> 00:16:48,294

oh

 

215

00:16:48,690 --> 00:16:49,010

is.

 

216

00:16:49,010 --> 00:16:59,558

This is a personal mistake that I made and I wish I had simplified my financial life in

Canada more before I moved to the US.

 

217

00:16:59,558 --> 00:17:07,223

Consolidating bank accounts, retirement accounts, know simplicity is really an asset when

you're moving abroad.

 

218

00:17:07,223 --> 00:17:10,685

ah And then related to PFIC.

 

219

00:17:10,956 --> 00:17:20,854

When you hold, so for example, you have Canadian brokerage accounts and you're holding

ETFs or mutual funds in those Canadian brokerage accounts.

 

220

00:17:20,854 --> 00:17:29,641

It's most likely that those are Canadian domiciled ETFs and automatically become subject

to PFIC rules.

 

221

00:17:29,801 --> 00:17:38,568

Now, honestly, PFIC took me a long time to understand too, because it's complicated in the

way that it's described and the way that it's understood and also interpreted.

 

222

00:17:38,568 --> 00:17:40,675

ah

 

223

00:17:40,675 --> 00:17:46,196

the big, if I were to simplify it, it just adds to your compliance headache.

 

224

00:17:46,196 --> 00:17:51,218

You have extra forms to fill out when you report your holdings to the IRS.

 

225

00:17:51,498 --> 00:18:03,221

The treatment on when you buy or sell or get distributions or dividends from your holdings

is not subject to uh good tax treatment.

 

226

00:18:03,221 --> 00:18:06,462

You don't get the benefits of

 

227

00:18:06,818 --> 00:18:12,520

holding those same assets domestically ah when you move to the US.

 

228

00:18:12,520 --> 00:18:24,305

So you want to pay attention to that to make sure that you don't leave behind brokerage

accounts with a whole bunch of Canadian domiciled ETFs and mutual funds before you leave.

 

229

00:18:24,305 --> 00:18:29,167

uh With estate planning, the rules are so different.

 

230

00:18:29,167 --> 00:18:35,170

ah In Canada, it's your taxed, it's a deemed disposition.

 

231

00:18:35,618 --> 00:18:36,058

death.

 

232

00:18:36,058 --> 00:18:40,760

So they essentially tax you out of your estate at death.

 

233

00:18:40,760 --> 00:18:43,641

And then there's no transfer tax, so to speak.

 

234

00:18:43,641 --> 00:18:46,361

But in the US, we have a transfer tax.

 

235

00:18:46,361 --> 00:18:59,185

So it's just it's good to understand the differences before you move if you're sitting on

a lot of assets in Canada, ah just to just to make sure that you know, you have some kind

 

236

00:18:59,185 --> 00:19:01,046

of planning done around.

 

237

00:19:01,046 --> 00:19:07,651

your will or your trust is going to try to be more holistic with your assets across the

border.

 

238

00:19:07,651 --> 00:19:12,554

ah That part really depends on how much wealth you have.

 

239

00:19:12,554 --> 00:19:22,181

So I would keep it very practical and say if your wealth is above a certain level, you

want to work with somebody to say, it worth it for me to hold?

 

240

00:19:22,362 --> 00:19:28,345

I would say maybe over a million dollars is when you want to.

 

241

00:19:28,698 --> 00:19:29,818

or real estate.

 

242

00:19:29,818 --> 00:19:38,221

if you're holding real estate in Canada, which can get, know, property prices, I've

appreciated a lot in Canada.

 

243

00:19:38,221 --> 00:19:43,950

ah Maybe even a million dollars, I don't think is worth it with all the headache.

 

244

00:19:43,950 --> 00:19:46,124

I would even increase that to five million bucks.

 

245

00:19:46,124 --> 00:19:52,546

ah It might be worth it to sell all your brokerage accounts and just move them with you to

the US.

 

246

00:19:52,546 --> 00:19:54,184

ah

 

247

00:19:54,184 --> 00:19:56,947

Canadian capital gains tax though?

 

248

00:19:56,947 --> 00:19:59,460

When you sell everything, if you go to liquidate everything?

 

249

00:19:59,479 --> 00:20:10,106

Yeah, so when you exit the US, you have to do this departure process anyway, where you

fair value all your assets at that point.

 

250

00:20:11,047 --> 00:20:12,688

So you're going to do that anyway.

 

251

00:20:12,688 --> 00:20:21,013

So you might as well sell it and just move it to the US and invest it in your US brokerage

accounts.

