How much time can you spend in the US? What are the reporting requirements?

1. Cross Border
Tax & Estate Planning
Ed Madro – 403 220-9654
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2. This Presentation
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Is provided by Investors Group Securities Inc. (in Quebec, firm
in financial planning).

Is specifically written and published by Investors Group and
intended as a general source of information only, and is not
intended as a solicitation to buy or sell specific investments, nor
is it intended to provide legal advice. Clients should discuss
their situation with their Investors Group Consultant for advice
based on their specific circumstances.

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Is provided by Investors Group Financial Services Inc. (in
Quebec, a financial services firm).
Although we have tried to ensure the accuracy of this
information, tax laws change frequently so the provisions and
exemptions mentioned in this presentation may change.

3. Snowbirds
For this presentation:

Residents of Canada
• Worldwide income taxed in Canada
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Not a citizen of the United States

4. Canadian Images of Snowbirds
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5. How does the Internal Revenue Service (IRS)
imagine a Snowbird?
If not a US Citizen you are either:
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a non-resident alien; or
a resident alien.

6. Snowbirds in the U.S.
Non-resident Aliens
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only subject to U.S. income
tax on U.S. source income
only subject to gift and
estate tax on U.S. situs
assets

7. Snowbirds in the U.S.
Resident Aliens
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Subject to U.S. gift and
estate tax on worldwide
assets
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Subject to U.S. income tax
on all sources of income
worldwide
Green Card Holders –
deemed to be residents of
the U.S.

8. Both countries tax worldwide income
based on Residency!
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Can you be considered a resident of both Canada
and the United States? - YES
Do you want to be considered a resident of more
than one country?

9. How long can we stay?
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Canadian visitors are generally granted a stay in the U.S.
for up to six months at the time of entry.
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Requests to extend or adjust a stay must be made prior to
expiry to the U.S. Citizenship and Immigration.
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Canadian citizens do not require a visa to enter the United
States directly from Canada for the purposes of visiting.
A visitor who intends to live, work or study in the U.S. may
be permanently barred from the U.S.

10. “I don’t live in the U.S. for more than 6
months…am I OK?”
Deemed resident if:
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Present in U.S. for 183 days or more in current year
• Required to file U.S. tax return (Form 1040)
• May be able to treaty tie-breaker under treaty
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Present in U.S. for more than 31 days in current year
and meet the Substantial Presence Test
• Required to file U.S. tax return (Form 1040) unless you can
demonstrate a closer connection to Canada
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11. Substantial Presence Test
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substantial presence exists if you stayed in the U.S.
for at least 31 days in current year and for greater
than 182 under the above formula
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Calculate days spent in the U.S. as follows:
• All days in current year
• Plus 1/3 of days previous year
• Plus 1/6 of days second previous year
Days do not need to be consecutive and partial days
count as full days

12. Deemed U.S. resident if more than 182,
unless…
Year
Multiplier
Days Present
in U.S.
Total
2012
1
120
120
2011
2010
Total
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13. Deemed U.S. resident if more than 182,
unless…
Year
Multiplier
Days Present
in U.S.
Total
2012
1
120
120
2011
1/3
150
50
2010
Total
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14. Deemed U.S. resident if more than 182,
unless…
Year
Days Present
in U.S.
Total
2012
1
120
120
2011
1/3
150
50
2010
1/6
180
30
Total
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Multiplier
200

15. Closer Connection to Canada
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Will not be deemed a US resident if:
• less than 183 days were spent in the US in the current
year ; and
• “closer connection” to Canada than to the U.S. in the
current year.
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Closer Connection Exemption Statement for Aliens - IRS
Form 8840
• Must be filed by June 15, 2013 for the 2012 taxation year
• see CRA publication “Canadian Residents Going Down
South”
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16. Closer Connection to Canada
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Economic and Social ties must be more significant to
Canada than to the U.S.
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Some important ties include:
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•
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Location of permanent home
Location of personal belongings
Location of family and business activities
Location of banking relationships and investments
Social, political, cultural or religious organizations to which
taxpayer belongs
• Jurisdiction in which driver’s license held
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17. Things to Consider
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Where do I attend church?
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Do I need bank and credit card accounts in the US?
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Should I buy and keep that luxury vehicle in the U.S.?
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Have my children moved away from Canada?
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Where is my golf club membership?
Should I rent out my Canadian home?

18. Residence under Treaty
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If fail to file Form 8840 on time, you cannot make
Closer Connection claim
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Only recourse is to seek a determination of
residential status under Article IV of the CanadaUnited States Income Tax Convention
• See IRS publication 519, US Tax Guide for Aliens, and Form
8833, “Treaty-Based Return Position Disclosure Under
Section 6614 or 7701(b)”
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19. What if I lose my Canadian residency?
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Deemed disposition of most property at fair market value
• Capital gains triggered
• Tax due with filing of tax return for year of departure
• Tax can be deferred by providing CRA sufficient security
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Main exceptions
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Canadian real estate
Registered assets (RRSPs, RRIFs, TFSAs)
Life insurance
Capital property used in business

20. For Non-Residents What Assets are Subject to U.S. Estate Tax?
What is U.S. Situs Property?
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U.S. real estate
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Shares of U.S. corporations
• even if held in accounts outside of the U.S.
• even if held in RRSPs, RRIFs & TFSA
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Tangible property located in the U.S.
• including automobiles, furnishings, etc.
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U.S. debt instruments (with exceptions)

21. Will Rogers
“The only difference between Death
and Taxes is that Death doesn’t get
worse every time Congress meets!”
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