Moving from Canada to US, Part 2— Things nobody tells you about preparing to move
All about finances, tax residency and temporary housing
About 500 days ago, I accepted a job offer, sold a ton of my stuff in Toronto, moved out, packed my bags and flew out to San Francisco. All in 4 weeks.
This article will cover the key things to address in those weeks prior to the move. I had countless questions and while I did find helpful articles about specific sections, I was left hoping for a holistic overview of the whole process. You don’t know what you don’t know, and I was left wondering what I hadn’t thought about. Turns out the answer was taxes, TFSA — uh oh. I’ve included all that here for anyone that might be in a similar situation.
We discussed all about TN visa in Part 1 of this series, and this one will cover the following:
- Finances — how to open US bank accounts with no US credit history, deciding if you’ll keep Canadian accounts open, and ways to bring over some money for the first few days.
- Tax residency — eligibility, pros and cons, and how to go about it.
- Accommodation — finding temporary housing remotely.
- If you’re moving to San Francisco, the last bit should be interesting to you!
1. Opening a US bank account and credit card (using Canadian credit history)
Without credit history and SSN (takes 2–3 weeks after moving), banking options in the US are limited. I also wasn’t sure how easy it would be to transfer funds from my CAD accounts. Given this, it was apparent that figuring this out before I moved would be the safest and least stressful option!
Good news is that some of the big Canadian banks like RBC and TD have programs to help make the transition. If you’re banking with them in Canada, they’re able to open up a US account and credit card based on Canadian credit history. These often go by the name “cross-border” or “borderless” account.
I’ve been a long term RBC customer and always had an incredible experience, and this was no different. I went into the branch to chat with one of the advisors, did some research on what he suggested and went with the following:
- US RBC Checking account: $4/month. The US and Canadian accounts are visible from the same portal, making it very easy to manage and also, transfer funds for a low cost. The debit card can be used in ATM Plus machines in the US. This account really came in handy for setting up payroll deposit right away, and when I had to pay two months’ rent as downpayment. There are limits for withdrawal per day, so plan accordingly. I ended up closing this account after few months once I had another bank account here with enough saved for any emergency.
- Signature Black Visa US Credit Card: No annual fee. The RBC in US is a US institution so this credit card is a great way to start building credit here. Due to lack of credit history in the US, to get credit cards here, you have to put money down as deposit and even then the credit limit starts off pretty low.
TD has a similar program from what I hear. Based on ATM locations, RBC is a better choice if you’re moving to West Coast, and TD for East Coast.
2. Deciding if you’ll keep your Canadian accounts open
Most people opt to keep majority of their funds back in Canada, mainly because moving over everything is a costly affair with the current exchange rate.
As we’ll discuss in the next section, having a few bank accounts doesn’t stand in the way of being considered a Canadian non resident.
3. Bringing over some money for immediate expenses
ATM withdrawals have limits around $300–500 usually, so you might need to carry some cash or cheque for immediate big expenses like a sublet. I tried signing up on Venmo to pay for my sublet, but their signup required SSN number so it wasn’t a viable option on day 1. For the best conversion rate from CAD to USD, I’d compare bank exchange rates, Knightsbridge, XE and local currency exchange spots.
To stay resident or non resident of Canada
Tax related things might not be the most fun topic under the sun, but I’ve tried to section it in bite sized chunks. While I hope this is a good guide to help get an overview, I’d highly suggest checking out the official docs I have linked — they are written in great detail, and mention a lot of the nuances since this is such a case by case type of scenario.
Pros of being non resident — Less taxes to pay
Residents of Canada are taxed on global income, whereas non residents are only taxed on income earned in Canada.
Since you’re moving to the US, it’s safe to assume you will be a US resident sooner than later. As a dual Canadian resident and US resident, your global income is taxable in both countries. There is, however, a tax treaty between these two countries to avoid double taxation. In simple words, this means
If US income tax = X%, and Canadian income tax =Y%
You pay X% as US taxes since you’re working here, and Y-X% as Canadian taxes
Depending on your tax bracket, Y-X% is likely still a substantial amount of money so being a non resident can be beneficial in this case. You will, of course, be paying taxes for any income originating in Canada itself (including interests from active bank accounts).
Transition year: In the year of moving, you’re a resident of Canada till the day you move and possibly, resident of US for the rest of the year if you pass the substantial presence test.
Cons of being non resident — TFSA and RRSP Limitations
As a non resident, you can continue to keep your TFSA active and benefit from the tax shelter but there are penalties on deposits.
- Any interest earned in this account remains non taxable in Canada, but it is subject to tax in the US.
- Any deposits are subject to 1% penalty for each month the contribution remains in the account until you withdraw everything or become a resident again.
- You will not be able to accrue additional TFSA contribution room for any years in which you are non-resident of Canada.
If you decide to keep it open, the ideal scenario is maxing it out or making any necessary changes before moving and then leaving it untouched once you are a non resident.