 

252

00:20:21,013 --> 00:20:22,007

Plus, think.

 

253

00:20:22,007 --> 00:20:25,734

the tax rate in Canada when you sell?

 

254

00:20:26,522 --> 00:20:28,143

the capital gains rate.

 

255

00:20:28,724 --> 00:20:29,465

It's about 30%.

 

256

00:20:29,465 --> 00:20:31,147

It's similar to the US.

 

257

00:20:31,147 --> 00:20:33,649

It depends on whether you're holding it short or long term.

 

258

00:20:33,649 --> 00:20:37,182

ah So the tax rates are not very different.

 

259

00:20:37,182 --> 00:20:39,715

They are higher in Canada.

 

260

00:20:39,715 --> 00:20:44,439

But you're paying that anyway when you exit, when you do your deem disposition.

 

261

00:20:44,439 --> 00:20:47,741

So you might as well move.

 

262

00:20:48,130 --> 00:20:51,823

sell out of your assets and hold them in the US.

 

263

00:20:51,823 --> 00:20:58,788

Or you can work with some investment firms that allow you to hold US-based brokerage

accounts.

 

264

00:20:58,788 --> 00:21:03,768

So you can transfer to those if you don't want to move the money physically to the US.

 

265

00:21:03,768 --> 00:21:04,859

seen that.

 

266

00:21:05,159 --> 00:21:14,806

I just want to point that out because if you have individual holdings, you will likely be

able to transfer those into a US brokerage account rather easily without having to like

 

267

00:21:14,806 --> 00:21:15,646

to.

 

268

00:21:15,774 --> 00:21:17,194

sell everything.

 

269

00:21:17,254 --> 00:21:24,834

if Canadian capital gains tax is like 30%, I would be thinking maybe we could pay, you

know, 23.8%, which is like the US.

 

270

00:21:24,834 --> 00:21:26,814

But you're right, it depends on what state you go to.

 

271

00:21:26,814 --> 00:21:32,394

If you go to a state that also has additional capital gains tax, then you may end up

paying almost 30%.

 

272

00:21:32,394 --> 00:21:33,954

So it really won't matter.

 

273

00:21:33,954 --> 00:21:42,134

The other thing is that I wanted to just circle back on is you're talking about, you know,

call professional when you have a million or 5 million.

 

274

00:21:42,134 --> 00:21:45,150

The issue that I see in cross border is

 

275

00:21:45,150 --> 00:21:48,430

you can have not a lot of money and have a really complex case.

 

276

00:21:48,430 --> 00:21:52,050

And so for me, think about there's like kind of almost like two tests.

 

277

00:21:52,050 --> 00:22:01,290

So I think about, do you have enough assets where it makes like, I know I'm going to add

enough value to your situation, or do you have enough complexity where I know I'm going to

 

278

00:22:01,290 --> 00:22:02,410

add value to your situation?

 

279

00:22:02,410 --> 00:22:08,270

And that's really how I determine if we should work with someone, because if you're

self-employed, that's complex.

 

280

00:22:08,270 --> 00:22:12,950

Even if you don't make a of money, that's still a complexity that you really have to think

through.

 

281

00:22:12,984 --> 00:22:13,444

Yeah.

 

282

00:22:13,444 --> 00:22:19,519

If you are involved in any foreign corporations in Canada or in the US, that's something

to think through.

 

283

00:22:19,519 --> 00:22:27,826

um If you have complex family situations, maybe part of the family is staying back, um

that's something to think through.

 

284

00:22:27,826 --> 00:22:32,310

If you, like you said, if you own real estate, that's something to think through.

 

285

00:22:32,310 --> 00:22:39,816

Or even if you have family wealth that you're preparing to potentially inherit while

you're abroad, I think that's another reason to call.

 

286

00:22:39,816 --> 00:22:42,768

So it doesn't necessarily have to just be don't call.

 

287

00:22:42,768 --> 00:22:45,340

Aditya, Aditya, until you have $5 million.

 

288

00:22:45,340 --> 00:22:52,176

It's like, think about it, you know, are you earning a million dollars a year, but you

don't have a million dollars in assets yet?

 

289

00:22:52,176 --> 00:22:53,757

Because we see clients like that all the time, right?

 

290

00:22:53,757 --> 00:23:02,658

Those high m income earners where they have the equity compensation that we have to think

about across borders, all of those types of things, still a reason to call.

 

291

00:23:02,658 --> 00:23:05,087

And maybe it's not ongoing financial planning engagement.

