Tools for Snowbirds
(Canadian residents who spend part of their year in the US)

Important Information for Snowbirds

If you are a Canadian Snowbird during the winter months, we recommend you read Canada Revenue Agency’s useful pamphlet P151: Canadian Residents Going Down South. It provides important information on US tax compliance for Canadian residents who are neither US citizens nor green card holders. Specifically, it addresses reporting US rental and other income, disposing of US property, and the substantial presence test of US tax‑residency. The substantial presence test calculates the number of days you were in the US over a rolling three‑year period; the test result may render you a US tax resident. If you visit the US for between 31 and 182 days total in any given year, you should consider filing IRS Form 8840: Closer Connection Exception Statement for Aliens to report Canada as your tax home. All of this is covered in the pamphlet or call us to discuss your situation. Visit the Tools section of our website for the CRA pamphlet P151 and the IRS Form 8840.

• • Canada Revenue Agency Pamphlet – Canadian Residents Going South
• • United States Department of Treasury Internal Revenue Service, Form 8840 – Closer Connection Exception Statement for Aliens

USA Expat Taxes For Americans Living In Canada

US Taxes – What You Need To Know

If your annual income is more than US$10,000 (or $400 if self‑employed), you must file a form 1040. While any tax due is still due on April 15 , expats get an automatic filing extension until June 15 . This can be extended still further until October 15 . If you live abroad and have assets worth over US$200,000, you also need to file a form 8938 declaring them.

“A 2013 survey commissioned by Thomson Reuters asked 1,009 Canadians if they liked filing their taxes. 41 per cent said yes.”

If you have more than US$10,000 in total in one or more foreign bank accounts at any time during the tax year, you also need to file FinCEN form 114, sometimes known as an FBAR (Foreign Bank Account Report).

If you are paying income tax in Canada, there are several ways to avoid paying tax on the same income to the IRS. The two primary ones are the Foreign Earned Income Exclusion, which allows you to exclude the first around US$100,000 from US income tax if you can demonstrate that you are resident in Canada, and the Foreign Tax Credit, which gives you a dollar tax credit for every dollar of tax you’ve paid in Canada.

The Foreign Tax Credit is typically a better option if you pay more tax in Canada than you would owe in the US, as you can carry the excess tax credits forward for future use. Don’t forget though, even if you don’t owe any tax in the USA (if your income is more than US$10,000 or $400 self‑employed) you still have to file a return.

The US and Canadian governments share taxpayer info, while Canadian banks pass on their US account holders’ account info to the IRS, so it’s not worth being economical with the truth or burying your head in the sand. The penalties for tax evasion for expats are stringent, to say the least.

If you’re a US citizen or green card holder (including dual citizens) and you have been living in Canada for some time but didn’t know you had to file a US tax return, don’t worry: there’s a program called the IRS Streamlined Procedure that allows you to catch up on your filing without paying any fines. It’s better to do this soon though before the IRS comes to you.

Canadian Taxes – What You Need To Know

Tax Day in Canada is April 30th, and this is also the date you have to file by, other than if you are self‑employed, in which case you must file by June 15th.

The Canadian equivalent of the IRS is called the CRA (Canada Revenue Agency), and the personal income tax declaration form is called T1 General, or just T1.

You can find information on Canadian income tax rates here.

We strongly recommend that if you have any doubts or questions about your tax filing situation as an American living in Canada, that you contact our expat tax specialist.

At Tax Partners, we have clients in over 150 countries worldwide. US expat tax is all we do and we are very good at it. If you have any questions regarding your personal situation, don’t hesitate to contact us and we’ll be happy to help.