A Canadian snowbird stays a Canadian tax resident, but the US counts your days too. Spend about 122 days or more in the US every year and you meet the IRS substantial presence test, which makes you a US tax resident unless you file a one-page form, Form 8840, each year. Add a US home and a portfolio of US shares and you also have US estate tax and sale rules to plan around. None of this is hard to handle once you know it’s there.
How the US counts your days
The substantial presence test looks back three years. You meet it if you were in the US at least 31 days this year and the weighted total reaches 183: all of this year’s days, a third of last year’s and a sixth of the year before’s. That’s why the common “six months” rule of thumb is wrong for regular visitors.
At 120 days a year the total is 180, just under. At 122 it’s 183.
Form 8840 keeps you a non-resident
Meeting the test doesn’t settle it. Under the closer connection exception you can still be treated as a non-resident if all of these are true:
- You were in the US fewer than 183 days this calendar year.
- You kept your tax home in Canada for the whole year.
- You had a closer connection to Canada than to the US: your home, family, bank accounts, driver’s licence and health coverage are here.
- You haven’t applied for, or taken steps toward, a green card.
You claim it by filing Form 8840 with the IRS by the due date for a US return, or attaching it to one if you file. The IRS treats a late form as no form, unless you can show clear and convincing evidence that you tried to comply. Each spouse files their own.
If you spend 183 days or more in the US in a year, the exception is gone. You’d be relying on the tax treaty’s tie-breaker rules instead, which is a more involved claim and a reason to get advice before the year starts, not after.
Canada still taxes you on everything
The CRA says people who spend part of the year in the US for health or vacation, while keeping a home, spouse or dependants in Canada, are usually still factual residents of Canada. That means Canada taxes your worldwide income as before. If the US also taxes some of it, such as rent from a US property, you claim a foreign tax credit on line 40500 for the lesser of the US tax paid and the Canadian tax on that income.
Your CPP, OAS and RRIF payments don’t change because you winter in the US. What does change is how much time you can be away from your province before your health coverage is at risk. Ontario, for example, says you may have to reapply for OHIP if you’re outside the province more than 212 days in a 12-month period. Each province sets its own rule, and none covers much of the cost of US care, so travel medical insurance is part of the plan.
Owning US property
A US home is where most of the planning sits.
| Situation | What to know |
|---|---|
| Reporting it to the CRA | A home you use mainly yourself is personal-use property and stays off Form T1135. Rent it out more than half the time and it can count toward the C$100,000 foreign property threshold. |
| Renting it out | The US taxes the rent, and so does Canada. The foreign tax credit stops the same income being taxed twice. |
| Selling it | The buyer generally has to withhold 15% of the sale price for the IRS under FIRPTA, with lower or no withholding in some cases. You can apply for a withholding certificate to reduce it, and you report the gain in Canada too. |
| Dying while owning it | If your US property, including shares of US companies, is worth more than US$60,000, your executor files a US estate tax return. |
That last point surprises most people. US estate tax isn’t only about real estate: shares of US companies count even when they sit in a Canadian brokerage account. The treaty gives a Canadian resident’s estate a share of the US exemption in proportion to how much of the worldwide estate is in the US, and lets US estate tax be credited against the Canadian tax due at death on US property. For many estates that brings the US tax to zero, but only if the executor files and claims it.
Common mistakes
- Counting only this year’s days. The test looks back three years.
- Skipping Form 8840. It’s free and takes minutes, and a late one may not be accepted.
- Holding title the simplest way. How a US home is owned, alone, jointly or through a trust, changes the estate tax and probate picture. Decide before you buy.
- Forgetting US shares are US property. A large US stock portfolio can bring a US estate filing even without a US home.
- Converting money at the bank’s rate. Paying for a US winter in US dollars converted at retail rates every year adds up; ask about cheaper ways to move money.
Questions to ask a planner
- Can you track my US days against the substantial presence test and remind me to file Form 8840?
- How should we own the US property, and what would my estate owe the IRS today?
- Who prepares my US filings if I rent or sell, and do they also work on Canadian returns?
- How does a US home fit my RRIF withdrawals, OAS and the OAS clawback?
- Do you or your firm earn anything from the insurance or products you recommend?
When a fee-only planner is worth it, and what it costs
If you spend a couple of months in the US and own nothing there, you probably don’t need a specialist. Once you own US property, hold a large US portfolio, or are near the day count, a planning session usually costs far less than one missed filing or a poorly titled condo.
Canadian fee-only planners who publish prices charge a median C$1,900 for a one-time plan (middle half C$950 to C$3,000, from 46 firms), C$250 an hour (15 firms) or C$2,300 a year for ongoing planning (21 firms). Many are advice-only: they charge for the plan and leave your investments where they are. Cross-border work can cost more than these medians, so ask for a quote that names the US pieces. Our guide to what fee-only advisors charge in Canada explains the samples.
Where to go next
If you’re thinking of moving south for good rather than wintering, read cross-border financial advisors for departure tax, RRSPs and TFSAs. To find a planner, start with the cross-border specialty or browse by audience: cross-border families and Canadians in the US. For income planning at home, see the dividend tax credit and what 1% costs on C$1 million.