Canadians regularly going to U.S. for long stays need to be mindful of changes, says MP
Officials can now track Canadians' exit dates and re-entry dates into Canada
A B.C. MP is warning people about a new information-sharing agreement between Canada and the United States that could put travellers who regularly spend a lot of time in the U.S. at risk of significant consequences.
The Entry Exit Initiative allows officials to track how many days Canadians have spent in the U.S. Prior to the agreement, the country could only track entry dates, not exit dates.
"We were specially wanting to alert people that this could potentially be a problem for them if they were being careless about their travel," said Gail Hunnisett, constituency assistant for Alex Atamanenko, MP for B.C. Southern Interior.
Anyone who travels to the U.S. regularly should keep a log and make sure they're accurate if they're asked to substantiate their time across the border.— Gail Hunnisett, constituency assistant for Alex Atamanenko, MP for B.C. Southern Interior
Hunnisett said she's been fielding a lot of calls since Atamanenko's office put out the information.
She said a common misconception is that Canadians regularly travelling to the U.S. for long stays can spend up to 182 days, or six months, in the U.S without being considered a resident for tax purposes.
Hunnisett said that for people travelling to the U.S. for long stays year after year, it's actually 120 days, or four months, averaged using a special formula over a period of three years.
"The total number of days spent in the current travel year is added to 1/3 the total number of days spent in the previous year, and 1/6 the number of days spent in the year prior to that," according to Atamanenko's website.
The total number of days includes all trips to the U.S. in a single year, said Hunnisett.
Hunnisett said Canadians spending more than 120 days in the U.S for three years or more in a row can extend their stay limit to 182 days and avoid being considered a U.S. resident for tax purposes by filling out a Closer Connection Exception Statement form detailing their close ties to Canada annually.
Canadians who overstay their welcome in the U.S. are at risk of:
- Being considered a U.S. resident for tax purposes and having to pay taxes on worldwide income.
- Losing their Canadian residency for tax purposes and their health care.
- Being deemed illegally resident in the U.S. and being banned from the country for three to 10 years.
"Anyone who travels to the U.S. regularly should keep a log and make sure they're accurate if they're asked to substantiate their time across the border," said Hunnisett.
She said the rules of length of stay haven't changed, only the information that can be shared between borders.
Hunnisett said that so far she hasn't spoken with anyone who's run into trouble with the rules.
For more tips, listen to the full interview with Gail Hunnisett. Click on the audio labelled: Gail Hunnisett's tips for Canadian snowbirds.
- An earlier version of this story did not specify that the 120-day limit, after which Canadians may potentially be considered U.S. residents for tax purposes, is averaged over three years using a specific formula. This information has been added to the story.Jan 19, 2015 4:15 PM PT