US Tax Issues for Canadians

I've been investigating this topic to ensure I don't get caught by any surprises during our trip planned for next year.

 

A Substantial Presence Test is used to determine if you are considered to be a US resident and it's based on the number of days in the US over the last 3 years using a formula.  If you are considered a US resident then you will have to file a US Tax return.  

My interpretation is that it's possible to be in the US more than 183 days over 2 calendar years (ie. fall 2015 - spring 2016).  For example if you were in the US for 240 days (120 days in 2015 & 120 days in 2016) with no other past US visits then:

• For 2015:  You would not be considered a US resident since the number of days is 120 days which is < 183.

• For 2016:  The calculation is the current year 2016 (120 days) + 1/3 of previous year 2015 (120 / 3 = 40) + 1/6 of 2014 (0) which = 160 days.  Thus you would not be considered a US resident since 160 < 183. 

I'm definitely not an expert on this subject.  I'm just trying to educate myself to ensure I don't get caught by any surprises.  I suggest that any interested parties refer to a document published by BDO in March 2015 that explains US Tax issues for Canadians:

 

http://www.bdo.ca/en/Library/Services/Tax/Documents/Tax-Bulletins/US-Tax-Issues-for-Canadians.pdf

Canadian preparing for an extended stay in the US

Here’s what I have learned so far, we’ll need to:

·         Arrange for an OHIP absence in advance so we don’t lose our health coverage – more info at http://www.health.gov.on.ca/en/public/publications/ohip/travel.asp
·         Arrange Health Insurance during our stay in the US & Bahamas
·         Apply for Nexus cards to simplify our boarder crossings
·         Obtain an Annual Customs & Border Protection CBP Decal at https://dtops.cbp.dhs.gov/main/login_internet.jsp
·         Investigate if a CBP Cruising Permit is required
·         Investigate the I-94 Arrival form for entering the US & I-539 Extension form to stay longer
·         Investigate potential US Tax issues associated with being in the US > 6 months
·         Extend Boat Insurance for our trip to cover US & Bahamas
·         Investigate obtaining a Credit Card / Bank Account for US currency
·         Investigate US Cell Phone / Data plan
·         Investigate Boating Safety equipment needed for the Great Loop

We’ve read about the Small Vessel Reporting System (SVRS) however it appears that this is not required if we have Nexus cards.

I'd appreciate feedback on my list to date, especially if I'm missing something!

Step 1 – Retirement – Dec. 19, 2015

I’m now officially retired and my wife Maria will be retired at the end of June 2016.  We plan to start our Great Loop adventure on July 1st, 2016.  I have lots of time to prepare for our trip thus my next step will be to develop a checklist of things that must be done in advance of our departure.  Since we’re from Canada I know that my checklist will differ from those that reside in the US, however I hope to learn from others that have shared their plans via their blogs.  If you’d like to recommend items that should be included on my checklist then I’d appreciate any input that you may have.