As of June 30, 2014, travellers are now “checked-in” or “checked-out” of Canada and the US. Both countries are recording and sharing entry/exit data as part of the Entry-Exit Initiative and the Perimeter Security and Competitiveness Action Plan. The intent is to prevent Canadian snowbirds from overstaying their welcome in the US and holding them financially accountable, if they do.
Canadians can visit the US for up to 183 days in a year (6 months). Otherwise, according to the IRS Form 8840, a Canadian could be considered a US resident and required to pay taxes if he/she was “physically present in the United States for at least:
- 31 days during 2013 and
- 183 days during the period 2013, 2012, and 2011, counting all the days of physical presence in 2013 but only 1/3 the number of days of presence in 2012 and only 1/6 the number of days in 2011.”
If a Canadian is deemed an American resident, not only are there ramifications in the US, but he/she also risks serious tax implications, loss of resident status and loss of provincial health benefits back in Canada.
- Canadian Revenue Agency will tax Canadians annually, regardless of their time spent abroad. Accurately tracking how long they’ve spent away, understanding when and how to file taxes and what’s involved in having a bank account with a US institution are imperative.
- Canadians can avoid loss of status and provincial health coverage by ensuring their main residence is still in their home province. In provinces where the maximum days allowed out-of-province exceeds 183 days (for instance in Ontario, where it’s 212 days), Canadians can extend and retain provincial health coverage. For more detailed information, consult the specific provincial health authority.
Here are some resources to share with your clients to help them understand what’s required of them:
- Canada Border Services Agency
- Travel Underwriters’ blog for Canadian travellers
- Advisor.ca
- Financial Post
- moodysgartner.com
- goodlifeconnoisseur.com