Canadian snowbirds spending time south of the border are generally aware of the “183 day rule” but there is a lesser known calculation that could create tax trouble for those spending substantial time in the United States.
Rob Hooton, Partner of Millards Chartered Accountants is sharing a memo written by Dennis Tavares, CPA, CA, LPA, which advises Canadians to consider the Substantial Presence Rule and the potential requirements to file certain US tax documents.
“A portion of the Canadian population rent or own property in the US. Most snowbirds are aware of the 183 day rule. If you are in the US for more than 182 days, you may be considered a resident of the US for tax purposes. As a result, you may be obligated to file certain US tax or information returns. What many people are not aware of is there is another calculation called the Substantial Presence test. The memo outlines the calculation during a given year as well as two previous calendar years.”
Hooton believes that many snowbirds are not aware of the rule and is worried that Canadians may be at risk as the Canadian and US governments are poised to share more information related to border crossings.
“Anyone spending substantial time in the United States can be caught by this calculation and we are not seeing people submitting the required documents. The IRS is becoming more aware of returns not being filed by foreigners and can apply penalties if they are caught.”
Millards is encouraging all snowbirds to download the included article and to make sure that they are compliant with US tax laws. If you have any questions or concerns about tax law abroad, Hooton encourages you to consult a tax professional as soon as possible.
Existing clients should contact their Millards representative for more information. Millards is accepting new clients and anyone with a tax inquiry should contact Millards Chartered Accountants.
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