Snowbirds are retirees who migrate with the seasons
Every winter, active adult snowbirds flock from northern climates to America’s warmer southern regions. While many of these retirees are coming from the northern United States, some of them hail from neighboring Canada.
Though Canadian snowbirds share much in common with their American counterparts, crossing the border brings additional concerns. Doug Gordon is one Canadian snowbird who has been wintering in the United States for the past eight years. While Doug and his wife have enjoyed their winter visits to Arizona and California, they are careful not to stay longer than the allowed 182 days per year. If they were to exceed this limit, they would be required to pay taxes in both countries.
Like many snowbirds, Doug acknowledges, “[The taxes] would be a kind contribution for allowing us to hunker down under the wonderful California sun for the winter, but we choose to count the days.” While they can appreciate the reasons behind the laws, double taxation is a cost that most snowbirds cannot afford. Fortunately, these extra taxes can be avoided by staying only as long as allowed by law.
Canadians who visit the United States for less than 30 days in a calendar year are simple “visitors” and do not have to worry about taxes. If a Canadian’s visit extends more than 182 days in a calendar year, he is considered a “resident alien” for tax purposes and must file a regular U.S. tax return. Canadian snowbirds whose visits fall between 30 and 183 days in a single calendar year still may meet the criteria for having a “substantial presence” in the United States.
Having a “substantial presence” does not necessarily mean that snowbirds will be required to pay U.S. Taxes. They will need to file Form 8840 Closer Connection Exception Statement for Aliens with the U.S. Internal Revenue Service (IRS). Failure to file this form could result in hefty fines, even if no taxes were owed.
There is a simple formula to determine if a Canadian visitor meets the criteria for a “substantial presence”: Add the number of days visited during the current calendar year, plus 1/3 of the days visited in the previous year, and 1/6 of the days visited in the year before that. Let’s say a Canadian couple visited the United States for 130 days in 2009, 120 days in 2008, and 120 days in 2007. They would add 130 days, plus 40 days (1/3 of 120), plus 20 days (1/6 of 120 days) for a total of 190 days. Since this is more than 182 days, the couple would meet the criteria for a “substantial presence” and be required to file Form 8840 with the IRS.
When Canadians purchase a winter home in the United States, the tax laws can be complex, especially when the home is rented out while the homeowner is away. Before purchasing a home, Canadians should become familiar with the tax laws that will affect their ownership both in the United States and in Canada. If a homeowner dies while retaining ownership, his winter home will also be subject to U.S. estate tax laws.
Like most Canadian snowbirds, Doug and his wife recognize the need to plan for medical care or emergencies while visiting the United States. Doug’s approach will likely sound familiar to other visiting snowbirds: “We purchase travel insurance before leaving, visit urgent care if needed, or get on a plane and get home if necessary.”
Travel medical insurance is an important consideration when Canadians plan an extended visit to the United States. Though it certainly helps to have a physical examination and fill prescriptions before leaving Canada, travelers should be prepared for illnesses or accidents that may come up during the visit. Travel medical insurance will help protect visiting snowbirds from the high costs of an uninsured emergency or urgent care visit.
As they will be wintering in another country, Canadian snowbirds must also consider currency exchange rates. It’s best to plan ahead when exchanging currency. By watching the rates as they change, Canadians can purchase U.S. Dollars to their advantage.
Though there are additional considerations, many Canadian snowbirds enjoy wintering in the United States each year. The Canadian Snowbird Association (CSA) is a not-for-profit organization that offers a wealth of information to educate and support Canadian travelers. Members can also enroll in the Snowbird Currency Exchange Program, join the CSA Auto Club, or find information about recommended travel medical insurance.
Through organizations like the Canadian Snowbird Association, information found online, and the help of fellow travelers, Canadian snowbirds can learn how to accomplish their dreams of wintering in a warm climate. With a little planning, it is easy for snowbirds to divide their time between two homes, even if those homes happen to be in different countries.
{ 19 comments… read them below or add one }
Nice overview to the pros and cons a snowbird can encounter.
Your article is a little confusing in that it mentions having to pay taxes in both the USA and Canada if snowbirds stay longer than 182 days. This implies that Canadians are allowed to stay in the USA longer than 182 days. As a recent retiree with financial and property ties to Canada, and a motorhome, I love spending the winter in Florida or Arizona. However, I would also love to be able to explore other parts of the USA during the summer but that would put me way over the 182 days allowed in a year and possibly jeopardize a future trip south for the winter.
