Keeping Canadian Bank Accounts After Moving to the US: What Works, What Gets Restricted, and What to Report

Nothing in Canadian or US tax law requires a Canadian who moves to the US to close their Canadian bank accounts, and there are good reasons to keep them: Canadian-source income (rent, pension, RRSP withdrawals) needs somewhere to land, Canadian bills need paying, and a return to Canada is easier with the banking intact. What changes is the institution's willingness to serve a US resident (Canadian brokerages generally will not trade for one), the tax treatment of the income (Part XIII withholding on some, exemption on others), and the reporting (every account on the FBAR and Form 8938). Here is the account-by-account picture.

Key takeaways

• Chequing and savings: keep them. Interest paid to a US resident by a Canadian bank is exempt from Part XIII withholding (arm's-length interest); report the interest on the 1040; the account is on the FBAR and Form 8938.
• Non-registered brokerage: most Canadian brokerages will not accept trades from a US-resident client because of US securities registration rules; the account is typically frozen for buys (sells and transfers out are allowed) or must be moved to a US broker or a cross-border-licensed dealer. Canadian mutual funds and ETFs in it are PFICs for a US person.
• RRSP and RRIF: keep them; the treaty defers US tax; most Canadian institutions will hold and administer an RRSP for a US resident but restrict active trading; withdrawals face 25% (lump) or 15% (periodic) withholding.
• TFSA: close it before crossing; it is taxable in the US and potentially a foreign trust.
• Notify the institution of non-resident status and the departure date so Part XIII withholding is applied correctly and the NR4 is issued; the bank will update the tax residency information under FATCA and CRS.
• Credit cards, mortgages, lines of credit: keep or wind down as convenient; a Canadian mortgage on a rented Canadian home is a deductible expense on the Section 216 return and Schedule E.

Chequing and savings

Canadian banks keep accounts open for non-residents. The bank should be told the new status and address so it can apply Part XIII correctly (there is none on arm's-length interest from a Canadian bank, so no withholding on savings interest) and update the account holder's tax residency under the FATCA and CRS regimes. The interest is reported on the US return as ordinary income (converted at the average rate) with no foreign tax credit; the account is on the FBAR and Form 8938 at its maximum value.

Some banks restrict online features or product eligibility for non-resident addresses; keeping a Canadian mailing address (a family member's) for the account while reporting non-resident status for tax is common and legitimate, provided the tax residency is reported accurately.

Brokerage accounts

The US Securities and Exchange Commission and state securities regulators require dealers serving US residents to be registered in the US. Most Canadian discount and full-service brokerages are not, and will not execute purchases for a client with a US address; they permit sales and transfers out. A US resident who wants to keep trading Canadian securities uses a US broker (most hold TSX-listed securities), a Canadian dealer with US registration (a few of the bank-owned dealers have cross-border units for larger accounts), or a cross-border investment advisor licensed on both sides.

For a US person, Canadian mutual funds and Canadian-listed ETFs are PFICs (Form 8621 each); individual Canadian stocks and bonds are not. Most movers sell the funds before the move and hold individual securities or US-listed ETFs after.

Canadian dividends paid to a US resident face 15% withholding (NR301 on file); interest is exempt; capital gains are not Canadian-taxable for a non-resident (except taxable Canadian property).

RRSP, RRIF, LIRA

Keep them. The treaty defers US tax on the accrued income, and the accounts are reported on the FBAR and Form 8938. Canadian institutions will administer registered plans for US residents, but many restrict purchases inside the plan for the same securities-law reasons; a self-directed RRSP at a Canadian discount broker may be limited to holding and selling. Some institutions require the plan to be moved to a cross-border-capable dealer. Withdrawals face Part XIII withholding at 25% on lump sums and 15% on periodic RRIF payments within the treaty limit (NR301 on file), and are taxable in the US with a foreign tax credit.

TFSA, RESP, RDSP

The TFSA is taxable in the US from the residency start date and potentially a foreign trust (Forms 3520 and 3520-A). Close it before crossing; the withdrawal is tax-free in Canada. An RESP can be kept for a child's education, but it is a foreign trust for a US-person subscriber and the CESG is taxable to them; the contribution room and grants stop for non-resident beneficiaries. An RDSP can be kept with no further contributions; foreign trust reporting applies.

Credit and debt

Canadian credit cards work in the US; keeping one preserves Canadian credit history for a return. A Canadian mortgage on a home kept and rented is a deductible interest expense against the rental income on both the Section 216 return and Schedule E. A Canadian line of credit is an ordinary debt; paying it off in US dollars after the Canadian dollar has weakened can produce a section 988 gain for a US person.

The notification

Tell each institution the departure date and the new address, and complete the institution's non-resident declaration (which feeds the NR4 reporting and the Part XIII withholding). File NR301 with any institution that will pay dividends, pension, or RRSP income. Expect the institution to update your tax residency under FATCA and CRS and to ask for a US TIN.

Worked example

A Toronto couple moving to Florida hold a joint chequing account, a $400,000 non-registered account at a bank-owned discount broker (Canadian mutual funds and bank stocks), two RRSPs, two TFSAs, a $200,000 mortgage on the Toronto condo they will rent, and Canadian credit cards.

• Chequing. Kept; non-resident status declared; used for rent deposits and Canadian bills; on the FBAR and Form 8938.
• Brokerage. Mutual funds sold before departure (avoiding PFICs); bank stocks transferred in kind to a US broker after the move; the Canadian account closed. Dividends on the bank stocks now paid by the US broker with 15% Canadian withholding on the NR301.
• RRSPs. Kept; NR301 filed; trading restricted to sells; on the FBAR and Form 8938; treaty deferral.
• TFSAs. Withdrawn tax-free and closed in June before departure.
• Mortgage. Kept; interest deductible on the Section 216 return and Schedule E.
• Credit cards. Kept.

Official sources

"The usual Part XIII tax rate is 25% unless a tax treaty between Canada and your home country reduces the rate." — Canada Revenue Agency, Non-residents of Canada, https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/non-residents-canada.html

"A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year." — Financial Crimes Enforcement Network, Report of Foreign Bank and Financial Accounts (FBAR), https://www.fincen.gov/report-foreign-bank-and-financial-accounts

"For Part XIII tax withholding purposes, this declaration expires when there is a change in the taxpayer's eligibility for the declared treaty benefits or three years from the end of the calendar year in which the form is signed and dated, whichever is earlier." — Canada Revenue Agency, NR301 Declaration of eligibility for benefits (reduced tax) under a tax treaty for a non-resident person, https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/nr301.html

Practitioner note

The account that has to go is the TFSA; the account that has to move is the brokerage; everything else stays. The step clients skip is telling the institution: without the non-resident declaration and the NR301, dividends and RRSP withdrawals are withheld at 25% instead of 15%, and the NR4 that the US return needs is issued with the wrong numbers.

See also: Planning a move? Start with the Canada-to-US tax checklist and browse every corridor by city, province, and state.

Next step

Fairlight prepares the account-by-account plan before departure, the non-resident declarations and NR301 filings, and the FBAR and Form 8938 reporting on the retained accounts. See cross-border pricing or book a call.