Important caveats for Canadian snowbirds in the USA

Read below for a warning from Moodys for Canadian Snowbirds. Thanks to R for forwarding this article on important caveats for Canadian snowbirds in America.

The Immigration Reform legislation currently before Congress would allow Canadian Snowbirds to stay for more than current allowable time, 182 days in a twelve month period. If passed Canadians aged 55 and up could stay for a maximum of 240 days or almost eight months in any 12 month perieod. In addition, foreign national retirees from any country who have invested at least $500k in American real estate could be eligible for a three year visa, as long as they come with their own health insurance. For more details, see http://www.fronterasdesk.org/news/2013/may/21/perks-foreign-retirees-included-immigration-bill/. However, there are some critical tax implications for those who stay beyond the 182 days.

If you want to maintain non-resident alien status and thus avoid having to pay income tax in the USA, there is a complicated formula that looks at your stay in the USA over a three year period. The short answer is stay less than four months in each calendar year and you will meet the Substantial Presence Test. If you  would like to stay longer, currently up to 182 days in the calendar year, file Form 8840, Closer Connection Exception Statement for Aliens with the IRS. A useful resource is the Canada Revenue Agency’s guide on Canadian Residents Going Down South ( www.cra-arc.gc.ca/E/pub/tg/p151/).

So if the immigration reform legislation comes into being, be prepared to file with the IRS if you stay more than 182 days in a calendar year.