Substantial Presence
"Snowbirds" are retirees who, while maintaining residential ties with Canada, spend their winters in the United States. If you are one of these Canadian residents and were present in the U.S. for 31 days or more in the current tax year, you may be considered to have a "substantial presence." This means you could be subject to special reporting requirements with the Internal Revenue Service (IRS).
To find out if you have a "substantial presence" in the United States, complete the following calculation:
- Determine the number of days that you were present in the United States in the current tax year.
- To this figure, add 1/3 of the number of days you were present in the United States in the preceding year.
- Then add 1/6 of the number of days you were present in the United States in the second preceding year.
If the total number of days that you were present in the U.S. is more than 182, then you are substantially present.
Here's an example. If you were present in the United States for the following number of days:
| Current tax year | 115 days |
| Preceding year | 150 days |
| 2nd preceding year | 120 days |
Then, to determine if there is substantial presence, add the following numbers as shown:
| 115 days x 1 | = | 115 |
| 150 days x 1/3 | = | 50 |
| 120 days x 1/6 | = | 20 |
| 185 |
Because the total is more than 182, you are considered to have had a substantial presence in the United States in the current taxation year.
If you do not have substantial presence, or are present in the United States for less than 31 days in the current year, nothing is required unless you have U.S. income or income connected with the conduct of a U.S. business.
More Than 30, Less Than 183
If you are present in the United States for a period of time greater than 30 days and less than 183 days, and have a substantial presence, one of two following options must be taken:
- File Form 8840 -Closer Connection Exception Statement for Aliens, or
- Claim an exemption from tax under the tie-breaker rules of the Canada-United States tax treaty.
For more information or assistance in filing these forms, please contact the H&R Block National Client Service Centre at customer.support@hrblock.ca or 1-800-561-2154.
Resident Aliens
If you are a Canadian resident who is present in the United States for 183 days or more in the current tax year, you are considered to be a resident alien for U.S. tax purposes. If this applies to you, unless you claim an exemption under the tie-breaker rules of the tax treaty, you are required to file the IRS Form 1040, reporting your world income.
Filing Your Canadian and U.S. Tax Returns
If you are required to file your Canadian and/or U.S. tax return, or need assistance in filing the appropriate tax forms, you can contact the H&R Block National Client Service Centre at customer.support@hrblock.ca or 1-800-561-2154.
