Borders. Governments. Taxes.
So much bureaucracy.
We will soon be heading back to Canada. We leave Desert Shores Motorcoach Resort on April 14th, two weeks from now. We’ve enjoyed our time here. The Palm Springs area is stunningly beautiful.
As retired Canadians, we need to be very mindful of the duration of our stay in the United States. We have to cross the border back into Canada before the end of April.
Most of my American friends seem surprised to learn about the length of stay restrictions for retired Canadians.
Let’s deal with being a Canadian first, eh?
If you plan to be outside Canada for more than seven months in any 12-month period you can keep your medical insurance coverage for up to two years if you:
- have a valid health card
- make Ontario your primary home
- will be in Ontario for at least 153 days a year in each of the two years immediately before you leave the country
Okay. So, if we want to continue to have our health care, we need to spend at least 153 days in each of the two years prior to leaving the country. But we can only do that once.
To be entitled to continuous OHIP coverage during your first of these absences, you must have been physically present in Ontario for at least 153 days in the 12-month periods for 2 consecutive years before the absence. Further absences of this nature will be permitted provided you are physically present in Ontario for at least 153 days in the 12-month periods for 5 consecutive years before each subsequent absence.
Simply put, to keep our health care, we need to be in Ontario, nowhere else but in Ontario, for 153 consecutive days while maintaining some form of residency in the province (rental or owned). Other provinces in Canada have similar restrictions.
While in the U.S. we have to watch out for the substantial presence test. This test may render a retired Canadian snowbird a U.S. resident for tax purposes.
How many days can we spend in the U.S. before we are considered a U.S. resident for tax purposes?
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 we can only spend 120 days, or four months, a year in the U.S. before being taxed in both countries. To gain an exemption and to stay in the U.S. for up to 182 days a year without being considered a U.S. resident for tax purposes requires filing an 8840 form with the IRS.
To qualify for this exemption, 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, and where your drivers license was issued amongst other things.
And then there is the crossing of borders, in a motorcoach.
Entering the U.S. was very straightforward. Returning to Canada? Well, we shall soon find out.
We carry a lot of stuff in our coach. And we have to document everything that we brought with us into the United States, including sales receipts, to prove that we purchased them in Canada. We have to document everything that we purchased in the U.S. and declare those goods at the border. We get to declare up to $800 CAD. Anything above that gets charged duties and taxes at the conversion rate in effect on the day we cross. In other words, an item that cost $1,000 USD would be converted to $1,334 CAD and charged a 13% HST ($1,507.42 CAD) plus any other applicable duties.
Every item we have brought into the U.S. is documented in Evernote along with the corresponding sales receipts. If we do get pulled over and searched we can easily prove that these items were already taxed by the Canadian government.
We now have to build a list of items that we purchased during our time in the U.S. to declare at the border.
So much paperwork.
The fun part of being a cross-border RVing Canadian snowbird.