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)

[joebedford]

Oh, NOW I get it - it's to dodge the IRS.

[Community Alumni]

joebedford wrote:
I just don't get why someone would limit their stay in the US to 120 days. To avoid filling out a 5-minute form? I don't get it.

It quite simple, if you have sufficient holdings within the US you might fail the test for being an exception to having a closer connection to the US.

If you stay year after year for more than 120 days then you will likely be required to file the 8840 form based upon the 3 year formula. Failing to do so could subject you to a fine of up to $10,000 according to US Customs & Immigration. Once you complete the 8840 form and the IRS determines that you have a closer connection to the US because of your holdings or physical residences then you could be subject to US taxation.

... Eric

[alfredmay]

What Mike described in his post of 4/25/16 is something called "Source Taxing". It was struck down in 1996 by a law signed by President Clinton.
http://www.pmstax.com/state/bull9602.shtml

I don't understand all the fuss here. The IRS does not want you to pay tax on any of your income if you have a closer connection to another country (Canada). Fill out the form and be done with it.

[almcc]

I just filled out the forms (one for me and one for the DW) and they will be in the mail today. While I don't like giving out information to governments there isn't much more on that form than they already know about since it's already on our passports.

[joebedford]

I just don't get why someone would limit their stay in the US to 120 days. To avoid filling out a 5-minute form? I don't get it.

[Kidoo]

There are a few things, but why do they want our money? Yes we use the free roads, we get free entry to many of the government's funded stuff, we get the protection from the police (or get tickets!) but other than that?
We pay fuel, taxed fuel, which should support the road system, we pay our own health, we spend a lot of money in all sort of stuff, I spent over $10,000 this winter, we pay more for the government funded campground (we do not get 1/2 price when older), ect.

They already get some of our money, so what is it with 183 days, and this is from both side. If an American comes to Canada it is the same, he pays for his services.

[Walaby]

I think taxing Canadian citizens if they spend too much time in the US is utterly ridiculous. They are not US citizens, and as such, should not be subject to US taxes. Their income has not been earned in the US, in the sense that they performed work in the US.

This reminds me of my time in the military, when I was stationed in California. I learned that California was trying to tax military retirement income if the military member served any time in California. In my case, I served 4 years, so, theoretically 1/5 of my retirement income was potentially going to be taxed by California. My wife worked in California as well. Once I knew this, I REFUSED to file a state income tax return. I would calculate it, and fill it out, to make sure I didn't owe, but I would not file. I was due refunds, but didn't care. They were NOT going to get my SSAN associated with any state tax return.

Hate this **** from my government.

Mike

[Kidoo]

Once you fill up, it should not be too hard to do it again. I filled it up once but did not send it since I was under 183 days total, I just kept it for reference.

[Community Alumni]

Paleo Ron wrote:
As a follow-up to my post above, I looked at the form last night and decided to fill it out and mail it in. The 120-day option is not very appealing to me; I worked many years up in the Artic and now the less snow I see the better.

These days, unfortunately, Big Brother is never too far behind your shoulder.

I think that's wise. :C

[Paleo_Ron]

As a follow-up to my post above, I looked at the form last night and decided to fill it out and mail it in. The 120-day option is not very appealing to me; I worked many years up in the Artic and now the less snow I see the better.

These days, unfortunately, Big Brother is never too far behind your shoulder.

[Kidoo]

IRS and Canada tax hunters are after the middle class people, it is too hard to get the big guys...guess what, they will run after all they can get to bring money to their patrons.

[Community Alumni]

John & Angela wrote:

Paleo Ron wrote:
Well, I don't know if this is a wise approach, but I decided to "stay below the radar" and not fill out the form. (I should mention that I spend about 5 months total per year in the US.) If queried at the border, I intend to play dumb and say something like: "Oh yeah, I think I heard something about that...." So far, it hasn't even come up on either entering or leaving the US.

Interested to hear your comments, but no trolling please.

Good morning. I don't htink the border people care as this has nothing to do with them. This is a Tax issue...namely the IRS.

I agree, the border folks are a separate government entity from the IRS and they pretty much do not care about the IRS forms. However at my last meeting with US Customs & Immigration in late March for my a NEXUS renewal, the agent stated that the IRS has access to everyone's travel status now that everything between Canada and the US is digitized.

Actually the Immigration folks would like to extend the limit to 8 months for Snowbirds however the IRS have no intention of following suit.

As for my wife and I, we stay under the radar by now limiting our US time to under 120 days a year split between some winter time in South Carolina and summer time in the NY Adirondacks.

[John___Angela]

Paleo Ron wrote:
Well, I don't know if this is a wise approach, but I decided to "stay below the radar" and not fill out the form. (I should mention that I spend about 5 months total per year in the US.) If queried at the border, I intend to play dumb and say something like: "Oh yeah, I think I heard something about that...." So far, it hasn't even come up on either entering or leaving the US.

Interested to hear your comments, but no trolling please.

Good morning. I don't htink the border people care as this has nothing to do with them. This is a Tax issue...namely the IRS.

[Paleo_Ron]

Well, I don't know if this is a wise approach, but I decided to "stay below the radar" and not fill out the form. (I should mention that I spend about 5 months total per year in the US.) If queried at the border, I intend to play dumb and say something like: "Oh yeah, I think I heard something about that...." So far, it hasn't even come up on either entering or leaving the US.

Interested to hear your comments, but no trolling please.