With spring finally here and the weather beginning to warm up, hundreds of thousands of Canadians, aged 55 and up, will begin their return trip home for the summer from the warm sandy beaches of the U.S. southern coast. It is estimated that in the Sunshine State of Florida alone there are about 500,000 snowbirds that spend their winter months there each year. With such a significant amount of snowbirds making the trip down south each year, it is important to be aware of a number of issues.
Currently, Canadians can spend just six months in a calendar year in the U.S. Under the current rules, when snowbirds spend time in the U.S. and return home for a short trip (for example, a few days home for Christmas), the time spent in Canada or elsewhere is still counted as time spent in the U.S. This time still counts towards one’s six months in the U.S. because the snowbird left the U.S. only temporarily with the intention of returning. There is currently a proposed travel law that would allow Canadian retirees to spend eight months each year in the U.S. without a visa.
Canadians also need to be concerned about the tax implications of staying in the U.S. With this proposed law allowing Canadians to spend up to eight months in the U.S., tax experts warn of serious tax consequences, specifically, the consequences if one is deemed a U.S. resident for tax purposes. As a U.S. resident for tax purposes, a Canadian retiree down south could become subject to not only U.S. income tax but estate tax.
While the majority of us are familiar with how income taxes work, some may not be familiar with estate tax as Canada does not have an inheritance tax. The U.S. imposes an estate tax on the value of an individual’s worldwide assets owned at the time of death. Tax experts highlight that this estate tax could take effect even if someone lives in the U.S. for a brief time, depending on the facts.
Furthermore, staying outside of Canada for more than 212 days can also put eligibility for health insurance at risk for those in Ontario. As long as a person’s primary place of residence is still in Ontario, they are permitted to be temporarily outside of Canada for a total of 212 days (seven months) in any 12-month period and still maintain Ontario Health Insurance (OHIP) coverage. However, there are specific circumstances where an individual is afforded extended coverage, and further details on that can be found here.
It is also a good idea for snowbirds to leave copies of important documents such as passport, driver’s license, insurance cards, insurance policies, power of attorney documents, and power of care with their adult children or closest relative. These documents can save valuable time in the event of an unexpected emergency.
Canadians traveling abroad for extended periods of time should consult with a U.S. immigration attorney to be sure they are in compliance with U.S. immigration laws. If you have questions on this, please contact our office to schedule a consultation with one of our attorneys today!