 

292

00:23:05,087 --> 00:23:08,940

Maybe it's a limited engagement to just do a quick check in.

 

293

00:23:08,940 --> 00:23:11,686

What are the tax implications of moving?

 

294

00:23:11,686 --> 00:23:17,149

across this border and have I truly optimized it or am I missing something?

 

295

00:23:17,149 --> 00:23:27,934

Because if you have a million dollar investment management account, you could have

$100,000 $300,000 or more of capital gains tax exposure.

 

296

00:23:27,934 --> 00:23:36,818

And so it's definitely worth to pay $10,000 to do a full review or whatever to think

through, have I really optimized this?

 

297

00:23:36,911 --> 00:23:45,765

100%, I think the threshold that I was referring to is more on when do you feel like you

should leave your assets in Canada.

 

298

00:23:45,765 --> 00:23:53,027

If you have a large amount of assets and you may not be able to transfer it all to the US

easily.

 

299

00:23:53,027 --> 00:23:54,067

So that's a threshold.

 

300

00:23:54,067 --> 00:24:02,935

But in terms of evaluating what is the easiest way for you to get down, I think you

absolutely want to consult somebody more for the efficiency.

 

301

00:24:02,935 --> 00:24:05,157

And this was my landmine.

 

302

00:24:05,157 --> 00:24:12,463

did not consult a cross-border accountant early enough in my process.

 

303

00:24:12,804 --> 00:24:14,035

And I wish I had.

 

304

00:24:14,035 --> 00:24:18,369

I wish I was working with somebody that understood the tax treaty better.

 

305

00:24:18,369 --> 00:24:20,390

ah

 

306

00:24:20,438 --> 00:24:23,820

So that I think I would have saved myself a lot of headache.

 

307

00:24:23,820 --> 00:24:26,703

ah So I agree with you.

 

308

00:24:26,703 --> 00:24:38,190

Even if you're moving with little assets, you should still consider talking to somebody to

make sure you're not leaving something behind that's not gonna cost you an extra form with

 

309

00:24:38,190 --> 00:24:39,321

the U.S.

 

310

00:24:39,321 --> 00:24:43,174

filing in the year that you're starting to do this.

 

311

00:24:43,356 --> 00:24:43,987

Absolutely.

 

312

00:24:43,987 --> 00:24:46,510

Okay, landmine number two, retirement accounts.

 

313

00:24:46,510 --> 00:24:52,318

um What are some of the common mistakes that you're seeing for people who are moving

between Canada and the U.S.?

 

314

00:24:52,318 --> 00:24:56,704

I think we have more Americans in Canada than in any other country.

 

315

00:24:56,704 --> 00:24:59,167

So I'm assuming you're a really good treaty with Canada.

 

316

00:24:59,167 --> 00:25:01,454

So what happens with retirement accounts?

 

317

00:25:01,454 --> 00:25:09,294

So retirement accounts are, you just leave them, you stop contributing to them, leave them

as is, let them grow into the future.

 

318

00:25:09,294 --> 00:25:14,894

But there's one type of account in Canada, it's called a tax-free savings account, the

TFSA.

 

319

00:25:15,534 --> 00:25:20,654

This one, it's ideal you close before you move to the US.

 

320

00:25:20,694 --> 00:25:27,774

The reason you do this is because it doesn't give you the same benefits in the US as it

did in Canada.

 

321

00:25:27,774 --> 00:25:31,054

So a tax-free savings account almost works like a Roth.

 

322

00:25:31,581 --> 00:25:35,306

where you put in money, it grows tax free.

 

323

00:25:35,306 --> 00:25:37,559

When you withdraw from it, it grows tax free.

 

324

00:25:37,559 --> 00:25:40,152

Except for the TFSA, you don't have to wait till retirement.

 

325

00:25:40,152 --> 00:25:42,094

You can withdraw from it at any time.

 

326

00:25:42,094 --> 00:25:44,797

So it's kind of a more flexible Roth.

 

327

00:25:44,797 --> 00:25:46,179

ah

 

328

00:25:46,179 --> 00:25:50,983

But the problem with the TFSA is it's treated as a trust in the US.

 

329

00:25:50,983 --> 00:25:53,524

So the tax reporting becomes a headache.

 

330

00:25:53,785 --> 00:26:01,450

So for most people that are moving, we want to close down your TFSA account before you

move.

 

331

00:26:01,450 --> 00:26:03,892

ah You don't want to hold on to it.

