How US RSUs Are Taxed After Moving to Canada

(Common Issues, Timing Traps, and Where People Overpay) 

Last updated: Dec 18,  2025

Restricted Stock Units (RSUs) are a common component of compensation for professionals working in the United States, particularly in the technology sector. When an individual relocates from the US to Canada, RSUs often become one of the most complex items to report correctly. The complexity arises because RSUs span multiple stages, grant, vesting, and sale, while being subject to two tax systems that apply different rules for sourcing and timing. When a move occurs during the life of an RSU award, the risk of double taxation increases significantly. 

Who This Applies To

This situation typically applies to individuals who received RSUs while working in the United States and then moved to Canada before those RSUs fully vested or were sold. In many cases, employment continues with the same US-based employer, and tax filings are required in both countries during the transition period. Where RSUs were granted, vested, and sold entirely while the individual remained resident in a single country, the reporting is usually more straightforward. Issues tend to arise when residency changes mid-cycle. 

Why RSUs Become Complicated After a Move

RSUs are not taxed when they are granted. Taxation generally occurs when the units vest, and again when the shares are sold if they are not disposed of immediately. The difficulty after a move lies in how each country asserts its taxing rights. The United States generally looks at where the underlying employment services were performed, while Canada focuses primarily on the individual’s residency at the time the income is realized. When these approaches overlap, both countries may legitimately tax the same income, often in different years or under different classifications. 

How the United States Taxes RSUs 

From a US tax perspective, the fair market value of RSUs at vesting is treated as employment income and is typically reported on Form W-2. Any increase in value between vesting and sale is taxed as a capital gain. Importantly, the US may continue to tax RSU income even after an individual has moved to Canada, to the extent the RSUs relate to services performed while the individual was working in or resident in the United States. This often surprises taxpayers who assume US tax exposure ends on departure. 

How Canada Taxes RSUs

Canada does not treat RSUs as a distinct or preferential form of equity compensation. When RSUs vest while an individual is resident in Canada, the full fair market value of the shares is generally included in employment income, regardless of where the grant originated or where the services were performed. Any subsequent gain on sale is treated as a capital gain, subject to Canada’s capital gains inclusion rules. All amounts must be reported in Canadian dollars, and exchange rate movements alone can materially affect the reported income. 

Where the Double-Tax Risk Arises 

The most common double-tax scenario occurs when RSUs are granted while an individual is working in the United States, the individual moves to Canada before vesting, and the RSUs vest after Canadian residency begins. In this situation, the United States may tax a portion of the RSU income based on the period of employment prior to departure, while Canada may tax the full value at vesting because the individual is resident at that time. Although foreign tax credits are available in principle, they often do not fully offset the tax due because of timing differences, currency translation issues, and differences in how each country characterizes the income. 

Illustrative Example 

Consider an individual who receives RSUs while working in California, moves to Canada partway through the vesting period, and has the RSUs vest after the move. In this case, the United States may continue to assert taxing rights over the portion of the RSUs attributable to pre-departure services, while Canada taxes the full vesting amount as employment income. Without proper allocation and coordination between the two tax systems, the same income can effectively be taxed twice. 

Common Mistakes Seen in Practice 

In practice, many issues arise not from intentional non-compliance, but from reasonable assumptions that turn out to be incorrect. Common mistakes include reporting the entire RSU amount only in Canada without considering US sourcing, claiming foreign tax credits in the wrong year, failing to allocate RSUs between pre- and post-move service periods, applying incorrect exchange rates, or treating RSUs as capital gains rather than employment income at vesting. There is also a frequent assumption that tax treaties automatically eliminate double taxation, which is not always the case in practice. 

Why Case-Specific Review Matters 

The correct tax treatment of RSUs in a cross-border context depends heavily on the specific facts, including grant dates, vesting schedules, the exact date of relocation, residency status in each year, employer reporting practices, and whether the shares were sold immediately or held. Small differences in timing can lead to materially different tax outcomes. For individuals with significant equity compensation, reviewing these details before filing often helps avoid unnecessary overpayments and future reassessments.

US–Canada RSU taxation is one of the most common issues encountered following a cross-border move, particularly among professionals with stock-based compensation. While the underlying concepts are relatively straightforward, the execution is rarely simple. Each situation benefits from a fact-based review that considers both tax systems together rather than analyzing each country in isolation.

Final Thoughts

RSU taxation following a move between the United States and Canada is highly fact-specific, and small differences in timing can materially affect the outcome. Before filing, it is often helpful to review the RSU history, residency dates, and reporting approach to ensure the position taken is consistent across both countries. 

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Frequently Asked Questions (FAQs) 

Are RSUs taxed if I move from the US to Canada before they vest? 

Yes. RSUs are generally taxed when they vest, not when they are granted. If RSUs vest after you have moved to Canada and become a Canadian tax resident, Canada will generally tax the full fair market value at vesting as employment income. The United States may also tax a portion of the RSUs if they relate to services performed while you were working in the US. 

Does the US still tax my RSUs after I leave the country? 

In many cases, yes. The United States may continue to tax RSU income after departure if the RSUs are attributable to employment services performed in the US. This is a common source of confusion for individuals who assume US tax exposure ends when they move. 

How does Canada tax RSUs received from a US employer? 

Canada generally taxes RSUs as employment income at the time they vest, based on the fair market value of the shares on the vesting date. The income must be reported in Canadian dollars, and Canada does not provide preferential tax treatment for RSUs. 

Are RSUs considered capital gains in Canada?

No. In Canada, RSUs are generally treated as employment income at vesting. Capital gains treatment applies only to any increase in value between vesting and the eventual sale of the shares. 

Can RSUs be taxed in both the US and Canada?

Yes. When residency changes between the grant and vesting dates, it is possible for both countries to tax the same RSU income under their respective rules. While foreign tax credits may reduce double taxation, they do not always eliminate it entirely due to timing and sourcing differences.

Do foreign tax credits always fix double taxation on RSUs?

Not always. Foreign tax credits can be limited by timing mismatches, differences in income characterization, and currency conversion issues. In some cases, credits do not fully offset the tax paid in the other country.

How are RSUs allocated between the US and Canada after a move? 

RSUs are often allocated based on the period of employment services performed in each country between the grant date and vesting date. Proper allocation requires careful analysis of employment history, residency status, and vesting schedules. 

Are exchange rates important when reporting RSUs in Canada? 

Yes. RSU income must be reported in Canadian dollars using the appropriate exchange rate. Currency fluctuations alone can materially affect the amount of income reported and the availability of foreign tax credits. 

What are the most common RSU tax mistakes after moving to Canada? 

Common mistakes include reporting all RSUs only in Canada, ignoring US sourcing rules, failing to allocate grant-to-vest periods, using incorrect exchange rates, and assuming tax treaties automatically eliminate double taxation.