All my research with US Immigration authorities indicates that while Canadians are not technically required to have a B2 visitor visa (max 6 month stay), they are in fact treated as B2 visitors and limited to 182 days regardless if they meet the substantial presence test or not. Does anyone know if there is a legal way around the 182 days max stay rule? Just looking for sun and sand and am willing to spend some of my pension income in the USA to get it.
Thanks
Mark,
Sorry for the confusion, but this is how the U.S. tax law is written. According to Canada’s Foreign Affairs and International Trade website:
“A maximum admission period of six months is expected to be the norm for Canadian retirees seeking to winter in warmer climates. Those who wish to stay longer may apply for an extension with the nearest office of the U.S. Citizenship and Immigration Service once they are in the United States, but before their authorized stay expires. They may be asked to demonstrate that they are only remaining temporarily in the U.S.”
More information can be found here: http://www.voyage.gc.ca/countries_pays/report_rapport-eng.asp?id=308000
I hope that helps!
Susan
Your info is quite informative, unfortunately for us, we recent retirees who bought a property in the us an plan to spend 6 months a year there as we thought we could but I guess if we don’t want to pay alien tax, we can only stay a maximum of 4 months each year if you could count previous year’s stay with your current year. Any idea how much an alient tax would cost if you want to stay 6 months a year?
Carmen: We have hundreds of lawn bowlers who come from Canada to Sun City. A good number of them own property here (i know, i watch them for them while they are goine). They vary their arrival and departure schedules based on their own situation, but almost all of them track their days in the United States to get the maximum 6 months allowable. They do that for two reasons i’m told: One is so they do not have to pay taxes in the US when they are here for more than 180 days and the other is due to meeting the required number of days in Canada to qualify for their health insurance. The bigger concern is being able to buy health care coverage while they are out of Canada, it’s fairly spendy.
Thanks a lot, i just got confused with Susan’s explanation that you have to include two year’s previous to your current one which means you can’t really stay for 6 months in a year. I called the US immigration at the airport and told them about it and they told me, you are allowed 6 months out of 12 and the bottom line is you have to be outside US more than in to be on the safe side and it makes sense.
In your recent bird talk column..it stated that if you came back to Canada from the USA for r the holidays you could not deduct this from your 182 days..Also it stated that if you left on a cruise from USA and returned to USA these days could not be deducted from the 182 days…Please confirm…..
Also is the 182 days in the USA in a calender year,,,or …does it start from the date of your longest trip,,,for instances would you start counting your days in Oct to Apr….then adding on any day trips ……………….or would i count so many days from Jan to april then my day trips then my time from Oct to Dec 31…..
thanks
As a recent retiree, my wife & I have looked carefully at the US. Since we currently live in the GTA which is less than one hours drive from the Niagara Falls border, we have been looking (for the lower cost of living reasons) at property in Niagara Falls NY, which would be less than 10 minutes from the Canadian border. We have enough combined income from OAS, CPP, private pensions & investment income to show we can support ourselves
OK, this is the plan
Buy the property, stay monday-Friday, back on weekends to Canada
Then say four times per year – flying out of the country (outside North America)visits to Europe, Carribean wherever
On two of the four trips we’d plan to stay away for one month stretches in the sunny Med .
We maintain bank accounts in Canada, use one of the childrens addresses as ours, keep our drivers licenses, would file yearly Canadian tax returns as Canadian residents – but in fact are living temporary in the USA in a property which we would own there.
When leaving North America for Europe & other far off places, we would depart & enter at Toronto Pearson airport
When returning on weekends or after the trip abroad we’d connect to visit the doctor, dentist etc [keeping OHIP current] – thereby maintaining the close connection with Canada & never ever being away for more than 180 days at any one stretch
Is something like this doable [sort of bending the rules a bit] considering we’d never be in the US ever for more than 180 days at a stretch, but in fact we would be on US soil more than 180 … worked properly
I still dont understand how you count the days. When does it start and can you deduct the days you return to Canada example Xmas. I was turned away at the boarder on Sept 23 by a young agent who was convinced I lived in Florida year round because I had a Florida drivers license and own property. I was given a long list of stuff to produce in order to get in. I returned two days later with the documents and was grilled again but let in. I was finger printed and photo taken. Has anyone had a similar problem. I dont stay over my limits but am now very concerned about what will happen everytime I try and get in. I am a retired Air Canada employee who flies back and forth often. Any Ideas?
