US/Canada Cross-Border Living Can Be A Taxing and Pain in the Ass
By Peter J. Merrick, TEP® and Adrian C. Spitters, CFP®, co-authors of the international bestseller It Starts With Gold™ and the forthcoming book Guns, Gold & Land™
This analysis continues a series of long-form investigations published in The Merrick Spitters Reset Report™
By Peter J. Merrick, co-author of the #1 International Bestseller It Starts With Gold
Not long ago, I attended a meeting of the Estate Planning Council of Toronto. I was seated beside a U.S. citizen who is also a cross-border tax lawyer, licensed in both the United States and Canada. What struck me was not just her knowledge. It was that she lives what she practices.
She is an American living and working in Canada. She is married with children and applies her own cross-border planning strategies to her family’s finances. As we spoke, it became clear that most professionals, even the experienced ones, will eventually stumble in this space unless they have skin in the game. She does. And it shows.
We moved from theory into real life fast. I could not help but think about my own story. I am a Canadian married to an American. I know how easy it is to run into issues that most people never see coming.
She shared something that stayed with me. Unless someone has a personal connection to cross-border issues, they usually do not understand the risks or the landmines. Even when a Canadian advisor suspects that U.S. tax laws might apply, they often do not know what to do next. They rarely know who to call. There is a knowledge gap that affects real families and real money.
When she first arrived in Canada, she sat down with a senior advisor at a well-known firm. He said, “This is what we do for Canadians, but I cannot help you with the U.S. side. You will have to find someone else.” The trouble was there was no one else.
Then came her visit to a major Canadian bank to open accounts. She told the bank manager she was an American living in Canada. He proudly recommended a TFSA, explaining that every Canadian over 18 should have one. What he did not mention, and probably did not know, was that for Americans, TFSAs are not tax-free. They are tax traps.
The IRS does not recognize TFSAs. Any growth inside them is fully taxable in the United States. The paperwork is expensive and complicated. The whole point of the account is lost. The advice was well-meaning, but the consequences were real.
She learned the hard way. Now she does not make a single investment without reviewing the U.S. tax consequences first. She sees the traps. She has lived them.
Her message is clear. Canadian advisors do not need to become U.S. tax experts. They just need to ask two questions:
- Is the client or anyone in their financial picture a U.S. person for tax purposes?
- Could this strategy create any U.S. tax problems?
That alone can make the difference between a tax-smart decision and an expensive mistake.
She does not blame the bank manager. She just wishes someone had paused and said, “Double-check the U.S. side before you move ahead.”
This is the reality for many Americans in Canada and Canadians investing in the U.S. The danger is not what they know. It is what they do not know. The real pain comes from discovering a problem too late.
This lawyer turned her pain into purpose. She became the advisor she needed. Now she helps others avoid the same mistakes.
If this sounds like your story, let us talk. Book a 30-minute meeting here. 👉 https://calendly.com/petermerrick
To find out more, order your own copy of It Starts With Gold™ from Amazon today. CLICK HERE