 

332

00:26:03,892 --> 00:26:06,094

It's more work to do so.

 

333

00:26:06,699 --> 00:26:18,706

and I think it's also I just want to quickly uh point out and correct me if I'm wrong you

cannot take money from your retirement account in in Canada and move that into a US

 

334

00:26:18,706 --> 00:26:25,960

retirement account because I always get that question from people and it's important to

just remember there are two different countries two different Retirement plans you cannot

 

335

00:26:25,960 --> 00:26:30,733

combine those plans, but like you said for a lot of those standardized plans.

 

336

00:26:30,733 --> 00:26:32,476

You can leave that in the country

 

337

00:26:32,476 --> 00:26:33,667

And the same with the US one.

 

338

00:26:33,667 --> 00:26:38,253

You would leave that one in the US, and you're not completely combining those plans.

 

339

00:26:38,253 --> 00:26:39,825

Same with the Social Security as well.

 

340

00:26:39,825 --> 00:26:40,766

You're not combining plans.

 

341

00:26:40,766 --> 00:26:44,461

You might get credits from uh both countries, but they're still separate.

 

342

00:26:44,461 --> 00:26:49,025

uh Landmine number three, Canadian property ownership.

 

343

00:26:49,506 --> 00:26:58,647

Yeah, this one's complicated because Canada doesn't have a uh citizen-based tax system

like the US does.

 

344

00:26:58,647 --> 00:27:03,262

So once you leave Canada, you can become a non-resident of Canada.

 

345

00:27:03,303 --> 00:27:06,264

But if you are leaving back property in Canada...

 

346

00:27:07,020 --> 00:27:17,917

the CRA, which is the Canada Revenue Agency, just wants to make sure that you are going to

file your taxes for the income that you're earning on your real estate properties if

 

347

00:27:17,917 --> 00:27:19,549

you've rented it out, for example.

 

348

00:27:19,549 --> 00:27:20,374

uh

 

349

00:27:20,374 --> 00:27:32,082

And if you do rent it out, they want you to withhold 25 % of your rental revenue, not your

income, your revenue, and remit it to the CRA.

 

350

00:27:32,082 --> 00:27:38,547

So this could become kind of a headache from a cash flow perspective, administrative

perspective.

 

351

00:27:38,547 --> 00:27:44,882

So there's a couple of forms and some elections you need to make to ensure that you uh

file a form.

 

352

00:27:44,882 --> 00:27:46,012

It's called the NR73 form.

 

353

00:27:46,012 --> 00:27:48,774

uh

 

354

00:27:49,047 --> 00:28:01,512

and you let them know, you let the government know what your estimated income is going to

be, and you're exempt from then sending 25 % of your revenue, you can send 25 % of your

 

355

00:28:01,512 --> 00:28:03,744

income, which is better.

 

356

00:28:03,965 --> 00:28:07,188

And then at the end of the year, you go through a...

 

357

00:28:08,486 --> 00:28:15,510

You consolidate, understand, you analyze how much you've earned, um and you pay your taxes

based on that.

 

358

00:28:15,510 --> 00:28:26,226

So the home ownership piece financially is not a big ah hit because you will pay

something, you'll get it back at the end of the year.

 

359

00:28:26,226 --> 00:28:28,758

It's just an administrative headache.

 

360

00:28:28,758 --> 00:28:36,262

So you just want to make sure you're talking to your cross-border accountant of having the

right elections filed before you move.

 

361

00:28:36,722 --> 00:28:43,116

Yeah, super, super important because yes, uh gross revenue versus net revenue, those

numbers can be very, very different.

 

362

00:28:43,116 --> 00:28:52,351

And I can see that being a a huge uh hassle on a cashflow if you tie up 25%, even if

you're just basically breaking even on a rental property.

 

363

00:28:53,292 --> 00:28:57,254

landmine number four, ignoring currency.

 

364

00:28:57,580 --> 00:29:00,196

Yeah, we started the conversation with this.

 

365

00:29:00,196 --> 00:29:02,361

uh The rates move.

 

366

00:29:02,666 --> 00:29:16,492

and they move frequently, uh you just want to ensure that you, if you're moving large sums

of money, you probably don't want to use your bank ah unless you have a relationship with

 

367

00:29:16,492 --> 00:29:16,812

them.

 

368

00:29:16,812 --> 00:29:25,215

If you have a private bank relationship with your bank, they will help you get to a close

to spot exchange rate.

