by Jeff Berwick, Dollar Vigilante:
Many Canadians, referred to as snowbirds, spend 3 to 6 months each year in the United States. If they think to consult a tax adviser at all they’re usually told that so long as they spend less than 183 days per year in the USA, they can rest assured that they will not be triggering any tax consequences. A brief reading of the US tax code would appear to verify this statement; however there is a nuance that threatens to trap snowbirds in the IRS’s web.
It’s called the substantial presence test and it’s a second layer of the standard test performed by the IRS in order to determine residency. Not only can you not exceed 183 days in USA for the current year, but after adding in one-third of the prior year’s days, and one-sixth of the second preceding year’s days that total is not allowed to exceed 183 either. What this means is that your annual day allowance is not 183, but 122.
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