Beware the taxman

[Tequila]

Tax Change Alert



Are you a Canadian Snowbird? Do you usually winter out in the United States?

The IRS & CRA are now sharing information and closely tracking how much time you spend in the US. This is going to blindside a lot of Canadian Snowbirds, hard. You are only allowed to be in the United States for 183 days during any 12 month period, or you pay have to pay US tax and be taxed by the US on your worldwide income. Furthermore, Revenue Canada may consider that you are no longer a Canadian resident and have disposed of your assets, and tax you on those capital gains. It is important to note that the rule is not 183 days per calendar year, it is 183 days per 12 month period. That can get people into a lot of trouble. You also have to realize that that 30 minute trip across the US border to buy gas counts as 1 day. Many people may go camping in the summer in the US for a week or 2, and forget to count that as well. The US seems just like Canada, so its easy to forget you are in a foreign country. If you violate this rule you can be banned from the United States for 3 to 10 years, depending on how many days you are over. If you are in the US for more than 120 days in a calendar year, you will automatically attract the scrutiny of the IRS. Since 911, your trips into the US & out are heavily monitored. The days of waving at the border guy as you drive across are over, and they know exactly how long you are in the US. Both countries share all this information. George Orwell's world, has finally arrived.

Here is how the IRS makes its determination for tax purposes: The total number of days you spend in the States (including non-consecutive and partial days) is one of the ways the Internal Revenue Service (IRS) uses to determine if you are a resident or a non-resident alien. Each day in the current year counts as a full day, each day in the year before that counts as one-third of a day and each day in the year before that one counts as one-sixth of a day. If the total is at least 183 days, you will generally be considered as a resident alien for the current tax year. You will probably have to file a U.S. tax return and declare income from all sources, including Canadian income. So you can see that even if you do only spend less than 183 days, you can easily be nailed. If you spend less than 120 days, you will not attract attention.



All of this is making Mexico more attractive. Every day you spend in Mexico is a day less on your day count. It is important to note that passport tracking may not be as intense with Mexico, outbound from the US, and you need to keep documentation you were down there, be it RV park receipts, your vehicle paperwork or toll road receipts. It is also good to ensure when you do your paperwork after crossing the border, that Mexican immigration stamps your passport. When you cross from the US into Mexico, US immigration may not be aware that you have done so. It is a good idea to make a copy of your Mexican tourist card and keep it.



Canadians should also be aware, that being out of Canada for more than 6 months in some Provinces or 7 months in others, can cause you to lose your free Provincial Health Care. Technically speaking, it is days outside your own Province, but you are not tracked when traveling internally in Canada, so you can get away with that one. (avoid using your passport for ID flying within Canada). What can nail you is that summer trip to Europe which will raise your totals. Once again the calculation is based on a 12 month period and not necessarily a calendar year.


(info from www.coppercanyonrvtours.com/tax.php)

[Community Alumni]

Yeah Al I agree, that's pretty much leaving an opening for interpretation. I guess it's done intentionally so that they can go after those who they feel are really abusing their presence in the U.S. and not folks like ourselves who clearly reside outside the U.S. I don't believe the U.S. government wants to deter cross-border shopping and recreational activities for those who clearly have a closer connection to Canada.

... Eric

[almcc]

Eric, the statement below was copied from the 8840 form instructions:

"Days of presence in the United States. Generally, you are treated as being present in the United States on any day that you are physically present in the country at any time during the day."

I guess the word "generally" may or may not have the wiggle room you are thinking about.

[Community Alumni]

Tequila wrote:
What can nail you is those quick trips across the border for Canadians who live close to it. Even 1 minute counts as a day. BTW the IRS is also going after US citizens in Canada.

This is not what US Customs and Border Protection told us at a meeting we had at Champlain NY. They do not consider same-day crossings as presence in the U.S. for the purpose of determining residency. I guess like everything else it can be a matter of regulation interpretation.

We live close to the border and cross regularly, sometimes several times a week during summer months (we've have a campsite in upstate NY). We use Nexus passes so our crossings are always registered.

We'll have to see how it all plays out.

... Eric

[Tequila]

What can nail you is those quick trips across the border for Canadians who live close to it. Even 1 minute counts as a day. BTW the IRS is also going after US citizens in Canada.

