Can Canadians invest in the U.S.?
Canadians living in the U.S. often have to invest on American stocks. And, while it sounds easy, it’s not in practice. In fact, it’s even more difficult for Canadian natives to invest in the U.S. even if they want to. Tax consultants in Toronto are often asked about the matter. So, what do Canadians need to do to invest on anything American?
Guide for Canadians investing in the U.S.
Regarding this matter, questions are often asked about the need to get any accreditation or permission. There’s a simple answer to that – no. But, it would be wise and profitable for Canadians to maintain a respectable allocation to the U.S. stocks for long-term income. This is because, the American market is far broader and more diversified than the Canadian stock market.
Tax consultation services in Toronto will also mention that for Canadians owning a U.S. stock or a U.S. bond, United States IRS requires 15% tax withholding on dividends and 10% on interest, respectively. Moreover, without a Form W-8BEN, the aforementioned tax rates increase to 30%. To minimize or reduce tax on withholding, Canadians can hold an RRSP and enjoy a tax exemption from the U.S. if they own U.S. stocks or bonds. But, for tax-free savings accounts, there’s no such tax exemption.
Visa and Green Card
While on the topic, it’s worthy to note that, Canadians can opt for a working Visa or a Green Card if they want to invest on American stock. If you’re not looking for permanent residency in the U.S. and just want to start your own business there, an indefinitely renewable E-2 Visa might be your pick. But, if you’re investing a significant amount, EB-5 Green Card is the appropriate one. Not only does it guarantee an immediate residency in the country, but also it lets you work and study across the country without restrictions. Your spouse and children, if any, can also reap benefit from the Green Card.
If your queries are regarding matters such as Canadians investing in U.S., The Accounting and Tax is your savior! Being an international tax consultancy service in Toronto, we specialize in providing tax preparations and valuable knowledge on tax matters for U.S. and Canadian citizens. Serving small businesses in accounting, bookkeeping, and several other tax matters, we’ve been a dedicated tax consultancy for almost two decades now.
