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)
