US Tax for Canadian Citizens (Snowbirds)

Thank you for coming to visit us again for more information on US tax requirements.

With Canada’s harsh winters, it is very appealing to go down to the southern states of America.  As beautiful as the Muskoka terrain can be with a fresh layer of snow, who wouldn’t want to spend six months basting in warmth and sunshine while the rest of us Canadians are fighting the bitter wind chill and frost-bite?

There are some things that may be overlooked when planning that yearly winter retirement.  As mentioned above, the US and Canadian tax systems are different.  In the states, people are taxed on their citizenship.  Although a Canadian travelling to the states does not make them a US citizen, they can still be required to file a return based on their world-wide income.  

If you spend more than 183 days in the US in one year, you could be deemed a US resident for tax purposes. 

If you spend more than 121 days in the US each year over a three year period, you might also be considered a US tax resident under the US domestic rulings.

Snowbirds are a regular item up here in Muskoka when the population of most towns drop by 75% by thanksgiving.  The U.S. have actually created a ruling for long term visitors to the US and gave us a substantial presence test.  There are also rulings as to whether you own your vacation property instead of renting it.  If you are lucky enough to own your own vacation property in the US and rent it out during the period that you are not there, you will have to file a US return for the rental income you receive.

Please visit us at www.saundersandassociates.ca or come in for a visit at Saunders & Associates located in Bracebridge for more information.

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We are an accounting office in Bracebridge, located in the heart of the Muskoka Lakes.  We will be coming to you with information which will be useful to you and if you need any clarification, we will be more than happy to answer any of your questions.  You can also find us on the web at www.saundersandassociates.ca

One of the hottest topic relating to some of our retirees who have lived in the US for many years only to come to the calming scenery of the Muskoka’s is their requirement to continue to file a US tax return.  Unlike Canada, US requirement to file taxes is based on citizenship rather than residency.  As long as you have an active Green card, you are classified a citizen for tax purposes and you have to denounce your green card and file an Expatriation return before you can stop filing.  If you have not filed this return, you may want to contact our office for this.

Most US citizens will not owe any money since you can earn up to $92,900 in foreign earned income without paying taxes however investments are taxed.Before you decide not to file for the sake of not owing anything, failure to file is a crime.  You could be detained at the border for tax evasion.  Before you go south for the winter, you should contact Saunders & Associates Inc to assist you in your US tax issues.

Stay tuned for more information as we continue to unravel the US Canadian tax issues