How can Canadian Snowbirds avoid US tax implications?

Sep 2, 2022 11:30:00 AM The MacMillan Estate Planning Team Tax Planning, inheritance, family estate planning, tax plans, canadian revenue agency, tax returns, Canada Revenue Agency, CRA, Enhanced Tax Planning Strategies, snowbirds

Each year, it is estimated that over one million Canadian retirees, known as snowbirds, escape the freezing winter temperatures to enjoy the warmer climates of the United States.

Many believe that they are legally allowed to stay in the US for up to 180 days every year without having to file a US tax return. However, we recommend that snowbirds spend no longer than 120 days in the States at a time to avoid tax repercussions.

The reason we urge snowbirds to err on the side of caution is due to a test entitled the ‘Substantial Presence Test’. This test calculates the length of time an individual has spent in the US over 3 years to determine if that person is considered a US resident for tax purposes. So, it is essential for individuals, families, and trusts who are planning to spend time in the US, to seek expert advice and to protect their assets when navigating the US tax rules.

Now is the perfect time to review cross-border personal tax and estate planning with an expert; especially when an increase in U.S. tax is expected soon.

For Canadians who have property or assets in the US, MacMillan Estate Planning recommends a variety of strategies to safeguard those assets, including a Canadian Resident Trust to hold US property, especially if it has a value of more than $300,000. This is also recommended if the goal of a client is the transfer the property to a spouse, child, or other family member after their passing because of the US tax implications.

Taking advantage of strategies like this may save you a lot of hassle and time, especially for those looking to spend the winters in the US throughout the majority of their retirement years.

To find out more about which estate planning strategies could benefit you and your family, register for our upcoming complimentary webinar, or contact us on 1-833-266-6464.

At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.

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