In this blog post we’ll cover the US Tax for Canadian Citizens who travel to the States for the winter months.
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.