Every year, retirees from across Canada take a trip to the southern United States to escape the harsh winters at home. For years, these snowbirds have been hoping that the U.S. government would pass a bill which would allow them to extend their stay and, finally, there may be some hope. However, there are material tax implications for Canadian snowbirds spending long amounts of time in the U.S., which must be addressed as soon as possible – ideally, before any property decision is made.
The AG Tax team have examined the current bill and have prepared a brief summary of the main points, which may be helpful for all retirees planning to head to the U.S.
Background
The Canadian Retiree provisions are part of the JOLT Act (Jobs Originated through Launching Travel), a bill that could provide for a boost to the U.S. economy by encouraging international travel to the country. The bill includes comprehensive immigration reform and it is currently under review by the House Judiciary Subcommittee on Immigration and Border Security. If passed, the JOLT Act would allow Canadian retirees (over age 55) to spend up to eight months (240 days) each year in the U.S. – compared to the current 182-day annual limit.
Conditions
There are various criteria that must be met in order to be eligible under the proposed provisions including:
• Have Canadian citizenship
• Be 50 years of age or older
• Maintain a residence in Canada
• Own a U.S. residence or have a rental agreement for the duration of their stay
• Will not engage in employment while in the U.S.
• Will not seek assistance or benefit.
Tax implications
• Retirees who spend more than 182 days in the U.S. might be considered to be U.S. tax residents. This would mean reporting their worldwide income to the U.S. Internal Revenue Service (IRS) and paying U.S. tax.
• Additionally, Canada may still view the snowbirds as Canadian tax residents, and without proper professional guidance, they may face double taxation.
• Staying out of Canada for a long period of time could endanger a retiree’s eligibility for provincial health insurance.
Retiree Visa
Additionally, there is also a proposed Retiree Visa for foreign citizens who make a property purchase of $500,000 or more. This would permit individuals to live in the U.S. year-round if they’re 55 years or older, have health coverage and live in the U.S. for more than 180 days a year. This visa would be valid for up to three years but may be renewed.
AG Tax LLP Can Help
If you have any tax-related queries, need assistance with tax planning or filing your tax returns please contact us. Our team comprises of highly experienced tax professionals with extensive knowledge of U.S. and Canadian tax laws as well as cross-border compliance
Furthermore, as a full service accounting firm, AG Tax assures complete assistance with even your most complex tax needs.
We can assist with:
- Canadian Personal and corporate tax returns
- Cross Border Taxation and Business Planning
- U.S. Personal and Corporate Taxation
- Disclosure of Foreign Assets and other information filings
- Retirement planning
- State Sales Tax & E-commerce Taxation
- Estate Planning, Inheritance tax advice
To obtain a quote or to arrange for a consultation to discuss your tax related queries, please contact us at:
- 416-238-5920 (Greater Toronto Area, ON)
- 604-538-8735 (Greater Vancouver Area, BC)
- 780-702-2732 (Greater Edmonton Area, AB)
Disclaimer: The information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