RRSP
Similar to TFSA, you can continue to keep this account open with no additional contribution room for non-resident years. For withdrawals, the Canadian government has a 25% withholding tax at source. I didn’t personally deal with this, nor can I find a credible source, but this might be something worth looking into for you. If you know more about this, please leave a note in the comments so we can help future Canadians reading this :)
How is Canadian residency calculated?
- Canadian residency isn’t calculated with a formula like US residency, but is based on residential ties. Primary residential ties include a home, spouse/common-law partner and/or dependents in Canada. Secondary residential ties include personal property (car), social ties (memberships), economic ties (bank accounts, credit cards), driver’s license, Canadian passport, health insurance with Canadian province or territory.
- The stronger your ties, the less likely you are to qualify as non resident. From personal experience and many redditor’s responses, you can qualify as a non resident if you just have a Canadian passport and a few bank accounts.
- The official site linked below goes into greater detail, so I’d highly recommend reading through it.
How to declare Non Residency in Canada (if you qualify)
- You could do it while filing taxes for the year of departure by noting date of departure and foreign address in the appropriate fields. Also, update CRA and Canadian financial institution address to your foreign address and have them update you as non resident in their system. I noticed that shortly after I changed my address for bank accounts, they sent me a form about declaring non residency so I didn’t have to do anything else to initiate the process.
- Another option is to fill the NR 73. I have no personal experience with this, but Reddit seems to have a lot of mixed opinions. While some state this is the best way to ensure you are indeed a non resident according to the CRA, others say its inviting more scrutiny.
The best way out is looking for temporary housing for the first few weeks, and then looking for a long term lease. It gives you a good chance to check out the different neighborhoods and get a feel for the city.
Most long term leases need SSN, job offer and 2 months rent deposit. You can only apply for SSN 10 days after arrival and it takes about 1-2 weeks to arrive in mail. It’s usually easier to find a long term lease beginning at the start of the month, so calculate how long your short term accommodation should be.
Where to look for temporary housing
- Sublet through Craigslist/Padmapper: Renters are usually flexible with dates and rent, making this a very favorable option. Craigslist can be sketchy, but there’s tons of great listings out there too! I reached out to a few listings asking for more photos and eventually narrowed it down to one. I spoke to two of the girls over Google Hangouts — one who would be my roommate for the 6 weeks, and the other whose room I would be renting. They gave me a virtual house tour — I highly recommend this, it gave me a much better idea of the space and helped ease some of the worry! Depending on the type of apartment/house, you might be asked to send in recommendation letter from previous landlord, credit report and job offer letter. Not all sublets are this official, but it can vary depending on what kind of housing it is.
- Sublet through Facebook groups: There are a bunch of area specific renting groups. Slightly less sketchy than Craigslist since you see a real profile account, and you might even find a friend of a friend for that extra level of trust!
- Airbnb or hotels: Pricey for a longer stay, but might be an economical option for 2 or more people. San Francisco prices are steep, especially during conferences or festivals, so plan to avoid these dates if you can.
- Hostels: Not for everyone, but an option worth mentioning. It’s cheap, often has perks like free coffee/breakfast and a good way to meet new people. Rooms are mostly shared with multiple people and locker space for storing valuables is limited, so it’s only a feasible option if you don’t have too many belongings yet.
Tips
- The housing market moves fast in California, so be quick to respond and follow up with listings.
- I moved alone, and wanted to steer clear of unsafe areas, so I ran some listing locations by one of my future coworkers. Google street view is a good aid too.
- The first few weeks at work are busy getting up to speed, so living close to work makes for a more pleasant experience. Also saves you the hassle of worrying about optimal commute route.
- Do a quick grocery store lookup near areas you’re considering staying in. In San Francisco, Trader Joes has to be my favorite. Safeway is open till midnight and a good late night option. Whole Foods has fresh produce but much pricier. For household and beauty things, I’d go to Target for best price and selection, and Walgreens for convenience.
If you’re moving to San Francisco :)
- For exploring the city or looking for accommodations, a difference of one street can drastically change your experience so definitely do your research. Steer clear of cheap rentals in Tenderloin — It’s a high crime neighborhood. Some listings there will be listed as Lower Nob Hill so be sure to double check on Google Maps. Jason Evanish has an excellent guide to finding apartments in San Francisco.
- September and October are essentially summer weather, referred to as Indian Summer. July is cold! It’s an odd feeling to put on a sweater mid July after being accustomed to high heat East coast summers. Winter is glorious with no snow though, so I ain’t complaining :)
- Meet Karl the Fog. Nothing less than a celebrity with 289K Twitter followers, and he can always be counted on to show up. Makes for stunning views some evenings when you can see the fog vividly rolling across the bay, into the city. Fascinating.
Let me know if you found this article helpful! Happy to answer any questions as always. The next post will address things to do after the move like SSN, healthcare options, apartment hunting, phone plan and more.
