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Author Topic: Foreign Snowbirds in U.S., IRS wants You!  (Read 44921 times)

Steve, CDN

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Foreign Snowbirds in U.S., IRS wants You!
« on: April 07, 2005, 07:02:21 PM »
U.S. INTERNAL REVENUE SERVICE FORMS
8840 Closer Connections
W8-BEN Certificate of Foreign Status

8840 – Closer Connection Exemption Statement for Aliens

Canadian residents and other foreign visitors who winter in the U.S. are technically subject to U.S. income tax if they exceed a specific number of days (based on a calculation on the form 8840) in the U.S. in any one year.

To avoid U.S. taxation, IRS form 8840 (Closer Connection Exemption Statement for Aliens) needs to be filed annually with the U.S. Internal Revenue Service.

The form, in essence, acknowledges that you met or exceeded the "substantial presence test" BUT are not going to be filing a U.S. income tax return due to the fact that you maintain "a closer connection" to a foreign country, such as Canada, where you will be paying annual income tax.

You will be considered to have a "closer connection" with a country other than the U.S. based on the location of:

Your permanent home.
Your family.
Your personal belongings, such as cars, furniture, clothing, and jewellery.
Your current social, political, cultural, or religious affiliations.
Your business activities (other than those that constitute your tax home).
The jurisdiction in which you hold a driver's licence.
The jurisdiction in which you vote.
It does not matter whether your permanent home is a house, an apartment, or a furnished room. It also does not matter whether you rent or own it. It is important, however, that your home is available at all times, continuously, and not solely for short stays.

Canadians and other foreign visitors should pro-actively complete and file a new 8840 form each year with the U.S. Internal Revenue Service. This is a positive acknowledgment that you are entering the U.S. each year as a "temporary visitor for pleasure" and are complying with U.S. tax laws. A photocopy of each year's completed form should also be carried, when crossing the border into the U.S. the following year, to indicate that you are entering the U.S. as a temporary visitor from Canada.

A copy of the current year's 8840 form can be downloaded from the U.S. Internal Revenue Service website by Clicking Here
W8-BEN – Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding

If you have a bank account with a financial institution in the U.S. that earns interest on deposits, then you should complete IRS form W8-BEN (Certificate of Foreign Status) with your U.S. financial institution to avoid possibly having 30% of any interest earned on your deposits withheld and sent to the IRS.

As Canadian residents are aware, bank interest earned on their accounts (regardless how small) is considered a form of taxable income when completing each year's Canadian income tax return with the Canada Revenue Agency (CRA) – formerly known as Revenue Canada.

Similarly, Canadian banks are required to withhold 30% (the maximum income tax rate) of any bank interest they pay to foreigners on their Canadian bank accounts because non-Canadians rarely receive T5 slips and complete a Canadian income tax return. Non-Canadians must, in turn, complete a Canadian income tax return in order to receive any refund.

In the U.S., a similar situation exists for U.S. banks and credit unions paying interest earned on the accounts of Canadians (foreigners).

IRS form W8-BEN is a withholding tax exemption form that the bank or credit union must keep on file to explain to the U.S. Internal Revenue Service why they did not hold back any bank interest paid to you or conversely did not issue you the U.S. equivalent of a Canadian T5 income tax slip.

Unlike the 8840 form that is sent directly to the IRS each year, the W8-BEN form is kept on file by the financial institution for IRS audit purposes and is valid for up to three years
« Last Edit: August 25, 2011, 07:04:19 PM by Steve, CDN »
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carbuff34

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #1 on: September 02, 2006, 06:32:08 AM »
Thanks for this info as I was just about to open a U. S. account.
Leo

Steve, CDN

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #2 on: September 03, 2006, 09:30:48 AM »
If you open a U.S account there is no problem as long as you open a non interest bearing checking account,   Instead of paying interest these accounts will provide you with various services at no charge.  That way there is no need to withhold any tax or to report your account to the IRS.

This is perfectly legal and avoids getting snowbirds like us into the IRS system, which can become problematic.
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DougJ

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #3 on: September 03, 2006, 12:28:44 PM »
Hi Steve,

Your post made me stop and consider my situation: that of a sometime snowbird with no bank accounts in the States and doing no business with US clients, but doing income earning consulting work from my motorhome for Canadian clients.

In my case, if I were a regular snowbird with the other conditions above prevailing for three months each year, (and not making any visits to the US during 2005 other than the snowbird trip) it seems that I would pass the first element of the test but fail the second since I was present for only 135 days (90 + 30 + 15), and hence fail the complete test, and therefore would not have to file the 8840. 

Am I reading the test correctly?  Is the income earning work from my motorhome for Canadian clients a factor?

This begs the questin, so for how long can I go snowbirding each year (the same number of days each year) if I'm not visiting the US at other times of the year?  If I understand the test this suggests that four months is a good round number. 

I'm not looking to entrap you, given that these posts just might be monitored ???, how long do you head to Florida each year?  Or is it that you fail the overall exception test for other reasons?

Ciao,

Doug


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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #4 on: September 03, 2006, 08:46:17 PM »
Doug,

In what Province is your residence?  I'll comment on your other questions later.
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DougJ

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #5 on: September 04, 2006, 11:17:16 AM »
In what Province is your residence?