[John___Angela]

Kidoo wrote:
Just to make sure, when you fill the 8840 form, I presume you must enter the exact number of days you stayed in the USA at Part 1 of the form? You do not divide by 1/3, 1/6 when entering the numbers of days? I wonder if I have to add the number of days I was on a ship from New-Orleans and visiting other country like Mexico, Honduras and Belize for a week?

This form is just annoying for the vast majority of Canadians visiting USA every year for less than 183 days. Canadians are spending many billions of dollars every year in the U.S, still, I guess they want more money. They could have just add the number of days and if you get over 183, you get a letter from IRS.

There are many countries in the world and our money is taking a hit againts the US dollar. USA is just more convenient for now to us but if we get use to go somewhere else, we might like it. For me it will be Mexico this year.

I appreciate the advice of keeping all you record of crossing the border to Mexico since you do not have to stop at the US border when crossing to Mexico, I guess USA could argue since they do not know when you crossed the border.

For proof of being in Mexico we just keep a copy of things like vehicle permit, insurance, receipts etc as a proof that we were not in the US during a certain period of time. Never needed them but always good to have them.

[Kidoo]

Just to make sure, when you fill the 8840 form, I presume you must enter the exact number of days you stayed in the USA at Part 1 of the form? You do not divide by 1/3, 1/6 when entering the numbers of days? I wonder if I have to add the number of days I was on a ship from New-Orleans and visiting other country like Mexico, Honduras and Belize for a week?

This form is just annoying for the vast majority of Canadians visiting USA every year for less than 183 days. Canadians are spending many billions of dollars every year in the U.S, still, I guess they want more money. They could have just add the number of days and if you get over 183, you get a letter from IRS.

There are many countries in the world and our money is taking a hit againts the US dollar. USA is just more convenient for now to us but if we get use to go somewhere else, we might like it. For me it will be Mexico this year.

I appreciate the advice of keeping all you record of crossing the border to Mexico since you do not have to stop at the US border when crossing to Mexico, I guess USA could argue since they do not know when you crossed the border.

[Gonzo42]

...and yet the IRS can't collect taxes owed years in arears from IRS and other US Gummint employees to the tune of Billions total. Not to mention certain protected individuals who just happen to be race baiters and frequent visitors to the White House, owing the IRS Millions.



Fashions are the only induced epidemics, proving that epidemics can be induced by tradesmen. --- George Bernard Shaw

[moisheh]

Nothing has changed as far as the rules from the IRS. EXCEPT it is niow easier for them to nail cheaters. They have always had the option of turning away Canadians suspected of over spending time in the USA. They really do not have to check any shared information. If the fellow at US customs dos not like you he can simply send you back because he thinks you will be staying in the USA. That form has ben around for years. Canadians who follow the rules have no worries. Interseting that the net is full of articles on this subject lately. Almost all of the stories come out of BC!!!

Moisheh

[John___Angela]

Tequila wrote:
Tax Change Alert



Are you a Canadian Snowbird? Do you usually winter out in the United States?

The IRS & CRA are now sharing information and closely tracking how much time you spend in the US. This is going to blindside a lot of Canadian Snowbirds, hard. You are only allowed to be in the United States for 183 days during any 12 month period, or you pay have to pay US tax and be taxed by the US on your worldwide income. Furthermore, Revenue Canada may consider that you are no longer a Canadian resident and have disposed of your assets, and tax you on those capital gains. It is important to note that the rule is not 183 days per calendar year, it is 183 days per 12 month period. That can get people into a lot of trouble. You also have to realize that that 30 minute trip across the US border to buy gas counts as 1 day. Many people may go camping in the summer in the US for a week or 2, and forget to count that as well. The US seems just like Canada, so its easy to forget you are in a foreign country. If you violate this rule you can be banned from the United States for 3 to 10 years, depending on how many days you are over. If you are in the US for more than 120 days in a calendar year, you will automatically attract the scrutiny of the IRS. Since 911, your trips into the US & out are heavily monitored. The days of waving at the border guy as you drive across are over, and they know exactly how long you are in the US. Both countries share all this information. George Orwell's world, has finally arrived.

Here is how the IRS makes its determination for tax purposes: The total number of days you spend in the States (including non-consecutive and partial days) is one of the ways the Internal Revenue Service (IRS) uses to determine if you are a resident or a non-resident alien. Each day in the current year counts as a full day, each day in the year before that counts as one-third of a day and each day in the year before that one counts as one-sixth of a day. If the total is at least 183 days, you will generally be considered as a resident alien for the current tax year. You will probably have to file a U.S. tax return and declare income from all sources, including Canadian income. So you can see that even if you do only spend less than 183 days, you can easily be nailed. If you spend less than 120 days, you will not attract attention.



