Would you like to spend the next few winters in Florida, or elsewhere in the United States, and return to Quebec in the springtime? Here is what you should know so you don’t have to pay taxes in the United States while still keeping your health insurance coverage as a Canadian snowbird.
Before hitting the road or catching a plane, you need to figure out how long you will be away, keeping in mind your previous trips to the United States. If you are ever inspected, American authorities will take into account all of the time you have spent in the States over the last three years.
As a non-resident, American law allows you to spend 182 days (six months) in the United States over three years. In this case, you will not have to declare your income with our southern neighbours.
To come to the same calculation as American authorities, add up the following:
Therefore, if you spend about four months per year in Florida, you add 120 days for this year, 40 for the previous year and 20 for the year before that. With a total of 180 days, you will be right at the limit. Note that even if you are not in the country for a full day, this still counts as an entire day in the calculation.
If you reach or exceed the 182-day limit, note that it is possible to obtain an exemption from the obligation to file a tax return. To do so, you must fill out Form 8840, entitled Closer Connection Exception Statement for Aliens. This form must be completed by June 15 of the current year.
This form aims to prove that you are not a U.S. resident, despite a substantial presence (Substantial Presence Test) in the United States. They will primarily look at your primary residence and where you vote, as well as the country in which your passport and driver’s licence were issued. You will also be asked where your family members reside, where you hold bank accounts and where your vehicles and personal objects are, etc.
If you rent your condo—even to friends from Quebec—you will have to pay an average of 30% of the gross amount of the rent in withholding tax in the United States.
You will also have the option of taxing your net rental income (after deducting eligible expenses, such as your mortgage interest and property taxes). However, this means that you will have to file an income tax return in the United States, even if you are not an U.S. resident. You will then have to report your income earned abroad to Canada. Thanks to a foreign tax credit, you will not be taxed double.
To make the best decisions based on your situation, speak with a specialist.
As long as you are not abroad for more than 182 days per year, you will not lose your Quebec health insurance coverage, so you can stock up on American dollars and take off with total peace of mind. Additionally, stays of 21 days or less are not included in the calculation.
If your vacation outside of Quebec lasts 183 days or longer, you must inform the Régie de l’assurance maladie by completing a form to try to keep your eligibility. If the decision is made to continue your coverage, you will be able to benefit from services covered in part, and sometimes in entirely, outside of Quebec.
To spend your winter under the sun and return to Quebec worry-free, be aware of the calculation of days spent abroad and what options are available to you. Once everything is in place, you can pack your suitcase and go.
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