Canadians Moving to the U.S.: TFSA, RRSP, FHSA and FBAR Traps to Sort Out Before You Go

Summary

Canadians relocating to the United States — whether on a TN visa or for work — often discover that their familiar Canadian accounts behave very differently once the IRS is in the picture. Community discussions among cross-border filers keep circling the same handful of traps, and they are worth understanding before the move.

The most common surprise is the TFSA. The IRS does not recognize the tax benefits Canada grants to a TFSA, so income earned inside the account remains taxable for U.S. purposes, and the account itself can create reporting obligations. Much of the advice circulating in these threads is to deal with TFSA positions before becoming a U.S. resident rather than after.

RRSPs can generally be kept, but the tax mechanics on withdrawals change. Once a taxpayer becomes a non-resident of Canada, RRSP withdrawals are subject to a 25% flat Canadian withholding tax, and the U.S. simultaneously treats the withdrawal as income. The FHSA, a newer Canadian account, has no direct U.S. equivalent; a common pre-departure step discussed in the community is rolling FHSA funds into an RRSP before the move.

Then there is FBAR. U.S. persons with foreign financial accounts whose aggregate value exceeds US$10,000 must report them, and for a Canadian moving south that can include bank accounts, investment accounts, and even an RRSP. Community threads repeatedly recommend closing dormant accounts before departure so the reporting picture stays clean. A taxpayer holding a six-figure Canadian savings account earning interest is a typical example of a situation that generates both reporting and tax consequences.

Sources

Our Take

For cross-border filers, the lesson is sequencing. Which accounts you hold, how they are titled, and what you do with them before versus after the move can change the tax result on both sides of the border. The TFSA, in particular, is a Canadian concept the IRS simply does not follow, and FBAR is a reporting regime rather than a tax — but the cost of missing it is real. Because residency dates, account values, and treaty positions vary from person to person, there is no one-size-fits-all checklist. A CPA who works both sides of the border can help you order the steps before you relocate, rather than untangling them after.

Disclaimer: This article is general information only and does not constitute tax advice; it should not substitute professional tax counsel. Please consult a licensed CPA for advice specific to your situation.