Steve, we're residents of British Columbia.

Ciao,

Doug

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #6 on: September 04, 2006, 05:14:16 PM »
Doug,

The length of time one can be out of their Province and still retain Medicare benefits depends on the Province.  I believe B.C. is 6 months.  IOW you must be in B.C. 6 months of the year to retain benefits.

The formula for snowbirds in the U.S. is calculated over the last three years you have been in the U.S. and as I recall that total must not exceed 183 days, otherwise you have to file with the IRS.   

In our most recent ground border crossings, the U.S. customs officer scanned our passports, so it would seem closer attention is being paid to visitors' activities.

Quote
Is the income earning work from my motorhome for Canadian clients a factor?

This is beyond my understanding, and should be clarified with a competent adviser.

Quote
how long do you head to Florida each year

Ontario allows retired residents to be out of Province 7 months, so we can remain in FLA the max based on the U.S. requirement formula we're talking about and still have a bit of time left over for other trips.
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DougJ

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #7 on: September 04, 2006, 10:35:07 PM »
Hi Steve,

Thanks for your further response.

In my case, I think the critical factor is the cost of getting medical coverage while in the US.  Between age and medical history the cost is now approaching exorbitant :).

Ciao,

Doug

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #8 on: September 05, 2006, 03:07:02 PM »
Quote
Between age and medical history the cost is now approaching exorbitant .

I understand Doug!  Several of our friends have complex medical histories and have had to cut back on their time spent in the U.S.  Hope you find a suitable solution.

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workingtorv

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #9 on: August 23, 2011, 07:35:55 PM »
This is an old post but likely still applicable.  So if I understand correctly if you visit Florida year after year as a snowbird you must file this B8840 form??

Also, Ontario residents can stay 7 months in the US each yr?  If we were to go to Florida for 6 or 7 months would we still be able to enter the US for multiple weekend trips to the US?

I also read in another of Steve's posts (legal PDF document in Visitors to the US) that as a Canadian you can only be out of country for 153 days per year to receive your govt pensions is this correct?

I searched prior to posting but want to be sure I understand for my parents who would like to go to Florida from November to April but they would also like to make frequent weekend trips to the US during the summer months.

Thanking you all in advance for your assistance.
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Foxysdad

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #10 on: August 23, 2011, 09:53:45 PM »
Geese  Steve, you had me worried there for a moment... :o
Thought I was going to have to spend winter here on the wet coast.. ;D instaed of AZ.
H
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Hfx_Cdn

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #11 on: August 24, 2011, 07:55:10 AM »
     Tom, is it possible to add this string to the library under "Visitors to the USA".  It addresses some of the points I was trying to make in a recent string when a UK couple were wanting to cross into Canada to retain visitor status.  It effects our stay, with a big IRS hook over our backs if we overstay the 6 month limit.

Ed
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CDN_Taxman

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #12 on: August 24, 2011, 08:02:56 AM »
Remember that if you're Canadian, you must report on your worldwide income!!! If you pay taxes in the US, you can claim a foreign tax credit to offset the Canadian taxes.

Residency is a very complicated thing. If you are unable to determine without a doubt, I'd recommend a professional opinion.

Mike
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Tom

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #13 on: August 24, 2011, 09:16:23 AM »
Quote from: Hfx_Cdn
Tom, is it possible to add this string to the library under "Visitors to the USA".

Hi Ed and thanks for the suggestion; Don't know why we hadn't thought of it before  :-[

Let me create (copy/paste) a draft for review; This is an old discussion, and things can change over time.
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Tom

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #14 on: August 24, 2011, 01:19:57 PM »
The first draft is in our library here. Hopefully, Steve and others can verify the accuracy and add any missing information.
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Alfa38User

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #15 on: August 25, 2011, 11:27:25 AM »
Quote
This is an old post but likely still applicable.  So if I understand correctly if you visit Florida year after year as a snowbird you must file this B8840 form??

Also, Ontario residents can stay 7 months in the US each yr?  If we were to go to Florida for 6 or 7 months would we still be able to enter the US for multiple weekend trips to the US?


I believe you are limited to 182 days out of province (6 months) in order to preserve your Medicare status. It can vary by province but I think most are now at 182 days.  We arrange to stay about 155 days on our winter sojourn (Nov to April). That  leaves us room for those summer visitations. Be sure you have sufficient emergency medical insurance for that long period. For example, 1/2 day in emergency, treatment etc, cost my insurance company over 21000$ last winter.  (I had a 1000$ deductible).

You may also  be limited by the visa you are issued by US Immigration service. You are not required to have a 'paper visa' but the B1 visa is 'issued' to you verbally as the officer allows you to enter the USA. It may be limited, plus or minus, to the time period you stated as you entered. 

And Yes, after several years, technically, you have to fill out the 8840 form. A mathematical calculation based over 3 years of visits will establish whether or not it is required for you. I do know of some longtime snowbirds who have 'never heard' of the form though.

Remember When you pass the Immigration people, your passport is scanned so they "know where you are" and that applies to both sides of the border should they feel the need. I know Quebec can and do check your absences for Medicare purposes...."should they feel the need".

