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Tips and tricks for Canadian tax filers at every stage of life from UFile's tax expert Gerry Vittoratos



It's Snowbird Season: How To Travel South Headache-Free

by UFile Team Équipe ImpôtExpert | Dec 27, 2016   Comments:

Snowbird season

More than 500,000 Canadians own real estate in Florida.

Although impressive, this number leaves out the number of Canadians who rent long-term or pay regular short-term visits to the sunshine state, or other appealing areas along the sunbelt.

According to Statistics Canada, Canadians combined spent 87,278 nights in Florida, 17,225 nights in California and 15,624 nights in Arizona in 2015 alone! Travelling south to escape the cold and dreary Canadian winter months, a trend particularly popular among retirees, is being looked at more closely by Canadian and U.S. governments as they look to reconcile the distribution of social benefits and tax obligations for Canadians who are out of the country for an extensive period of time.

While there should be no hesitation to reach for your bottle of SPF 50 before flying south this winter, here’s a refresher on the cross-border basics so you can travel, stay, and (tax) return headache-free.

Count Your Days Away Carefully

Counting your days will be more important, and possibly easier, than ever. Earlier this year, Canada and the U.S. jointly announced something called an entry/exit initiative. This means cross-border travel will be monitored more accurately to verify traveller movement. While this is not set to create delays at the border, it will be keeping a closer eye on how long travellers are staying outside of their home country.

You can stay a maximum of 183 days (approximately 6 months) over a three-year period before the IRS considers you a U.S. resident – and subject to pay income tax. If you’ve already (and possibly well surpassed) this number, don’t fret! Here’s how the math works for snowbirds:

100% of your days away in the current year

 

 

+

33% of your days away (1/3) in the previous year

 

 

+

16% of your days away (1/6) in the second previous year

 

 

=

 

 

Less than 183 days

Proposed U.S. law has been introduced – though not yet passed – to extend length-of-stay limit to 240 days for Canadian citizens over 50 years old and their spouses. With U.S. immigration law in limbo, it remains to be seen whether the proposal will roll out into law before the CRA tax filing deadline, if at all.

To learn more about the 183-day rule, visit the CRA’s website here.

Know Your Provincial Healthcare Laws

Depending on where you live, each province varies when it comes to the minimum of how long you need to be living in the country to continue health insurance coverage:

UFile - Canada map

Keep Paperwork Handy

The Canadian Snowbird Association suggests carrying copies of the following documents when crossing the border: Canadian driver’s license, credit card statements, tax assessment notices, bank and investment statements, homeowner documents, return ticket, travel insurance policy. You’ll need some of these documents when filing your 2016 tax return, so you’ll be well organized early!

Renting Versus Owning: Does It Really Matter?

For snowbird homeowners, the biggest headache lies in paying property taxes and home insurance year-round. Insurance rates may increase considerably for a home that you leave empty for extended periods of time. You can rent your home for several months each year, but be prepared to pay from 10% to 15% of your rental income in fees to the property manager.

For snowbird renters – an increasingly appealing option for sunshine seekers as cross-border laws tighten, the Canadian dollar weakens, and U.S. housing costs rise – there is significantly less to worry about from a personal finance and budgeting perspective.

Make a list of the amenities that come with your rental and what you can bring in your suitcase in advance to keep spending at a minimum while you’re there to make sure you have a memorable and enjoyable time away.

1 comment

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  1. Brenda | Feb 07, 2017
    In "Count Your Days Away Carefully" paragraph two, I assume you mean "183 maximum average" over three years. I found this confusing until I looked at the calculation. Thank you.

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