Personal Finance Playbook: Avoid Surprise Taxes When Relocating

You just said yes to a great role in a new city. Now the money questions start. Rent, taxes, banking, even that rental back home. Give me a few minutes and I will show you how to keep your take home pay steady, skip gotcha bills, and feel in control. You will leave with a printable checklist, a tiny calculator you can copy, and a simple way to see your full tax outlook.

Why money makes or breaks a move

Relocation changes prices and habits fast. Rent can jump while groceries or transit might drop. Guessing is stressful. Planning is calm. Your goal is simple. Keep cash flow steady, avoid surprise taxes, and help your family settle.

If you are a US citizen or a US tax resident, you still file a US tax return and report worldwide income even while living abroad. Credits or exclusions can help, but the filing duty remains. 

Host countries decide if you owe local tax based on their rules. Canada looks at your residential ties and your time and intent in the country. The United Kingdom uses the Statutory Residence Test for each tax year. 

Quick decision guide

Do I still file at home

Yes. US persons report worldwide income. 

Do I file in the host country

Usually yes if you become a tax resident there. Canada weighs your ties and time. The UK applies the Statutory Residence Test. 

Do I need to report foreign accounts

If your foreign accounts in total are above ten thousand dollars at any time in the year, you likely file an FBAR on FinCEN Form 114. 

Will I pay social taxes twice

Often no if your countries have a totalization agreement and you get a Certificate of Coverage so only one country collects. 

What should my company cover

Ask for cost of living support in pricey cities and tax equalization for cross border moves so your net pay stays whole.

Step by step plan

Step one: see the real budget

Put today and tomorrow side by side. List rent, child care, transit, food, phone, insurance, and taxes in both places. Try a quick example. If current rent is two thousand and new rent is two thousand eight hundred, and taxes rise by three hundred, your monthly gap is one thousand one hundred. That is the size of the cost of living allowance you ask for.

CTA: Download the US to Canada move tax checklist and copy the tiny take home pay calculator.

Step two: fix the tax basics

Ask if your company offers tax equalization. That keeps you tax neutral so the move does not shrink your net pay. If you are a US person abroad you still file and report worldwide income, and you may use credits or exclusions to reduce double tax. 

If your foreign account totals cross ten thousand dollars at any time in the year, file an FBAR. This is an aggregate test and it looks at peak balances, not just year end. 

If you are moving to Canada, learn how ties like a home, a spouse or partner, and personal property affect residency and when to use the CRA forms for a residency opinion. If you are moving to the UK, review the Statutory Residence Test rules for your year. 

Step three: protect your social security

Check if your home and host countries have a totalization agreement. With a Certificate of Coverage you and your employer can avoid paying into two systems on the same income. The SSA pages show how to request one and include country specific notes such as Canada. 

Step four: set up banking and transfers

Open a local account early. Keep one home account active since some bills and your credit file still rely on it. Use a low fee transfer method for larger moves of cash and set alerts so you catch friendly exchange rates on rent day. Keep proof of transfers for tax records.

Step five: plan your US state exit if you move away

Some states can keep taxing you if you keep strong ties. Change your license and voter record. Move your mailing address. File the right part year or nonresident return. Keep simple proof. This is easy work that prevents pain later.

CTA: See your Tax Outlook in about two minutes. The demo shows Tax Outlook, Optimization, and the advisor export.

Step six: keep a clean folder

Create one folder for pay slips, bank letters, and end of year account totals. Add reminders for key dates in both places. Calm paper creates calm minds.

Common mistakes

• Saying yes before you map take home pay in both places

• Forgetting to ask for tax equalization on a cross border move

• Missing FBAR when balances cross ten thousand for a single day 

• Paying social taxes twice because no one requested a Certificate of Coverage 

• Keeping strong US state ties and getting surprise state tax later

• Moving money every month with high fees and weak rates

  
  

FAQs

Do I still file US taxes if I live abroad?

Yes. US citizens and US tax residents report worldwide income and may qualify for exclusions or credits. 

What triggers FBAR reporting?

If the total value of your foreign accounts goes over ten thousand dollars at any time in the year, you file an FBAR electronically with FinCEN. 

How does Canada decide if I am a tax resident (in depth)?