A good source for information on this is The Canadian Snowbird Association. For the small membership fee of 20$ you have access to all the current info.

http://www.snowbirds.org/
« Last Edit: August 25, 2011, 12:02:27 PM by Alfa38User »
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Hfx_Cdn

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #16 on: August 25, 2011, 03:51:05 PM »
     Thank you Tom, it may not be fully current, but it does give one a starting point.  However, as far as I have been told, the US Laws haven't changed.  As for Canadian medical, it is still the case that each province governs alowable time out of province, and they do vary.  As I read the NS website, it allows regular out of province of up to 6 months, but periodic times of a year, and a caveat that allows people to do volunteer work out of province, and retain medical coverage for up to 2 years.

Ed
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Tom

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #17 on: August 25, 2011, 04:18:14 PM »
Thanks for the additional comments Stu and Ed. I won't be signing up for snowbirds.org, but it sounds like a good resource for Canadian snowbirds.
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workingtorv

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #18 on: August 25, 2011, 05:07:31 PM »
Thanks to you all.  I will let them know.

Thanks
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catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #19 on: August 25, 2011, 05:49:44 PM »
OK...maybe I'm being a little dishonest here but....how do they catch you? The gvmnt cant send 20 million undocumented (note the PC) workers back south so how will they catch our Canadian friends???
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Hfx_Cdn

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #20 on: August 25, 2011, 06:04:37 PM »
     I think they count the legs, devide by 4 then multiply by 2.  Then if they want to they sick the IRS on you just to make sure.  All joking aside, in today's computer age, they can monitor credit card, cell phone, internet usage and even though it is not supposed to happen, I'm sure the Canadian Border Service provides information to the US government.  Then, remember since we are in the US as a guest, it is our responsibility to prove we are there legally.

Ed
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Steve, CDN

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #21 on: August 25, 2011, 07:02:51 PM »
Because we wnter and leave the Country legally we are easier to monitor than illegals. Our passports are scanned every time we enter and leave the Country and information is shared between our govenments.
 
More important, if and when we (Canadians) sell a piece of real estate in the U.S. there is an automatic witholding of 10% of the selling price for capital gains and the Canadian seller is assigned a Taxpayer Identification Number at the time of the transaction to submit a special IRS return to accompany the witheld amount.  In order to reclaim the withheld amount, an 8840 form must be attached. 
 
A history of 8840's might be requested by IRS at that time.
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catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #22 on: August 25, 2011, 07:13:58 PM »
Silly Me....In your post Steve you have explained it perfectly...you enter LEGALLY ! Well I for one am glad you're here!! Welcome ;D
Will and Jane
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catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #23 on: August 25, 2011, 07:16:02 PM »
By the way..I was serious about wondering how they could catch you.....can you bring my prescriptions with you next time????
Will and Jane
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Steve, CDN

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #24 on: August 25, 2011, 07:28:23 PM »
Quote
I was serious about wondering how they could catch you.

It is believe U.S. customs officers do spot checks on people reporting they are snowbirds when entering the U.S. and will ask for a copy of their submitted 8840.  It's therefore recommended that Canadian snowbirds keep a copy of their 8840 with them when entering the U.S.
 
The idea is that if a Canadian spends more than 6 months (accoding to the calculation on the 8840) in the U.S. s/he must submit an IRS return on world income.  If the person pays income tax in Canada and can demonstrate a closer relationship to Canada and not exceed the six month maximum, they are IRS exempt. 
 
If they wish to stay longer than six months, they must submit an IRS return then claim an adjustment from Revenue Canada for the tax paid in the U.S.
 
The flip side of the coin is that being out of Canada for longer than six months (depending on the regulations of the Province of residence) the person loses Medical Care coverage.**
 
**That too is subject to spot checks for verification.
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catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #25 on: August 25, 2011, 08:18:45 PM »
You lost me in the second paragraph...They can't make it more complicated...you have to be an attorney to get it right....wow! Now I know one of the reasons they jump the southern border, they can't get the paperwork right. I just imagine asking one of the Mexican workers to prove he has a closer relationship to Mexico and please don't exceed six months stay. I would hate to see him loose his medical coverage there....Jeez!  Thanks for the explaination,,,really!
« Last Edit: August 25, 2011, 08:22:32 PM by catblaster »
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Tony_Alberta

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #26 on: August 25, 2011, 08:25:00 PM »
By the way..I was serious about wondering how they could catch you....
FWIW I've read stories in the past that state US and Cdn Customs share information. So US Customs knows exactly when you've gone back to Canada.

One story I found stated that the US Customs guy walked the Canadian over to a desk manned by an IRS employee.

Added the following paragraph and link.
"Some people have taken comfort over the years from the apparent fact Customs & Border Service was not supposed to share information with the IRS. That balloon was pierced for me this week when talking to a colleague at the annual conference of the Society of Trust and Estate Practitioners (STEP) in Toronto. He told me a first-hand account of a client crossing the border, and the customs officer walking him over to an IRS agent at an adjacent desk, who asked why he had not been filing his required U.S. resident tax return."
http://www.winnipegfreepress.com/business/irs-tightens-grip-on-snowbirds--ex-pats-in-canada-96125354.html

Just as an aside when doing the calcs on the 1/3 previous year and 1/6 the previous to that year, if you can stay under 120 days for all three years in the USA you'll be at 180 days for purposes of that calculation.*   A bit too close for comfort but you get the idea.

