Canadian snowbirds: Rules you need to know

There could soon be changes to the rules that affect U.S.-bound Canadian snowbirds. Here's a look at what may be ahead and a checklist of the rules about length of stay, taxation and insurance.

What you need to know about visas, taxation, insurance before taking a long U.S. vacation

Rules changes may happen that will affect U.S.-bound Canadian snowbirds. A crowd of snowbirds visit the Winter Guest Fest in Fort Walton Beach, Fla. on Jan. 16. (Nick Tomecek/Northwest Florida Daily News/Associated Press)

There could soon be changes to the rules that affect U.S.-bound Canadian snowbirds.

A Canada-U.S. agreement is in the works to share information on who's entering each respective country, and when, for example. The Entry Exit Initiative already covers non-citizens of the two countries, but the plan to start covering citizens as well has been delayed.

Once that's in effect, the U.S. government will be able to easily check whether snowbirds overstay their welcome.

The Canada Border Services Agency cautions that legislative and regulatory changes need to happen before that can be implemented, and says it will provide additional information about the timing "in due course."

There have also been initiatives in Congress over the last few years to extend the time some Canadians can spend in the U.S.

While those proposals are still being debated by American legislators, Canadian snowbirds continue to head to the U.S. in droves under the current rules, which have been in place for some time.

Here's a short checklist for snowbirds about the rules on visas, taxation, insurance, and so on.

How long can Canadians stay in the U.S.?

Usually a maximum of 182 days, or about six months during a 12-month period. Those days can be amassed during one trip or they could be the sum of several trips. 

People from countries other than Canada are allowed to stay a maximum of 90 days.

How long can a Canadian stay in the U.S. without paying U.S. taxes?

The Canadian and U.S. governments have plans to exchange information on when their citizens leave and enter the other country. Before the plan gets implemented, legislative and regulatory changes need to happen. (CBC)

The American Internal Revenue Service has a complicated way of determining this, and a form that may let snowbirds off the hook.

Complete the form and you can spend the full 182 days in the U.S. without paying U.S. income tax.

If you want to follow the formula, called the "substantial presence test," here is how to do the calculation.

The test determines whether you have been in the U.S. long enough to be considered a U.S. resident for tax purposes. The IRS determines this by using an unusual formula that calculates the total number of 'days' you have spent in the U.S. over a three-year span, and that number must add up to 183 or more.

They calculate the sum as follows:

  • Each day in the U.S. in the current calendar year counts as one day;
  • Each day in the U.S. in the prior year counts as one-third of a day;
  • Each day in the U.S. in the year before that counts as one-sixth of a day.

If the sum of those three numbers totals 183 or more, the IRS may insist you file a U.S. tax return.

When the IRS explains the test on their website, they give an example of someone staying 120 days each year for three years, which would total 180 (by adding 120; 120 divided by 3; plus 120 divided by 6)  and mean they are not considered a resident.

Here's another example. If a snowbird spent 180 days in the U.S. in both 2014 and 2013, they should limit their U.S. time to 92 days in 2015 to avoid being classified as a U.S. resident by the IRS.

Whether they own or rent, Canadian snowbirds usually take steps to avoid being considered a U.S. resident for tax purposes, like filing an IRS form that establishes their closer connection to Canada. (Susagna Guardiola)

There are exemptions available for students, teachers and diplomats, and for someone who is unable to leave because they develop a medical condition while in the U.S., but for serious snowbirds, the best strategy for maintaining non-resident status is filing out that IRS form, the "Closer Connection Exception Statement for Aliens," better known to snowbirds as Form 8840.

Snowbirds establish their closer connection to Canada through things like having a permanent home, personal belongings, affiliations, family, business, driver's licence and having voted in Canada.

The form needs to be filed with the IRS every year snowbirds spend time in the U.S.

How long can snowbirds be away from Canada and keep their provincial health insurance?

B.C., Alberta, Saskatchewan, Manitoba, Northwest Territories, Ontario, New Brunswick and Nova Scotia require at least five months of residence in the province to continue health insurance coverage. 

Quebec and Prince Edward Island require six months' residency, but Quebec does not count trips of less than 21 days as non-residency. Newfoundland and Labrador requires only four months. Nunavut and the Yukon have no residency requirements.

The good weather, the golf courses and the scenery lure Canadian snowbirds to place like Rancho Mirage, California. But their U.S. stay is limited to 182 days. (Daniel Schwartz/CBC)

Some provinces will allow longer absences under some circumstances or if a written request made by the resident is approved. 

To get provincial health benefits back after losing them usually requires living in the province for three months, at which point coverage begins again.

What are the rules for snowbirds buying supplemental travel health insurance?

That depends on the policy they buy. CBC News has had many horror stories about Canadians who needed medical treatment in the U.S.

The key things to watch for are issues around pre-existing conditions and the limitations and exclusions of the coverage.

How can snowbirds maintain their home insurance coverage in Canada while they are away?

That also depends on the individual policy, but in general, most require extra measures by a resident away for a long trip.

If no one is living in the house after the snowbirds fly away, some insurers require someone (a family member or acquaintance) to regularly do a walk-through or check the property.

What happened to the proposal to extend the limit for some Canadians to 240 days?

At least twice in recent years, legislation has been introduced in the U.S. Congress, but not passed, to extend the length-of-stay limit to 240 days for Canadian citizens over 50 years old and their spouses.

However, that proposal is now caught up in the debate over U.S. immigration laws. Now that the White House is bypassing Congress on the issue, and using executive orders, Canadian snowbirds shouldn't hold their breath.

Checklists for snowbirds

Checklists for snowbirds about what to do around their home, with their personal finances, for example, abound on the web. Two of the most detailed publications are available free on the Canadian Snowbirds Association website.