This happened to us in 2005. Although we produced the documents after the denial as in your case, we have been red flagged ever since. Almost 6 years now. We now get called into secondary every single time we cross the border. Often for several hours. We consider ourselves lucky if we get out under 90 minutes. We have missed several flights in Houston. We have never since been denied. On many occasions we have been lectured too , chastised, abused and even told we should visit another country and why did we want to come to the US so much. Often use of the washroom is refused. One time I sat with my 85 year old mother who was with me, she is a US Citizen but she was detained with me. She did not have her medicine, was refused use of a wash-room and almost went into diabetic shock as we were there for almost 3 hours. Because we are in there so much we have had the opportunity to witness many outright abusive treatment of other people. The US needs to address is in no uncertain way. I have many relatives and friends who no longer will even fly through the US on their way to Canada as a result of the fear. My 70 year old mother in law was strip searched in Houston once. My American family (Mother, father, sisters, brother) are all furious and ashamed. We no longer dare to cross for as short visit so my children do not get to see their Grandma, grandpa and Auntie who are old and disabled and cannot travel easily to Canada.
Hello, everyone,
Thank you for all of your comments. There seems to be some confusion between the amount of time Canadians are “allowed” in the U.S. and the U.S. tax laws that apply to snowbirds.
This article is discussing some of the U.S. tax laws that apply to Canadian snowbirds. It is not talking about the amount of time Canadians are allowed to stay in the U.S. You can find more information about U.S. entry and exit requirements in the Foreign Affairs and International Trade Canada’s Travel Report for the U.S. found here: http://www.voyage.gc.ca/countries_pays/report_rapport-eng.asp?id=308000
The calculation described in this article (covering 3 years) is an explanation of the U.S. “substantial presence” test. The IRS provides more detailed information here: http://www.irs.gov/businesses/small/international/article/0,,id=96352,00.html
Canadian snowbirds who meet the requirements for a substantial presence are considered U.S. residents for tax purposes. However, they often qualify for a Closer Connection Exemption, which states that they have a closer connection to another country and therefore are not required to pay U.S. income taxes. To claim a Closer Connection Exemption, you must file form 8840 with the IRS. The IRS provides detailed information on the Closer Connection Exemption here: http://www.irs.gov/businesses/small/international/article/0,,id=96377,00.html
If you are a Canadian snowbird and do not want to pay U.S. income taxes, or hefty fines, please visit the IRS website (links above) and make sure you understand how the rules apply in your situation. Ignorance of the law will not prevent the IRS from holding you liable for unpaid taxes.
If the people asking these questions were to join the Canadian Snowbird Association, they would get all there questions answered.
Visit http://www.snowbirds.org Membership is just $25.00 per year for a couple in the same residence
Your snowbird website seems to be useless for the most important question of clarifying my length of stay in the US. No matches were found in the search
I understand the counting of days in a calendar year and the 182 days USA restriction and filing the Form 8840.
But I do not understand the USA rule(?) about having to be out of the USA for 30 days or more to be “counted as out”.
If I go home to Canada or anywhere out of USA for a 2 week period during my winter in Arizona why should I count thoes days as being in the USA???. I am not there and my passport can prove that fact.
The CSA states that you are not considered out of the USA unless it is for a period of more than 30 days. WHERE is this rule printed in USA regulations please???
many thanks
I am in Canada Can I go to UsOct, Nov,Dec 2011 and 3 months and then in 2012Jan,Feb,March April and being 3 months in one yr and 4 months in next yr all in a row and be in the 6 months 181 day rule?