If 110 days you'll be at 165 days for the purposes of that calculation.*

I also totally disagree with the concept of spot checks in this situation.   Their computer systems are scanning the bar code on the passport every time you enter the country.  It's a very simple computer calculation to pop up a screen stating the person has exceeded their days.  So it's not going to be a spot check but every time.

Now the spot check may very well be the checking of the forms.   If the US Customs person feels like it well you don't have a choice.  If I were US Customs I'd send anyone who looks like they've exceeded their time inside for thorough checking.   And not check them for a year.  After all what do they care how long a lineup is inside or whether you're delayed.   OTOH maybe the IRS guy only works office hours.  OTTH (On The Third Hand) maybe the IRS guy decided he needed the overtime and is working the evening or weekend shift.

* I'm not a lawyer, I do not play one on TV and I don't read government regulations or Microsoft End User License Agreements for a living.  Make sure you do your own calculations.
« Last Edit: August 25, 2011, 08:50:14 PM by Tony_Alberta »

Tom

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #27 on: August 25, 2011, 08:31:56 PM »
Quote from: Steve
Because we wnter and leave the Country legally we are easier to monitor than illegals. Our passports are scanned every time we enter and leave the Country and information is shared between our govenments.

Steve, over the last 35 or so years, I've entered and left the US countless times, as a visitor (business/pleasure), as an inter-company transfer employee, as a resident alien (green card), and as a US citizen. I don't recall ever having to "check out" when I left the US.

Back in the 70's and 80's, the airlines would collect the I-94 form (the one you filled in on the plane or on entry to the US, and which was stamped by the border agent and stapled in your passport) as you departed. This was before the days of scanning passports, and the I-94 forms were sent in bulk to an office near the Mexican border where, one day, the info would be entered into the INS computer.

All this is counter to what folks leaving the UK do; They go through "Passport Control" before leaving the UK at the respective airport.

Are you saying that Canadian visitors/snowbirds submit their passport to US border agents when leaving the US?

Back in the day, the IRS had a requirement that you file a "sailing permit" before leaving the US. I don't recall filing any such permit, since I didn't earn any money here as a visitor.
« Last Edit: August 25, 2011, 09:25:48 PM by Tom »
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workingtorv

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #28 on: August 25, 2011, 08:33:31 PM »
I'm confused now...what is it about the last 3 yrs?  I'm obviously missing something, sorry.

D.
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Tony_Alberta

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #29 on: August 25, 2011, 08:38:03 PM »
I'm confused now...what is it about the last 3 yrs?  I'm obviously missing something, sorry.
The way I read things is that there's a calculation on the form in the Substantial Presence test section at http://www.irs.gov/pub/irs-pdf/f8840.pdf.  It's not just the days spent in the last calendar year.  But the days spent this year, 1/3 of the days spent last year and 1/6 of the days spent in the USA the previous year.

Now if you spend more than that calculated number of days in the USA you must fill out the form.

But you will have to read the document yourself.  Do *NOT* believe anything I have to say on this topic.

catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #30 on: August 25, 2011, 08:48:02 PM »
Awwwwah come on now...you're hurtin my head. 1/3 days this year...1/6 days last year. substantial presence test..you can't be making this up!!  I was born here and now I think I have to leave :o
Will and Jane
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workingtorv

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #31 on: August 25, 2011, 08:50:10 PM »
We're in trouble I really don't think they will remember 3 yrs of the days they were in the US, she goes back and forth for day trips to shop.
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Tony_Alberta

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #32 on: August 25, 2011, 08:52:43 PM »
Awwwwah come on now...you're hurtin my head. 1/3 days this year...1/6 days last year. substantial presence test..you can't be making this up!! 
Actually it's all your days this year, 1/3 days last year and 1/6 days previous year for purposes of this calculation.

Hey I might be misunderstanding things.    But if you exceed those days you have to fill out that IRS form.  Or, conceivably, filing x years of USA income tax returns.
« Last Edit: August 25, 2011, 08:59:48 PM by Tony_Alberta »

catblaster

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #33 on: August 25, 2011, 09:34:26 PM »
We're in trouble I really don't think they will remember 3 yrs of the days they were in the US, she goes back and forth for day trips to shop.
  OK...another onion layer..how many hours can she stay before it becomes a full day.....ooooor...1/3 hrs yesterday and 1/6 hrs last week..you're killin me ???
Will and Jane
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Tony_Alberta

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #34 on: August 25, 2011, 10:21:25 PM »
  OK...another onion layer..how many hours can she stay before it becomes a full day.....ooooor...1/3 hrs yesterday and 1/6 hrs last week..you're killin me ???
In fact they have that covered too in the section titled "Days of presence in the United States".   Page 3 starts at the bottom of the left hand column.  http://www.irs.gov/pub/irs-pdf/f8840.pdf   Unless you are traveling through the USA and you are staying less than 24 hours then any part of the day is counted as a full day.  There are other exemptions, such as crew on a foreign vessel, including one for medical.   

