Page 4 - Lets Talk Winter 2015 | Lipton Chartered Accountants
P. 4
SNOWBIRDS –
KNOW YOUR TAX RESPONSIBILITIES
Ilana Zeidel, BComm, CPA, CA – Tax Manager
Have you headed south of the border for the of days you can stay in the US from 182 days the US for more than 182 days in any given
winter? If you are a Canadian resident who to 240 days. year, you would be caught as well. As a result of
pays Canadian taxes and spends a considerable the Entry/Exit Initiative, this information will
amount of time in the US, then make sure you Under this proposed legislation, a Canadian be readily available to the authorities.
understand the various tax issues that can Retiree Visa would be made available to
If you are a deemed to be a US resident
occur once you cross the US border. Canadian citizens age 55 or older who
maintain a residence in Canada and who also for tax purposes, you face these potential
RECENT CROSS-BORDER own a residence or have a rental agreement implications:
INITIATIVES in place for the duration of their US stay. If Paying US Income Tax – Even if you are a
you obtain this visa, you cannot work while
Recent Canada/US initiatives resulting in Canadian resident paying Canadian taxes,
increased monitoring could potentially put in the US nor seek US assistance or benefits. you may automatically become a US resident
you at risk of being deemed a resident of the I. ARE YOU A US RESIDENT FOR as well subject to US tax on your worldwide
US for tax purposes and paying tax in both income. Generally, a mechanism exists in
Canada and the US. TAX PURPOSES? the Canada-US Tax Treaty that attempts to
Many snowbirds generally think that, if they avoid double taxation on the same income
Entry/Exit Initiative limit their stay to 182 days a year, they will by allowing a credit (foreign tax credit) to be
Effective June 30, 2014, border services are avoid being viewed as US residents for tax claimed in one country for taxes paid on the
now collecting and sharing the personal same income in another country. However,
purposes. They should think again.
information of people entering and leaving a filing requirement exists in both countries.
The IRS reviews the number of days spent
each country. Check your dates – border
in the US over a three-year period using the Facing US Disclosure and Reporting
officials are tracking not just when you
Substantial Presence Test. This test counts all Requirements – Under US legislation, if
enter the country, but when you leave.
the days you reside in the US during the current
Increased tracking resulting in exceeding you are deemed to be a US resident for tax
the ‘substantial presence test’ (discussed taxation year, plus one-third of the days during purposes, in addition to filing an income
below) may result in you being deemed a US the preceding year, and one-sixth of the days tax return, you are required to file a foreign
resident for tax purposes. from the year before that. If the sum exceeds bank account report (FBAR) to disclose
182 days, the IRS will deem you to be a US information on all non-US accounts if
JOLT – Jobs Originated through resident for tax purposes and will likely request the aggregate value of all accounts exceeds
Launching Travel a US personal tax return. Generally, this means US$10,000 at any time during the year. The
While this US draft legislation is still yet to be that if you spend about 4 months per year for 3 penalty for failing to file the FBAR on time
enacted, its provisions are worth noting. This consecutive years in the US, you will be deemed can be up to $10,000 or significantly higher
legislation will increase the annual number a resident for US tax purposes or if you are in if a wilful violation occurred.
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|
Accounting & Assurance Tax Business Advisory
4
KNOW YOUR TAX RESPONSIBILITIES
Ilana Zeidel, BComm, CPA, CA – Tax Manager
Have you headed south of the border for the of days you can stay in the US from 182 days the US for more than 182 days in any given
winter? If you are a Canadian resident who to 240 days. year, you would be caught as well. As a result of
pays Canadian taxes and spends a considerable the Entry/Exit Initiative, this information will
amount of time in the US, then make sure you Under this proposed legislation, a Canadian be readily available to the authorities.
understand the various tax issues that can Retiree Visa would be made available to
If you are a deemed to be a US resident
occur once you cross the US border. Canadian citizens age 55 or older who
maintain a residence in Canada and who also for tax purposes, you face these potential
RECENT CROSS-BORDER own a residence or have a rental agreement implications:
INITIATIVES in place for the duration of their US stay. If Paying US Income Tax – Even if you are a
you obtain this visa, you cannot work while
Recent Canada/US initiatives resulting in Canadian resident paying Canadian taxes,
increased monitoring could potentially put in the US nor seek US assistance or benefits. you may automatically become a US resident
you at risk of being deemed a resident of the I. ARE YOU A US RESIDENT FOR as well subject to US tax on your worldwide
US for tax purposes and paying tax in both income. Generally, a mechanism exists in
Canada and the US. TAX PURPOSES? the Canada-US Tax Treaty that attempts to
Many snowbirds generally think that, if they avoid double taxation on the same income
Entry/Exit Initiative limit their stay to 182 days a year, they will by allowing a credit (foreign tax credit) to be
Effective June 30, 2014, border services are avoid being viewed as US residents for tax claimed in one country for taxes paid on the
now collecting and sharing the personal same income in another country. However,
purposes. They should think again.
information of people entering and leaving a filing requirement exists in both countries.
The IRS reviews the number of days spent
each country. Check your dates – border
in the US over a three-year period using the Facing US Disclosure and Reporting
officials are tracking not just when you
Substantial Presence Test. This test counts all Requirements – Under US legislation, if
enter the country, but when you leave.
the days you reside in the US during the current
Increased tracking resulting in exceeding you are deemed to be a US resident for tax
the ‘substantial presence test’ (discussed taxation year, plus one-third of the days during purposes, in addition to filing an income
below) may result in you being deemed a US the preceding year, and one-sixth of the days tax return, you are required to file a foreign
resident for tax purposes. from the year before that. If the sum exceeds bank account report (FBAR) to disclose
182 days, the IRS will deem you to be a US information on all non-US accounts if
JOLT – Jobs Originated through resident for tax purposes and will likely request the aggregate value of all accounts exceeds
Launching Travel a US personal tax return. Generally, this means US$10,000 at any time during the year. The
While this US draft legislation is still yet to be that if you spend about 4 months per year for 3 penalty for failing to file the FBAR on time
enacted, its provisions are worth noting. This consecutive years in the US, you will be deemed can be up to $10,000 or significantly higher
legislation will increase the annual number a resident for US tax purposes or if you are in if a wilful violation occurred.
|
|
Accounting & Assurance Tax Business Advisory
4
