Your Secret is Out – How Many Days Have You Spent in the US?
We have written a number of articles on the topic of how many days you can spend in the US, but come June 30, 2014 a new initiative will be kicked into high gear in order to track your movement across the Canada/US border.
Snowbirds have tried to get around this issue by pleading ignorance or simply believing that the US had no way of actually knowing how many days they were present within their borders, and maybe they were right. Under today’s system, both Canada and the US keep track of the day you enter the country, but not when you leave and neither country is in the habit of sharing this information with each other. However, none of this actually means that snowbirds are exempt from the rules. In fact, the implications of surpassing the number of days allowed in the US comes with dyer tax, estate, immigration and medical coverage issues. These issues have all been discussed in great detail in the past, however it is worth taking a brief moment to recap the rules.
There are two different rules that all Canadian snowbirds need to be aware of. In the eyes of the Internal Revenue Code you are allowed to be inside their borders for up to 182 days within a calendar year, otherwise you risk being treated as a US resident for tax purposes. How you calculate those 182 days is where it can get confusing. This calculation goes back two years. In order to figure out how many days you have spent in the US in 2014 you would count every day spent in the US between January 1, 2014 and December 31, 2014, as one day. Then you need to add one third of every day you spent in the US during 2013 and finally one sixth of every day you spent in 2012. This calculation gives you the number of days you have been deemed to be in the US for the current year (2014), which cannot exceed 182. On the other hand, from an immigration standpoint you are allowed to be in the US for up to 180 days on a rolling year.
Although the way in which the two countries will track your movement is about the change, the rules above will remain the same. Therefore it is important that we understand the new regime being put in place. Back at the start of 2011, Canada and the US got together to begin a joint effort to help promote security and economic competitiveness with a program called “Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness”. This cooperative effort has been broken down into various sections and one in particular is of significant importance. The full implementation of the section entitled “Entry/Exit Initiative of the Perimeter Security and Economic Competitiveness Action Plan” will be coming into effect on June 30, 2014. As of this date both Canada and the US will begin sharing this information with one another as to when people enter and leave their respective countries.
Snowbirds will no longer be able to say that the US has no way of knowing how long they have been inside their borders. In fact, both Canada and the US will be tracking your days in and out of the country and they will have a detailed report of your whereabouts. This now makes it extra important for all snowbirds to keep their own detailed report of how many days they have been in the US so that their reporting can reflect the records being kept by government authorities.
As a rule of thumb we recommend all snowbirds that stay in the US for more than 120 days in a calendar year file the IRS Form 8840, which is more commonly referred to as the “closer connection”. This will put you on record with the IRS stating that you are not a US resident and that you are more closely connected to Canada, resulting in not being taxed as a US resident. However, remember for immigration purposes one can never be in the US for more than 180 days in a rolling year without the proper visa or immigration plan.
With the new tracking system in place, snowbirds need to properly educate themselves about the ramifications of being out of Canada for an extended period of time, as well as being inside the US visiting their vacation homes. The days of self-reporting are quickly coming to an end and the two countries will be coming together to monitor your movements across the border.