 

369

00:29:25,336 --> 00:29:30,958

Otherwise, you're just paying a lot in fees and exchange rate commissions.

 

370

00:29:31,180 --> 00:29:40,810

So it's easier to partner with, WISE is really good for small transfers across the border.

 

371

00:29:40,810 --> 00:29:45,958

I have a couple of firms that I work with that allow us to hedge.

 

372

00:29:46,401 --> 00:29:50,513

and log in a price for FX transfers.

 

373

00:29:50,533 --> 00:29:52,864

And then that is good for you too.

 

374

00:29:52,864 --> 00:29:54,685

You know exactly how much you're going to pay.

 

375

00:29:54,685 --> 00:29:57,897

They let you know when the rate is ideal for you.

 

376

00:29:57,897 --> 00:30:08,522

But you just want to bake that into your costs uh of living and transfer is the currency

movement and planning because it moves a lot.

 

377

00:30:08,573 --> 00:30:09,165

absolutely.

 

378

00:30:09,165 --> 00:30:15,414

Okay, final landmine number five, not hiring a cross-border accountant.

 

379

00:30:15,414 --> 00:30:18,337

Yeah, we talked about this as well uh already.

 

380

00:30:18,337 --> 00:30:23,781

ah This came to me, again, this was something I learned over time.

 

381

00:30:24,054 --> 00:30:36,192

At least the first year that you're moving and the first couple of years until you have

relieved yourself of all your ties of Canada, you really want to engage with a

 

382

00:30:36,192 --> 00:30:38,294

cross-border accountant.

 

383

00:30:38,294 --> 00:30:48,049

And if you're going to continue to keep the real estate property or if you're inheriting

property, like that's another great flag to make sure you engage a good cross border

 

384

00:30:48,049 --> 00:30:51,410

accountant, because now you're going to have obligations in Canada.

 

385

00:30:51,410 --> 00:31:04,166

So when you're transitioning, if you're inheriting or if you're moving from US to Canada,

you also want to do the same thing because there is similar landmines going the other side

 

386

00:31:04,166 --> 00:31:08,369

of the board, like going reverse, going from Canada to the US, which

 

387

00:31:08,369 --> 00:31:11,922

I believe is also happening a bunch right now.

 

388

00:31:12,818 --> 00:31:23,121

Yeah, with the accountant, do you have some tips for helping people find a good accountant

uh cross-border US for this?

 

389

00:31:23,121 --> 00:31:25,346

We're talking about tax prep, tax preparation.

 

390

00:31:25,346 --> 00:31:40,063

For tax prep, I think when you go online and you, uh if you are moving with your company,

ah you can negotiate with your firm to allow you to use an EY or Deloitte, one of the

 

391

00:31:40,063 --> 00:31:41,373

larger firms to help you.

 

392

00:31:41,373 --> 00:31:43,995

Just depends on how complex your situation is.

 

393

00:31:43,995 --> 00:31:54,159

ah If you don't have that opportunity, then, you know, there is Google searches and a lot

of these cross border accounts put out a lot of good content.

 

394

00:31:54,159 --> 00:31:55,313

ah

 

395

00:31:55,313 --> 00:32:01,975

on the website, they have YouTube videos about how they manage transfers, what are the

forms.

 

396

00:32:01,975 --> 00:32:11,018

So look for the cross-border accountants that are doing a good job educating you online or

have enough material out there.

 

397

00:32:11,018 --> 00:32:22,592

And then make sure you understand them and you guys are, you you and the accountant are

speaking the same language and that they're able to simplify some of the complexity for

 

398

00:32:22,592 --> 00:32:23,342

you.

 

399

00:32:23,502 --> 00:32:37,495

ah And I just like any other provider that you would hire, ah just make sure they're on

top of things and they're not dealing with too many files and you're lost in their case

 

400

00:32:37,495 --> 00:32:38,015

files.

 

401

00:32:38,015 --> 00:32:41,028

ah That happens, you don't want that.

 

402

00:32:41,028 --> 00:32:45,441

You want someone that's really paying attention to your situation.

 

403

00:32:45,818 --> 00:32:47,159

Yeah, I think those are great starting points.

 

404

00:32:47,159 --> 00:32:56,984

A couple of things that I want to just share from what I've learned in helping identify

good cross border accountants is don't be scared to interview at least three.

 

405

00:32:56,984 --> 00:33:02,407

Take your time and the best time to find a good accountant is outside of busy season.