Hmm, I wonder what about my truck driving cousins?

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #35 on: August 25, 2011, 10:43:27 PM »
Quote from: Tom
Are you saying that Canadian visitors/snowbirds submit their passport to US border agents when leaving the US?

No, we submit our passport to Canadian Customs on return to Canada; the passport is scanned the same as when we enter the U.S.
 
I know the process is differnt for visitors from the U.K. but I'm not familiar with the details.  It involves a maximum number of days in the U.S., some documentation and there is a requirement they leave the U.S. for a specified time before returning for another cycle.
 
None of that applies to Canadians; we can stay as long as we want as long as we comply with the "non employment" rules and the IRS rules.
 
Quote from: workingtorv

I really don't think they will remember 3 yrs of the days they were in the US

If you think you will be in the U.S. close to six months in total, then a log should be kept if you plan to submit the 8840
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #36 on: August 25, 2011, 10:52:32 PM »
Thanks Steve. I missed this part of your earlier message:

Quote
Our passports are scanned every time we enter and leave the Country and information is shared between our govenments.

When we entered Canada (at Niagara Falls, before we came to visit you and Ginette), the Canadian officer looked at, but didn't scan, our passports. She did, however, smile and say "have a nice day"  ;D

Are you sure our governments share information? Our government agencies can't share information among themselves  :o
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #37 on: August 25, 2011, 10:57:49 PM »
Quote from: Tom
Are you sure our governments share information?

It has been my understanding, Tom but I may be mistaken. 
 
I believe passports with barcodes are being scanned.   Ours have been on recent trips.
 
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #38 on: August 26, 2011, 06:12:31 AM »
     As with any discussion on this topic, it gets very confusing over exactly what we are saying or hearing.  As I understand it, and I too am not a lawyer, border agent or anything other than a retiree.  But as I see it we are confusing the following.
1)  Canadians are allowed entry to the US as a visitor for up to 6 months without paperwork.
2)  The US IRS uses a different formula to calculate foreign visitors time  in the US for tax purposes.. 
3)  That formula goes back 3 years.
4)  If Steve is correct, and I believe he is, all snowbirds should be filing a form f8840 with the US government each year, or risk a US tax liability on income earned in Canada.  I guess it is time for me to start submitting the form >:(
    Tom, as stated in a previous string, you are correct that US border officials do not require us to stop when leaving.  Also, since it is not necessary for a passport to enter Canada, they are not required to scan it.  However, it is usually done, and since they know we all have them as an entry requirement to the US, they routinely ask for it.  I am also of the understanding that Canada/US border agreements state that each country is only to provide the "free flow" of information for those with "criminal" backgrounds.  Yet, I have no doubt that when Uncle Sam asks, we answer without a second thought, so there is no hiding our departure date, besides as said earlier most of us use things that are easily traceable.
    I continues to be baffling as to why the US government would want to make it so complicated and difficult for tourists to come to your fine country and spend much needed dollars.  It is obvious that your economy is in such great shape that you don't want our money.

Ed
 
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #39 on: August 26, 2011, 09:40:23 AM »
Quote
I continues to be baffling as to why the US government would want to make it so complicated....

Ed, as I tell folks, don't look for logic or simplicity in US government regulations.

Having spent a large part of my career attempting to read, understand/interpret, and comply with US government regulations, both from a distance and while here in the US, I have to say that I'm not baffled by the same thing you are. I'd occasionally tell a boss "I'm trying to keep you out of jail, but can't guarantee I'll succeed".

The first year we arrived as visitors and were asked to stay beyond 6 months, I figured I should file a tax return with the federal government and with the state of California. I went along to the IRS office and collected a tall stack of publications, each of which seemed to apply to our situation &/or were referenced by another document. I then went to the California tax office and picked up a similarly tall stack of documents.

Being somewhat adept at reading large volumes of (non-tax) government regulations and extracting pertinent information/requirements, I figured I could understand this stuff. Having read every word several times, I didn't know for sure that I understood it all. I subsequently went to a tax professional, and he needed help from someone else with the dual taxation issue. Bottom line was that I really had understood the requirements, but they were so complicated that I couldn't be sure.
« Last Edit: August 26, 2011, 09:46:05 AM by Tom »
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #40 on: August 26, 2011, 09:55:32 AM »
BTW I also caution folks not to run afoul of the IRS, although many "foreign nationals" who come here don't seem concerned.

We paid taxes in two countries for a long time after arriving in the US. I was eventually able to get the UK Inland Revenue folks sorted out, and received a nice check for the taxes they'd wrongly collected. Following IRS rules, and with CPA guidance, I promptly filed this as "income" and sent the IRS a large check for the tax on this "income".

That started a whole chain of events and dialog lasting many months, and the IRS threatened to seize assets and property from us. I tried in vain to resolve it, and eventually had my CPA visit the IRS. They fixed their error on the spot, and the IRS agent told my CPA "if your client hadn't been so honest, we would not have known he received that money from the UK, he would not have had to send us that large check, and he would not have endured this ordeal".