Canada looks at your whole situation, not just your flight date. You are usually a resident from the day you arrive to settle, not just visit. The Canada Revenue Agency focuses on your residential ties.

Big ties that matter most

• A home available to you in Canada

• A spouse or partner and dependents living with you in Canada

Other ties that help paint the picture

• Canadian driver’s license, health card, bank or credit accounts

• Personal property here, club memberships, mailing address, car registration

• How much time you spend in Canada compared with elsewhere

Two special rules to know:

• Deemed resident: if you spend 183 days or more in Canada in a calendar year and you are not clearly a resident of another country, Canada may treat you as resident for that year.

• Deemed non-resident: if a tax treaty says you are resident in the other country under the tie-breaker, Canada treats you as a non-resident even if you have ties here.

What this means in practice: you usually file a part-year Canadian return for your arrival year and report worldwide income from your residency date onward. Keep simple records of arrival date, housing, and family moves so it is easy to show when your residency began.

How does the UK decide residency?

The UK uses the Statutory Residence Test for each tax year (6 April to 5 April). It is a step-by-step set of tests.

First, automatic tests

• You are automatically UK resident if you spend 183 days or more in the UK in the tax year, or if the UK is your only home or you work full-time in the UK for a long enough period.

• You are automatically non-resident if you were UK resident in one of the previous three years and spend very few days in the UK this year (there are specific day limits), or you work full-time overseas and keep UK days within tight limits.

If neither automatic test decides it, use the “sufficient ties” test

Ties include your family in the UK, accommodation available to you, work in the UK, whether you spent 90+ days in the UK in a recent year, and the country tie (where you spend the most days). The more ties you have, the fewer days you can spend before becoming resident.

Extras to know:

• Split-year treatment can often apply in your arrival or departure year so you are treated as UK resident only for the UK part of the year.

• Once resident, you may choose the remittance basis (taxing foreign income only if brought to the UK) if you are non-domiciled, but it has rules and trade-offs. Keep clean, separate accounts if you plan to use it.

Action tip: keep a simple day log and note flights, work patterns, and where your family and home are. It makes the UK tests far easier to apply.

How do I avoid paying social taxes twice?

Check if the US and your new country have a totalization agreement. If they do, ask HR to get you a Certificate of Coverage. Give that to payroll so you pay into only one system. This is common for US to Canada and US to UK moves.

• US → Canada: with a certificate, you may stay in US Social Security and be exempt from CPP for a limited period, often up to five years.

• US → UK: with a certificate, you may stay in US Social Security and be exempt from UK National Insurance for the covered period.

Why it matters: it prevents double contributions on the same wages and protects your future benefit eligibility by combining coverage periods if needed.

I moved overseas. Do I still owe US state tax?

Maybe. The US federal rules treat you as a taxpayer on worldwide income even abroad, but state rules are all about residency and domicile. Some states are easy to leave. Others are “sticky.”

What makes a state sticky

• California: if your move is a temporary or transitory absence, California may still treat you as resident. You need to show you changed your life’s center to another place.

• New York: even if your domicile moves, you can be a statutory resident if you keep a permanent place of abode in NY and spend 184 days or more there in the year.

How to reduce state tax risk when you move abroad?

For expats, the state piece is about facts and proof. Build a small folder that shows when and how you left and what ties you kept or ended.

• Sever ties you no longer need: sell or rent out your home on market terms, move your driver’s license, voter registration, and mailing address, close local gym and club memberships, update bank and brokerage addresses.

• Watch day counts in sticky states, especially New York. Keep simple travel logs.

• File correctly in the year you leave: usually a part-year resident return in the old state, then non-resident returns only if you have state-source income later.

• If you relocate to a no-income-tax state before going abroad, you may simplify your state picture, but you still need to show real ties to that state.

About Aequify

Aequify is a smart money hub built to help expats and relocating employees solve these challenges. It pulls your accounts, pay, and taxes into one clear view. You can see your likely take home pay in the new city, spot the forms you will need, plan state exit steps, and avoid double tax. Share a clean summary with your advisor with a single click, no spreadsheets or dozens of statements. Move with confidence.

Disclaimer: This blog is education, not tax advice.