Traveling to the U.S. for extended periods of time - Snowbird Calculations Part 1

Traveling across the border for a few weeks is one thing, but staying there for longer periods of time could bring unwanted heat from the IRS.  We are not talking about retirement in the U.S. as that is completely different and would most likely require becoming a U.S. citizen and filing tax returns (1040) with the IRS each year.

Most people are escaping the cold in Canada when they go.  There are many “Snowbirds” that spend their winters in the U.S.  The key to avoid having to report to the IRS is the 183 day rule, also known as the “Substantial Presence Test”.  The more years in a row you travel to the U.S. the more complicated this becomes.

If you do not travel to the U.S. every year then it can be a simple calculation.  If you only travel their for an extended period of time once then simply keep your stay under 183 days and you are fine.  However if you travel to the U.S. each year then there is a 2 and 3 year calculation that you must go by.  If you are across the border 2 years in a row, then you take the current year’s total days in the U.S. plus 1/3 of the prior year’s days in the U.S. and the total of these must be less than 183.  If you are across the border for 3 years in a row, then take the current year’s days in the U.S., plus 1/3 of the prior year’s days, plus 1/6 of the days from 2 years prior and this must equal less than 183.  Here is a chart to understand this:

Year 1 (This yr):       1 day = 1 day

          Year 2 (1 yr ago):    1 day = 1/3 day

          Year 3 (2 yrs ago):   1 day = 1/6 day

I will be discussing this in detail and will be giving an example on my next blog.  Please check back for part 2!