My spouse and I spent the past two winters in Arizona; first winter out of Nova Scotia, and second winter out of Ontario, while maintaining N.S. residency. Had a lot of hassle when crossing in our rv (due to being in our 40’s) and first time across we were taken into secondary, grilled for a long time and ‘warned’ not to overstay our visa. We made sure both winters not to exceed our stay, counted the days like everybody else, and in fact, I specfically asked Canada Customs to stamp our passports (Port Huron) to prove we left in time the first Spring coming back. Canada Customs refused to do so (said they don’t stamp returning Canadians) and told me to just keep a debit or credit receipt as proof we were back in Canada on time. Second time coming home, into B.C., we didn’t bother asking for a stamp.
We now live in B.C. and have been hearing about this US income tax stuff; everybody is confused; everybody is asking everybody else what do they know about it, and many have decided to stay home this year rather than take a chance of paying US taxes. Many are also cutting their normal 5 month stay to 3-4 months.
In my case, this year after I filed my Canadian taxes, it comes back with telling me I am a ‘non resident’ and owe many thousands of dollars more in taxes! Revenue Canada did not specify if I was a non resident of Nova Scotia or Canada. We maintained our N.S. residency, vehicle plates, health card and insurance, until this summer, when we became B.C. residents and switched over, months after I filed my taxes. So I have no idea, and am rather worried, about what this ‘non resident’ thing means. Then Revenue Canada sent me another statement saying I was a business owner/employer and owed still more taxes! I’ve not worked for over 5 years due to illness and certainly don’t own a business. I’m still waiting for an explanation from Revenue Canada. Is this non resident thing result of the IRS trying to tax me? Has any other snowbirds had this problem with Revenue Canada?
At the same time, my spouse, who spent the exact amount of time that I did out of both Nova Scotia and out of Canada, first drew EI sick benefits from his previous Nova Scotia job while we were in Ontario in 2009, then he was employed for 5-6 months in Ontario in 2010 and now has been working for the past five months this year in B.C., while maintaining his N.S. residency until recently. His income tax is not affected. He is still a resident. I am on disability. So in my line of reasoning, if anybody is a ‘non resident’ as far as Revenue Canada is concerned, it would be my spouse, who is basically hopping from Province to Province for employment and they know that. That is, if non-resident is referring to out of Province, not out of Country. Then I wonder if Revenue Canada is trying to hit me with some kind of provincial taxes because I’ve lived in three Provinces in three years and have not been employed. I don’t know what to think!
My spouse and I decided to stay in B.C. for this winter because of the mess with Revenue Canada. Not taking any chances on getting hit with more taxes.
My wife & I have been coming to Arizona since 1997. We purchased a house in Sun City West, Arizona in March of 1998. We have come to AZ every year since the purchase. We are careful not to stay over the 182 days & have submitted an 8840 form each year.
The last two years we have been hassled by the US immigration at Vancouver International Airport. This current year we came into the US on Oct. 31st. The border agent asked us how long we planned to stay in the US. We said 179 days. Our airline tickets verified this time frame. The border agent said “you are milking the system”. I said that I did not understand his comment. I said that we had a winter residence in AZ, & paid property taxes, bought groceries, clothing, etc., which helped the US economy. His comment was ” you can spread honey on manure, but it is still manure”. I was furious with his comment but did not say anything because of the absolute power these agents have. He went on to say that “we were lucky that we did not get a hardassed agent to deal with.
Why are we being abused in this manner? We do not work in the US, so we are not taking any employment away from a US citizen. We pay for own healthcare & spend money to help the US economy.
What is the problem & how can it be alleviated.
Shameful behjavior on the part of the immigration officer and hopefully this comment will be forwarded to the appropriate agency. Sun City, Sun City West and Sun City Grand are just three of the many Arizona retirement communities that Canadian’s call their winter home.
It is inexcusable for this to happen. Bill Ness does such a great job providing people research on retirement communities and now perhaps it can also be used as a tool to end some of the nonsense that occassionally people encounter. We love to have you help spurn our economy.
What’s better than to escape those cold winters for a far warmer climate.
I have not kept an aquirate log o how mqny days I have spent in the Us from Canada.Is there a way to find that out from Border Authoritiesthe actual days spent without ringing bells?. I too have had unreasonal and abusive interrigation from US Customes
My American partner of 5 years is being treated for Cancer with chemo to carry on until Mar 2012.I have spent more time in the US than usual this year. I am his sole caregiver and want very much not to run into taxation problems with the US but am wondering if they are commpassionate allowences for different circustances? Any help will be appreciated –thanks S