Leaving Quebec for the US: The Final TP-1, Revenu Québec, and What Happens to Your Taxes

Quebec is the only province that administers its own income tax, and a Quebec resident moving to the US files three departure-year income tax returns: the federal T1, Revenu Québec's TP-1, and the US 1040 (usually dual-status). Quebec also has the highest combined top rate in Canada at about 53.3%, its own pension plan, its own health plan, and a 14.975% combined sales tax. Every US destination is a large rate cut; the departure year is where the work is.

Key takeaways

• Two Canadian departure returns, the T1 and the TP-1, with matching departure dates.
• Quebec's combined top rate of about 53.3% sets the departure tax, reported on both returns. On a $300,000 unrealized gain, about $80,000.
• RAMQ coverage ends when you leave Quebec to settle outside Canada.
• QPP, not CPP, is your pension; under the treaty it is taxable only in the US once you are a US resident.
• 14.975% combined GST and QST becomes state and local sales tax between zero and about 10%.

The three-authority departure year

The federal deemed disposition (departure tax) applies to non-registered investments, private company shares, crypto, and property outside Canada at fair market value on the departure date; Quebec's rules mirror it. Report the gain on federal Form T1243 (with T1161 for the property list if it exceeds $25,000) and on the Quebec equivalents. The 16.5% Quebec abatement on federal tax is built into the 53.3% combined rate. Security can be posted to defer the tax under Form T1244 federally and the Quebec equivalent.

The IRS enters the same year with a dual-status first return, the RRSP treaty position, FBAR on remaining Canadian accounts, and Form 8938 above thresholds.

Quebec-specific items

• RAMQ. Ends on departure to settle outside Canada. Arrange US coverage to start the same month.
• QPP. Taxable only in the US under Article XVIII of the treaty, treated like Social Security.
• Quebec real estate. Excluded from departure tax. Rent it and NR6 plus Section 216 apply federally, with Quebec equivalents; sell later and Section 116 clearance is required, with a Quebec equivalent.
• Quebec corporations. A Quebec professional or consulting corporation is deemed sold, loses CCPC status, becomes a US controlled foreign corporation, and needs a Quebec corporate return closed as well as a federal one.
• French-language correspondence. Revenu Québec's forms and letters are in French. A preparer who does not read them misses the Quebec side.

Where Quebecers go

Florida (Hollywood, Hallandale Beach, Fort Lauderdale, and increasingly Miami), New York and Boston for finance and biotech, Texas and California for tech and aerospace, and Vermont and Maine for proximity. Each destination's state tax layer is covered in Fairlight's state guides; the Quebec side is the same everywhere.

Province-to-state guides:

• Quebec to California: The RRSP Gets Hit From Both Sides
• Quebec to Florida: Three Tax Authorities and the Largest Rate Drop in Canada
• Quebec to Michigan: The TP-1, a Flat 4.25%, and the Auto Corridor
• Quebec to New York: Three Tax Authorities on the Way Out, Two More on the Way In
• Quebec to Texas: The TP-1, the Biggest Rate Drop in Canada, and Texas Property Tax
• Quebec to Washington State: The TP-1, No Income Tax, and the Capital Gains Excise

Montreal city guides:

• Montreal to Atlanta · Montreal to Austin · Montreal to Boston · Montreal to Charlotte · Montreal to Chicago · Montreal to Columbus · Montreal to Dallas · Montreal to Denver · Montreal to Detroit · Montreal to Houston · Montreal to Las Vegas · Montreal to Los Angeles · Montreal to Miami · Montreal to Minneapolis · Montreal to Nashville · Montreal to New York · Montreal to Orlando · Montreal to Philadelphia · Montreal to Phoenix · Montreal to Pittsburgh · Montreal to Portland · Montreal to Raleigh · Montreal to Salt Lake City · Montreal to San Antonio · Montreal to San Diego · Montreal to San Francisco · Montreal to Seattle · Montreal to Tampa · Montreal to Washington DC

Worked example

A Montreal couple leaves on July 1 for Florida with $300,000 of unrealized gain in a non-registered account, $800,000 in RRSPs, and a Laval home sold in the departure year.

• Departure tax. $300,000 gain, $150,000 taxable, at about 53.3%: roughly $80,000, split across the T1 and TP-1.
• Home. Sold as a resident, principal residence exemption on both returns.
• RRSP. No tax on departure; periodic RRIF withdrawals later at 15%.
• Florida. No state income tax. Sales tax 14.975% becomes 7%.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"The fact that you leave Québec during the year does not release you from your income tax obligations in Québec." — Revenu Québec, Leaving Québec, https://www.revenuquebec.ca/en/citizens/your-situation/residence-status-and-tax-obligations/leaving-quebec/

Practitioner note

Quebec files fail on coordination, not on the law. The most common error we correct is a federal T1 with a departure date and a TP-1 filed as a full-year resident, which leaves Revenu Québec expecting tax on worldwide income for a year the client spent in the US. Three authorities, one date, checked three times.

Next step

Fairlight prepares the T1, the TP-1, the first-year US return, and ongoing cross-border filings for Quebec clients. See cross-border pricing or book a call.