Residency Calculator

If you are a U.S. Citizen, well, the U.S. Residency Calculator won’t be of any use to you. Lorraine and I, on the other hand, will have to be very careful about the number of days we spend in the United States.

When we first started planning out our retirement, we assumed we could be Canadian Snowbirds by just crossing the border to the U.S. in November and coming back to Canada in April. Enjoy moderate weather for twelve months of the year. Striking off one of my bucket list objectives for retirement: to never be cold again.

Perfect, eh? (Sorry about the Canadian stereotype.)

It turns out to be far more complicated than staying less than six months in the U.S. in any given year.

The substantial presence test, to avoid being considered a U.S. resident for tax purposes and goodness knows we already pay a ton of taxes in Canada, includes two very important points:

  • Physically present in the U.S. for 31 days in the current year
  • A three-year total of 183 days which includes all the days spent in the current year, one-third of the days spent in the preceding year and one-sixth of the days spent in the year prior.

That means only 120 days south a year to avoid being considered a U.S. resident for tax purposes. That means leaving in November and returning to Canada at the end of February. That means missing out on my bucket list objective to never be cold again.

February is cold in Canada. Very, very cold.

The U.S. Residency Calculator is helpful to determine whether you have to be a bit more formal in terms of staying in the U.S.

A Canadian can get an exemption by filing a Form 8840 with the IRS. This allows a Canadian snowbird to stay in the U.S. for up to 182 days every year without being considered a U.S. resident for tax purposes. To qualify, you have to be in the U.S. for less than 183 days in the current year, demonstrate a home in Canada in the current year (owner or renter) and establish a closer connection to Canada than the U.S. The latter can be demonstrated in terms of where you bank, pay taxes, keep your belongings, where your drivers license was issued amongst other things.

The 8840 form can be found on the IRS website here. The form should be filed before June 15 in the year after your 182 day stay in the U.S. although the Canadian Snowbird Association recommends proactively completing and filing a new 8840 each year and maintaining copies to indicate that you are entering the U.S. as a temporary visitor from Canada.

If a snowbird loses track of time and exceeds 183 days or more, then it is possible to file an exemption under the Canada – U.S. Tax Treaty. Sounds like a really complex process though which would require lawyers and fees. Best to keep it within 182 days. At least for now.

The Canadian Retiree Visa bill, H.R. 979: Promoting Tourism to Enhance our Economy Act of 2017, could see Canadian retirees being able to spend 8 months in the U.S. (owning real estate will not be required to obtain the visa). The bill has yet to pass but if it does, we will be applying for that visa. That said, every province in Canada has residency requirements to maintain health care coverage. In Ontario, we have to be physically present in the province for at least 153 days in any 12-month period. Not sure who is counting those days but I was somewhat surprised to learn that regardless of where you pay your taxes, you are a bit of a prisoner in your own province within Canada.

Who knew travelling in retirement could be so complicated?

Home

It has been a couple of weeks since our house closed. The house is no longer our home. We are living downtown and loving it.

The biggest surprise for me? I do not miss the house.

Nobody needs to own a house to have a home.

The process of downsizing was humbling and emotionally draining.

I came across Jonathan Look’s blog, Life Part 2. He has a post on The Luxury of Little:

… like many people in the “developed world,” I had so many possessions that I couldn’t remember where my stuff was, or in many cases even remember that I had it. My junk drawers were expanding. I had “spare” cables, obsolete electronics, redundant tools, more sets of dishes and silverware than I had places for people to sit, and boxes of mementos that “one day” I would get around to going through and sorting.

Our situation was like that. Too many things. Way too many things. And, now that they have been sold, donated and tossed, I don’t seem to care about them.

Why did we fill our lives with so much stuff? Probably because we did not fill our lives with experiences that matter more.

Our transition into retirement is teaching me about many things. And one of the important lessons has been about possessions.

As Jonathan puts it:

… having a lot of “stuff” we don’t see or use doesn’t make us more secure. It drains our finances, limits our options, distracts our attention, diminishes our energies and most importantly, it wastes our time.

Downsized

Well, not quite as posed as this stock photo:

Similar result though. We are now officially downsized.

Wow. I do not ever want to go through that process again!

Over 38 years of marriage, we had gathered quite an impressive collection of stuff. Months of effort in terms of going through papers, books, furnishings, electronics and pretty much everything else that North American consumers tend to purchase for their homes.

At times, I was literally embarrassed by all of the stuff. At times, I felt liberated by shedding most of the stuff.

Moving from a 5,200 square foot home with almost 2,000 square feet of garages into a 1-bedroom condo — and ultimately into about 450 square feet in our coach — seemed impossible when we started. But we did it. Although with a bit of stuff being held in a storage unit.

Our house closed around noon today.

Still a bit longer before we head out on the road. But for now, we will hang out in a wonderful space in the downtown core.

Downsizing

This, apparently, is what downsizing looks like. An older couple with a few boxes and a plant. I found the photo online here.

Downsizing is an incredible amount of work. I fully appreciate why some people decide not to move. It really is a lot of effort.

Our house is empty now, for the most part. Still a fair amount of stuff to work through yet before we close the doors for the last time at the end of June.

I have found that downsizing can be a very stressful and emotional exercise.

The toughest room for me to deal with was my recording studio.

Last week it looked like this:

And now?

Sold.

Waiting for the new owner to come and pick it up. Like most of the other stuff in our house.

I’ve told Lorraine that I am very excited about what happens next. And I am trying to manage my emotions as we go through the process of getting ready to go out on the road and experience new adventures.

The time between now and then? Well, let’s just say that I will be happy when it is all behind us.

Maybe like the couple in the photo above. That part of the job looks finished for them.

Home Free

Our house sold on my 60th birthday in March of this year. I was having lunch with my sister, her partner and Lorraine in Arizona. I told them the news and I said that Lorraine and I were now homeless.

My sister’s partner corrected me. “You are now home free!”.

We approached our real estate agent in September of 2015 about selling our home. At the time I thought that it would take a couple of years for us to sell the house. We lived in the country, the house was expensive for the area and it would have a much smaller pool of interested buyers.

We went ahead and put in our order for the new coach in October of 2015. I thought it would be wise to have the coach for at least a year or two before we went out on the road. There is a fair amount to learn about the RV lifestyle and the coach itself. Looking back, I’m really pleased we got it then.

We listed the house in March of 2016 and we took delivery of the coach in June of 2016.

And we waited for a buyer.

And waited.

Lots of showings during the first year. Not one offer.

We relisted the house in March of 2017. Reduced our price by 5 percent. Two offers within a few days. The second offer came in firm with no conditions which forced the first buyer to clear conditions if they wanted the deal. They wanted the deal. Close date of July 7.

We are in the process of downsizing and it is certainly a big task. We will move into a condo in a beautiful heritage home in the heart of the downtown. For a year. And then we will be off in our coach. Full time for the first year, perhaps longer.

I was out mowing the property last night. And it is a beautiful spot. The house and the property served us well. I will miss it. More than the other houses that we have lived in over the years.

Very mixed emotions as we go through this part of the transition into retirement.