All of this is making Mexico more attractive. Every day you spend in Mexico is a day less on your day count. It is important to note that passport tracking may not be as intense with Mexico, outbound from the US, and you need to keep documentation you were down there, be it RV park receipts, your vehicle paperwork or toll road receipts. It is also good to ensure when you do your paperwork after crossing the border, that Mexican immigration stamps your passport. When you cross from the US into Mexico, US immigration may not be aware that you have done so. It is a good idea to make a copy of your Mexican tourist card and keep it.



Canadians should also be aware, that being out of Canada for more than 6 months in some Provinces or 7 months in others, can cause you to lose your free Provincial Health Care. Technically speaking, it is days outside your own Province, but you are not tracked when traveling internally in Canada, so you can get away with that one. (avoid using your passport for ID flying within Canada). What can nail you is that summer trip to Europe which will raise your totals. Once again the calculation is based on a 12 month period and not necessarily a calendar year.


(info from www.coppercanyonrvtours.com/tax.php)

Thanks for posting Tequila. It actually comes up quite often on the board (and other travel and EX pat boards) but it never hurts to post it again in case someone misses it. As someone else mentioned the filing of 8840 solves all the problems but its still important for people to know they should keep track of their US time. Heading for Mexico is an easy solution as well and we did that for three years in a row. Depending on your general health, loss of health care coverage for a few months while in Canada is no big deal as Canadian health care is inexpensive anyway although for those who are older or have certain conditions it is something to be aware of and plan or budget for.

Que te vaya bien.

[almcc]

Yes, the US and Canada computers are now talking! we just filed our 8840's for 2014 and we keep some of the Canadian documents with us when we cross into the US to prove "a closer connection to Canada"

It was good for the OP to bring up the subject and the clarifications above should help anyone wanting to file. I don't think the 2015 form is out yet, you have to almost mid 2016 to file for 2015, the 2015 form should be on the website in early 2016.

[FULLTIMEWANABE]

FWIW: This worked for us to get the facts: Simply google FORM 8840 and you will get all the info from the ultimate source easily. Keep a copy of it with you when crossing back and forth into the USA. Also keep a copy of your tax return, couple of utility bills, property taxes, maybe bank statement or two. This can prove to the officials you are able to support yourself without working in the USA and you have close ties to Canada to return.

Gbopp: Only if you reciprocate and do the same to pay for our government employees here!

[joebedford]

bjbear wrote:
Tequila .... Please get your facts right before posting. This has been discussed adnausium here. Although some of your info is directionally correct, you have failed to mention the 8840 form which allows us Canadians to claim a closer connection to Canada, thereby exempting us from the need to file a US tax return.

Well, at a glance, his/her facts seem correct albeit old and incomplete.

Just file an 8840 unless you're cheating on the days, in which case you're screwed (as you should be).

[her_I]

kaydeejay wrote:

bjbear wrote:
Tequila .... Please get your facts right before posting. This has been discussed adnausium here. Although some of your info is directionally correct, you have failed to mention the 8840 form which allows us Canadians to claim a closer connection to Canada, thereby exempting us from the need to file a US tax return.

More info here here, including a link to the 2014 year form (I can't find the 2015 version)

The 2014 form covers the 2014 tax year up to the end of the year. The 2015 tax year is just beginning so the form will not be updated till next fall to cover the 2015 tax year.

[bjbear]

bjbear wrote:
Tequila .... Please get your facts right before posting. This has been discussed adnausium here. Although some of your info is directionally correct, you have failed to mention the 8840 form which allows us Canadians to claim a closer connection to Canada, thereby exempting us from the need to file a US tax return.

Here is some more info http://mycanyonvista.com/forum/viewtopic.php?f=9&t=4

[kaydeejay]

bjbear wrote:
Tequila .... Please get your facts right before posting. This has been discussed adnausium here. Although some of your info is directionally correct, you have failed to mention the 8840 form which allows us Canadians to claim a closer connection to Canada, thereby exempting us from the need to file a US tax return.

More info here here, including a link to the 2014 year form (I can't find the 2015 version)