Seeking help with cross-border financial planning in BC
January 4, 2022 8:51 PM   Subscribe

I’m hoping someone here can recommend a service or point me to a resource for financial planning for US citizens residing in Canada.

A few years ago, I moved to Vancouver, BC, from the US for work. For awhile, it seemed fine to keep doing my taxes by hand and contributing to my employer pension fund and otherwise not thinking too much about my investments. This past year, however, I become a parent (and a permanent resident), and now I feel like I need some help.

There are several issues I would like to discuss with someone who knows what they are talking about: retirement savings, saving for my son’s education, and tax stuff. I got the impression early on that, for US citizens living in Canada, if one country doesn’t collect tax on something, the other one will. As a result, I have been letting my savings pile up in my bank account because investing feels like more trouble than it is worth.

I have looked at threads in the Personal Finance Canada subreddit and other forums, but wish I could just sit down with someone to get a sense of what our best options are. At the same time, I recently saw a comment stating to the effect that if you don’t have a lot of assets to begin with, it’s not necessarily worth it to meet with a fee-only financial planner. If it's relevant, I don't have much hope of buying property, but I am maxing out my pension contributions and currently have about 50k CAD that I am hoping to move somewhere. Oh, also, while it's hard to say what things will look like in 25 years, I am assuming I will retire in Canada (which presumably means I will eventually want to do something with the pitiful TIAA and Vanguard accounts I have in the US). Any suggestions or recommendations you might have would be gratefully received.
posted by mustard seeds to Work & Money (5 answers total) 7 users marked this as a favorite
You should be able to find an accountant who does taxes for dual citizens in the Vancouver area, who would be able to answer the relevant tax questions. Maybe ask if RRSPs and TFSAs are treated differently with respect to US taxes owing. Tax-wise it would likely be easier in the long run to move your TIAA and Vanguard monies to Canada, but there’s almost certainly a penalty for withdrawing from those accounts early, so it may be more advantageous to just leave those be for the time being. If your employer is large enough to have multiple HR people including one dedicated to benefits/pension, and especially if they hire people from the States semi-regularly, they might be useful people to ask for advice, as well. You also should be able to set up a meeting with someone at your bank for a free basic financial planning info session. If your bank has international branches (in the US as well as Canada), they should be able to answer your questions about what to do with your TIAA and Vanguard accounts, too.
posted by eviemath at 5:37 AM on January 5, 2022

Keeping US citizenship is a tax hassle that is worth it if you plan on returning to work in the US, but as your living/work situation clarifies it is worth evaluating this. This is what I remember:

Firstly: The US only recognizes RRSPs as a tax-free retirement account. So TFSAs are subject to US taxation (and Canadian banks don't give you convenient tax receipts for dividends and capital gains in TFSAs, because they aren't subject to Canadian taxation). So as a US citizen, you can't take full advantage of the TFSA. (Report both the RRSP and the TFSA on Form 8938)

Secondly: The US doesn't recognize the tax-free status of the RESP for your child. So if your spouse is not US-affiliated, they should have the RESP only in their name. But that means that any leftover RESP money (after kiddo goes to college/university) will only be able to be contributed to your spouse's RRSP. If you hold this account in your name, it is subject to US taxation (and reported on Form 8938).

Thirdly: Your house's value is considered part of your net worth, so you will have to report it each year on your Form 8938. Some people opt to ensure that the house is in the non-american spouse's name only.

If you decide to give up your American citizenship someday, you don' t have to pay the exit tax if your total assets (including your house)are below $2 million (single person) or $4 million for a US couple (quick search says these were the 2019 numbers).

When I was doing my financial planning 10 years ago, it made sense to give up my American citizenship; I hated the idea of signing over the bulk of my assets to my spouse in order to simplify my tax situation. Since then, my TFSA has been a great tax-protected investment account because of the flexibility of withdrawals without penalty.

We used Deloitte-Touche for accountants to get into compliance. They were great, but relatively expensive. But the most straight forward strategy was just consolidating my citizenship to one country. Good luck.
posted by Sauter Vaguely at 7:32 AM on January 5, 2022 [1 favorite]

There's this wiki, written by Bogleheads who are Canadian.
posted by Dashy at 1:08 PM on January 5, 2022

Response by poster: Thank you for your responses! I didn't think to mention this, but spouse and I are both US citizens. We are still a few years off from applying for Canadian citizenship, but this is definitely something to keep in mind.
posted by mustard seeds at 4:31 PM on January 5, 2022

My friend does this professionally. I'll PM you her info.
posted by matildaben at 5:17 PM on January 5, 2022

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