 

406

00:33:02,407 --> 00:33:07,756

so do you, does Canada have like the similar tax filing deadlines as we have in the US?

 

407

00:33:07,756 --> 00:33:11,552

Yeah, so Canada, the US is April 15th.

 

408

00:33:11,552 --> 00:33:14,888

ah Canada is just 15 days after that, April 30th.

 

409

00:33:14,888 --> 00:33:15,678

Yeah.

 

410

00:33:15,708 --> 00:33:16,738

the 30th, okay.

 

411

00:33:16,738 --> 00:33:23,321

Yeah, so a great time to start interviewing for accountants is what we're, we're talking

about this in December.

 

412

00:33:23,321 --> 00:33:26,062

This is probably gonna go live in January, February.

 

413

00:33:26,062 --> 00:33:30,363

So I would say by February, you should definitely be interviewing.

 

414

00:33:30,363 --> 00:33:33,484

Don't call someone on April 1st to interview them.

 

415

00:33:33,484 --> 00:33:36,545

They are busy, they don't have time, and they don't wanna talk to you.

 

416

00:33:36,545 --> 00:33:39,536

I also loved your tip about looking, look for the educators.

 

417

00:33:39,536 --> 00:33:43,619

and look for the educators specific to the countries that you are living in.

 

418

00:33:43,619 --> 00:33:47,632

So there are a lot of really big firms that just do, we do international.

 

419

00:33:47,632 --> 00:33:48,562

International is great.

 

420

00:33:48,562 --> 00:33:50,694

There's a lot of countries to specialize in.

 

421

00:33:50,694 --> 00:33:57,959

I always like to go one step more and look for who is really talking about and educating

you on US, Canada issues, tax issues.

 

422

00:33:57,959 --> 00:34:06,065

um So again, look for three firms, see what those firms are, confirm what their prices or

their price ranges would be.

 

423

00:34:06,065 --> 00:34:07,666

Don't be scared to give them, you know,

 

424

00:34:07,666 --> 00:34:14,132

the prior year return so they have a really good idea of what your situation actually

looks like so they can give you a good quote.

 

425

00:34:14,132 --> 00:34:18,095

um So there's no major surprises at the end.

 

426

00:34:18,095 --> 00:34:22,740

Okay, Aditi, I know we're like over time, so I wanna ask our final question.

 

427

00:34:22,740 --> 00:34:30,386

If you could give one piece of advice for someone who's just beginning their US-Canada

cross-border journey, what would it be?

 

428

00:34:31,406 --> 00:34:41,346

would be to talk to people that have done it before or get a referral to talk to a

cross-border financial planner.

 

429

00:34:42,986 --> 00:34:50,206

and you know, if you're gonna DIY, then research and talk to as many people as you can.

 

430

00:34:50,206 --> 00:35:00,446

If you don't want to DIY and you want to outsource it, hire a cross-border financial

planner that's gonna help you navigate all the questions you need to ask before moving.

 

431

00:35:00,744 --> 00:35:01,965

Yeah, I think that's a great point.

 

432

00:35:01,965 --> 00:35:06,939

And you'd mentioned in the beginning, like you guys found your community of, you U.S.

 

433

00:35:06,939 --> 00:35:09,231

Canadian families living in Chicago.

 

434

00:35:09,231 --> 00:35:16,768

And I think that's always like the point that hits home in every single episode that we do

on Passport to Wealth is finding your community.

 

435

00:35:16,768 --> 00:35:20,591

And sometimes that's just other people who have shared lived experiences.

 

436

00:35:20,591 --> 00:35:25,165

And sometimes it's that community of people who can provide you with elevated support,

right?

 

437

00:35:25,165 --> 00:35:29,318

Financial planning, tax support, relocation, uh you know.

 

438

00:35:29,474 --> 00:35:31,656

real estate, uh language.

 

439

00:35:31,656 --> 00:35:33,577

There's so many considerations.

 

440

00:35:33,577 --> 00:35:35,916

Aditi, thank you so much for joining us today.

 

441

00:35:35,916 --> 00:35:36,969

It was such a pleasure.

 

442

00:35:36,969 --> 00:35:41,181

We'll have to have you back on to discuss more U.S.

 

443

00:35:41,181 --> 00:35:42,802

Canadian issues.

 

444

00:35:42,883 --> 00:35:43,877

Thank you, Ariel.

 

445

00:35:43,877 --> 00:35:45,392

Thank you for having me.

 

446

00:35:47,230 --> 00:35:48,074

you