Hopefully, this (abbreviated version of the) story helps explain the first line of this message.
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #41 on: August 26, 2011, 10:25:10 AM »
For you doubters (Canadian or American) as to whether your passport is scanned or not, Watch carefully when you hand it to the border agent. They are VERY skilled at this and although it may appear that he just glances at it, it has been scanned in one fluid motion at the same time the questions are being asked and he/she is looking you in the eye.

Several years ago when entering the USA, I was asked (as is usual) where I would be staying and I flubbed the number portion of the address. The agent said to me, "did you mean 1698 Diamond...? ". He was correct of course.....

Each of us, (wife and I, as times can differ) do keep a log of all our time in USA for all the reasons mentioned by Steve, Ed and others. My USA bank requests a Form W8BEN... at least every three years that is then filed with the bank itself. Each of us file Form 8840 with the US IRS by mail each Spring.
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #42 on: August 26, 2011, 10:49:11 AM »
I believe passports with barcodes are being scanned.   Ours have been on recent trips.
Minor quibble.    My current and previous passports have never had a barcode.  However the bottom two lines are in a format which is easily scannable very similar to the bottom line of cheques.

(BTW what really irks me is that the idiots who designed the passports did *NOT* use a four digit year for birthdate.  You laugh but I'm sure there is the occasionally centenarian traveling.)

Some countries are already or will soon be issuing passports with RFID chips built into them.   This is of concern to some because they can be read from a distance with the right gear.  Therefore, if you are a little paranoid, you may wish to purchase a copper or steel "wallet".

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #43 on: August 26, 2011, 11:01:08 AM »
Stu,

Are you saying that both US and CDN border agents scan passports? It's highly likely I would not have noticed CDN agents do it.

I have no doubt that US border agents scan passports, and I've seen them do it countless times. The only times I recall they didn't were when we docked at the 'customs dock' in San Diego aboard our own boat or a friend's, and had to request agents to come down from the airport to check us out.

One time, after returning from MX, I couldn't find our passports because I'd put them in a 'safe' place when we left home 3 months earlier. All our passengers were OK, but the agent insisted on seeing either a US birth certificate or a passport from me. After I sweated for a while, he asked for my drivers license, called his office on the phone, and said "you're good; you're in our computer and have been in and out of the US so many times over the years, we know who you are. Have a nice day". WHEW!

Meanwhile, I explained that Chris wasn't feeling well and was laying on the bed in the forward berth. They didn't ask for her passport, preferring not to disturb her.
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #44 on: August 26, 2011, 11:33:43 AM »
I believe your vechile licence plate is scaned before you get to the border agent, that's going both ways ( Cdn and USA )We have no problem keeping track of our time in the US, credit card data does the trick for us .
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #45 on: August 26, 2011, 01:45:28 PM »
Quote from: Hfx_CDN
Canadians are allowed entry to the US as a visitor for up to 6 months without paperwork.

In fact, Canadians or other "aliens" who remain in the U.S. for six months or less (according to the calculation of the 8840 exemption) are expected to file paperwork in the form of the 8840 Closer Connection Exemption.

Excerpts from Closer Connection Exception Statement for Aliens Form 8840 (excluding my commentary)
 
Quote

Purpose of Form
 Use Form 8840 to claim the closer connection to a foreign country(ies) exception to the substantial presence test. The exception is described later and in Regulations section 301.7701(b)-2.
 
Note: You are not eligible for the closer connection exception if any of the following apply.
• You were present in the United States 183 days or more in calendar year 2010.
• You are a lawful permanent resident of the United States (that is, you are a green card holder).
• You have applied for, or taken other affirmative steps to apply for, a green card; or have an application pending to change your status to that of a lawful permanent resident of the United States.

Quote
Who Must File
If you are an alien individual and you meet the closer connection exception to the substantial presence test, you must file Form 8840 with the IRS to establish your claim that you are a nonresident of the United States by reason of that exception.

Quote
Substantial Presence Test
You are considered a U.S. resident if you meet the substantial presence test for 2010. You meet this test if you were physically present in the United States for at least:
• 31 days during 2010 and
• 183 days during the period 2010, 2009, and 2008 (IOW the last three years)

Please refer to the official forrm for complete details of who qualifies, how to calculate the number of days and filing procedures.
 
Additional resources on the subject of 8840 filing:
 
Canadian Snowbirds Assoc
 
Global Tax Services
 
A pdf copy of forum 8840 (2010 reporting year) is attached.  For up to date version, visit the IRS HERE.
« Last Edit: August 26, 2011, 01:47:37 PM by Steve, CDN »
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #46 on: August 26, 2011, 08:55:26 PM »
Thanks for the links Steve, this is certainly a minefield. I sincerely wish that this stuff wasn't imposed on our Northern neighbors.
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #47 on: August 26, 2011, 09:32:55 PM »
• 183 days during the period 2010, 2009, and 2008 (IOW the last three years)
Hold on a sec.  That's not accurate.  That sentence is actually "183 days during the period 2010, 2009, and 2008, counting all the days of physical presence in 2010 but only 1/3 the number of days of presence in 2009 and only 1/6 the number of days in 2008."

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #48 on: August 27, 2011, 10:45:17 AM »
Quote from: Tony
That's not accurate

The quotation was intended as an overview, which is why I added the comment about referring to the form for the specifics of making the calculation.
 
