Mika Goodfriend is a photographer from Montreal who recently spent five weeks documenting the Québécois snowbirds of Breezy Hill RV Resort in Pampano Beach, Florida. According to the article, these Canadians spend six months out of each year down south – a lifestyle that both embarrasses and is financially out of reach of their children – and they make up 98% of the residents of this particular RV park.
Two things leap out in this article.
The first is the amount of time in the United States these snowbirds are spending. Six months per year will quickly add up and put a non-American over the limit that automatically renders them US Persons for tax purposes in the eyes of Uncle Sam and the IRS.
The second thing, which I found more significant still, is that Goodfriend notes how the lifestyle of these retirees is dependent on the wealth they accumulated during their working years and the at pensions their jobs afforded them. They are extremely well off in a way the current generation of young Canadian workers are likely never to be.
Which makes me wonder, who is going to inherit all this wealth? The children and grandchildren of the Québécois of Pampano Beach or the United States government, which has very complex and far-reaching tax and estate tax laws designed to ensnare people like snowbirds who overwinter in places like Florida.
No, 6 months is ok. 181 days, to be exact. You just have to file a form every year declaring you have “closer ties” to Canada. I forget the name/number of this form.
IRS Form 8840: http://www.irs.gov/pub/irs-pdf/f8840.pdf
Yeah, but how many snowbirds know about the ins/outs of the US tax stuff? And is it going to matter to the banks when they start scanning for “US idicia” whether you can or did fill out a form 8840?
Do you think the state of Florida or any real estate agent informs snowbirds from anywhere really about the possible tax consequences of dual residencies?
It is all so very interesting – articles like this one when you are aware of the bigger picture.
I only know half a dozen or so snowbirds. They all know about these rules but as you say, surely there are many who don’t.
My comment to this article, From Zoomer Travel (CARP related): Canadian Snowbirds Get More Days in the Sun, still doesn’t show — they apparently didn’t like it and it will never get out of moderation.
Typical flagrant Zoomer marketing — this time for the US.
WhatAmI – I know as many who go down to the US (snowbird, workers) who know the rules as do not. Given how difficult it is for USC’s to find competent tax advice, common knowledge of the US rules is probably a hit/miss proposition.
And then, of course, there are the children of snowbirds who might not get the correct estate advice and end up paying when they don’t have to or not paying when the “should”.
Finally, what happens when the rules change? Because the USG is known for changing the requirements to suit them. Of if a bank sees USP when you aren’t just because of the wintering time spent? I have a feeling that it will be messy though less so as time goes on because who is going to be able to afford that lifestyle anyway in another decade or two?
Quebec snowbirds have a pretty large voice in Florida (q’uelle surprise?) and even have a joint Chamber of Commerce with Florida. The money they spend is very important to the the State of Florida, that’s why such a big stink was made when Florida started requiring foreigners to carry international drivers licences there. CCQF is having a Snowbirds of Florida Conference in Quebec City soon, where all matters snowbird will be discussed.
I imagine if awareness of potential tax obligations has been low, it’s rapidly about to change.
I feel that I cannot invest the few pennies I have into USA. FBAR and FATCA prevents all. http://www.theglobeandmail.com/report-on-business/top-business-stories/stocks-rise-gold-slumps-as-dark-clouds-begin-to-part-in-washington/article14865398/
Are US citizens abroad allowed or required to fill out this form?
If you are a Canadian resident and US citizen or Canadian/US dual citizen snowbird and in the US for what amounts to anything over four months a year (to be on the safe side with the convoluted US formula), it behooves you to protect yourself with IRS Form 8840. Learn all you can about the protection this form can give you now that you are aware of it. Also learn from this site why a full Canadian snowbird would not want to be considered by the US to have US indicia which they could if with a stay in the US for too long in any year. Our Canadian banks may soon become an arm of the IRS and will be very interested in snowbird time in the US. There is a way to protect yourself — best to do it.
If you are a US citizen resident in Canada and intend to go through the IRS compliance hoops each year to remain a US citizen, you can stay in the US for whatever length of time, but the tax laws still apply to you. It is your responsibility to know the tax laws based on where you reside — is that Canada, with ‘snowbird’ time in the US? The rules as they apply to how you are taxed by Canada and the US, even if you are a Canadian resident, depend on the length of your stay in the US. You have tax obligations wherever you reside, but your have extra obligations if you have permanent residence in Canada as a US citizen (that is, where is your life?) US citizenship-based taxation is the reason. Mind you, you should also expect that any provincial health benefits you collect may not be valid if you over-extend your stay in the US.
This may not be a very clear explanation. Perhaps someone else can jump in.
Yet another article (Yahoo) on the new and improved 240 days you can be a snowbird in the US, if it ever passes: What Canada’s snowbirds need to know about U.S. taxes
Interestingly, this version is called the JOLT Act, appropriate name for snowbirds who need a jolt into the possible consequences if they do not have an 8840 filed each year. I somehow missed the JOLT title previously.
(I’m off to read the rest of the article and the 223 comments that now show.)