I believe those who would be affected would be using the actual form, thereby following the instructions.
 
Quote from: Tom

 I sincerely wish that this stuff wasn't imposed on our Northern neighbors.

It's not that hard, Tom.  It's simply a matter of maintaining a simple log, which, for anyone who spends longer periods of time in your Country can do using an ordinary calendar.  We keep track of other things for income tax, medical expenses, balancing check books...so why should this be any more difficult?
 
I see it as being part of life's responsibilities and complying with the laws of the Country hosting us.
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #49 on: September 03, 2011, 05:14:53 PM »
On the topic of sharing information between US and Canadian govt depts here's a story where idiots rented expensive vehicles in Detroit, drove them to Canada and then reported them stolen in the USA.   The point being that it was Canadian Customs who would have recorded the license plate info and driver info and not American Customs.   Then the American police somehow had access to that information.

http://news.nationalpost.com/2011/09/01/u-s-police-foil-canada-to-iraq-luxury-car-scheme/
« Last Edit: September 04, 2011, 11:49:59 AM by Steve, CDN »

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #50 on: September 04, 2011, 11:51:54 AM »
Discussion on snowbirds bringing medications to the U.S. split and moved HERE
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #51 on: September 20, 2011, 07:27:02 AM »
    On a similar but not identical line of thought, I haven't seen this on any US press coverage.  It is concerning to many of the approximate 1 million US born Canadians, many of whom used to visit US family, but no longer can cross the border.
    It does speak volumes to how the IRS thinks, and why we need to be so careful in our dealings with the US government.

Ed

http://www.theglobeandmail.com/news/opinions/opinion/help-im-on-the-irs-hit-list/article2171697/comments/
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #52 on: October 11, 2011, 03:34:49 AM »
Wow!  I hadn't visited this topic for some time and was surprised to find it still active.  There have been some really informative and interesting comments. 

As a regular foreigner RVing visitor  (a Brit though)  I guess I might also get trawled by the IRS one day.  Unlike the Canadians, however, I'm not allowed to earn income in the USA (naturally) so perhaps the 8840 requirements wouldn't apply? 

I had always assumed that Canadians weren't allowed to work either so this IRS situation is a surprise for me......

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #53 on: October 11, 2011, 06:31:18 AM »
    Macmac, that the crux of the problem, it has nothing to do with money earned in the US, US laws require taxes on money earned world wide if it is deemed that you fit IRS tax requirements, and that is judged on the formula that goes back 3 years to establish how much time was spent in the US, and that disregards the fact that taxes are paid in your home country, or that you can legally be a tourist for up to 6 months each year.

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #54 on: October 11, 2011, 06:39:26 AM »
    Macmac, that the crux of the problem, it has nothing to do with money earned in the US, US laws require taxes on money earned world wide if it is deemed that you fit IRS tax requirements, and that is judged on the formula that goes back 3 years to establish how much time was spent in the US, and that disregards the fact that taxes are paid in your home country, or that you can legally be a tourist for up to 6 months each year.

Ed

Yes I understand now - it's if one is deemed to fit the IRS tax requirements......  thanks

leapfrog

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #55 on: July 06, 2014, 07:08:49 PM »
Do both myself and my husband each have to fill an individual   Closer connection form. We have been filling one out for years, but thought it applied to both of us.

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #56 on: July 07, 2014, 12:30:50 AM »
Do both myself and my husband each have to fill an individual   Closer connection form.

yes

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #57 on: July 07, 2014, 12:15:29 PM »
I'm confused now...what is it about the last 3 yrs?  I'm obviously missing something, sorry.

D.
did you read the form?? it clearly explains it on the form.Read the form as its pretty straight forward

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #58 on: July 07, 2014, 12:17:15 PM »
Do both myself and my husband each have to fill an individual   Closer connection form. We have been filling one out for years, but thought it applied to both of us.

read the form it very very clearly says ONE for EVERY person must file individualy. 

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #59 on: July 07, 2014, 09:30:46 PM »
I am (or at least was) a Tax Specialist working at a CA (=(CPA) office. I am also a Canadian snowbird.

To make everything just a bit more complicated, there are THREE separate calculations for Canadians:

1. For US Government: We can stay a block of 6 months in the US.
2. For US IRS : we have to calculate the number of days in the last three years per a formula to see if we have to file the Closer Connection Form.
3. For our Provincial Health Care plan rules: most provinces allow 3 months and up to 6 months absence from a province in order to remain covered under a provincial plan (nothing to do with travel medical.... they assume that we are covered by Provincial Health Care). Many provinces have recently raised this to 7 months. Any longer than that and we have to prove that we really are a bona fide resident of our province.

These three are three seperate calculation, each with different criteria.
And yes, every day, including shopping days, count.Only exception is when in transit at a US airport on the way somewhere else. 

Eventually, whether your passport was scanned at the border or not, it will be up to us to prove our number of days. And yes, I keep a spreadsheet to keep track of all this.

Note that Canada and the USA now exchange border crossing info in real time especially of "third party nationals" (i.e. non Canadians or Americans). Phase I was started last September, Phase II in January 2014 and the final phase to come.

Elly
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #60 on: July 07, 2014, 09:36:19 PM »
I'm confused now...what is it about the last 3 yrs?  I'm obviously missing something, sorry.

D.
Just carefully read the 8840 form.Its all explained very clearly and very simple to figure out

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #61 on: July 07, 2014, 09:42:37 PM »
QUOTE:
Quote from: Hfx_CDN
Canadians are allowed entry to the US as a visitor for up to 6 months without paperwork.
QUOTE from STEVE CDN
In fact, Canadians or other "aliens" who remain in the U.S. for six months or less (according to the calculation of the 8840 exemption) are expected to file paperwork in the form of the 8840 Closer Connection Exemption.

Yes but the form 8840 has NOTHING to do with your entry. you can enter the us without any paperwork (other than showing a passport)Form 8840 IS NOT a requirement to enter.  you have up to 6 months after the current tax year end to file a form 8840
« Last Edit: July 07, 2014, 09:45:23 PM by buchanan »

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #62 on: July 07, 2014, 09:47:48 PM »
Thanks Steve. I missed this part of your earlier message:

When we entered Canada (at Niagara Falls, before we came to visit you and Ginette), the Canadian officer looked at, but didn't scan, our passports. She did, however, smile and say "have a nice day"  ;D

Are you sure our governments share information? Our government agencies can't share information among themselves  :o

I would find it extremely hard to believe that she never scanned your passports as that's a requirement of their job to do so just like the yanks do to us going down
When I go home to Canada they always scan my passports, always

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #63 on: July 07, 2014, 10:07:53 PM »
Form 8840 is needed for my  point 2.

It is true that Canadians can stay for 6 months without paperwork because that is the US Government.
(My point 1)

It is the IRS that has separate rules. They don't use the term "6 months" but "183 days).
So if you were in 2013 140 days in the US, in 2012 120 days, and in 2011 120 days, then your magic number of days for IRS purposes is 140 plus 40 (1/3 of 120) plus 20 (1/6 of 120) is 200 days which is over 183 and you have to complete and file (each person their own) the closer connection form.

In other word: for 2013 were less than 6 months so you are fine with the US Government but IRS goes by 3 years/183 days and you have to do extra paperwork for the IRS.

For us as Canadians our Provincial Healthcare wants us to be in our province. So if we'd go for 2 months to visit relatives in another province in Canada and then continue south for another 6 months... we're in deep trouble! 8 months away from our home province and we're no longer covered by our AHC which of course also invalidates our travel medical insurance.....

Sigh.....
Either at home in St Albert AB or working in Africa or in our 1993 Itasca Sunrise.

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #64 on: July 07, 2014, 10:13:30 PM »
Form 8840 is needed for my  point 2.

It is true that Canadians can stay for 6 months without paperwork because that is the US Government.
(My point 1)

It is the IRS that has separate rules. They don't use the term "6 months" but "183 days).
So if you were in 2013 140 days in the US, in 2012 120 days, and in 2011 120 days, then your magic number of days for IRS purposes is 140 plus 40 (1/3 of 120) plus 20 (1/6 of 120) is 200 days which is over 183 and you have to complete and file (each person their own) the closer connection form.

In other word: for 2013 were less than 6 months so you are fine with the US Government but IRS goes by 3 years/183 days and you have to do extra paperwork for the IRS.

For us as Canadians our Provincial Healthcare wants us to be in our province. So if we'd go for 2 months to visit relatives in another province in Canada and then continue south for another 6 months... we're in deep trouble! 8 months away from our home province and we're no longer covered by our AHC which of course also invalidates our travel medical insurance.....

Sigh.....
that's technically very true  but the chances of them ever knowing  if u happened to  go out province to another province would almost be impossible for them to trace.

Elly Dalmaijer

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #65 on: July 07, 2014, 10:56:09 PM »
that's technically very true  but the chances of them ever knowing  if u happened to  go out province to another province would almost be impossible for them to trace.

...... and I am so happy that this is true. But one very innocent call to AHC with a very innocent question ("Can I get for 6 months medication?") and you're in AHC's computers as "a person of possible interest". No problem if you have no medical claim while you;re gone but if you try to make a claim in that last month on your our-of-country travel medical..... those guys will try anything to get out of paying and they can easily find out through credit card records etc that you were gone, so your underlying AHC is not there and therefore you are not covered when you have your heart attack in the US in that last month..... Scary scenario but possible....?
Either at home in St Albert AB or working in Africa or in our 1993 Itasca Sunrise.

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #66 on: July 08, 2014, 12:12:05 AM »
Quote
I would find it extremely hard to believe that she never scanned your passports ...

Believe what you will, but I reported it the way I saw it. I didn't make it up  ;)
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #67 on: July 08, 2014, 08:19:49 AM »
Quote
that's technically very true  but the chances of them ever knowing  if u happened to  go out province to another province would almost be impossible for them to trace.

Not completely true though!!

Should you take sick, you will have to make a claim against your own provincial (Medicare) insurance at one point (unless you choose to bite the bullet).  They then ask all the pertinent questions.  Even if you have another outside (private perhaps) insurance, the first payer is always your Medicare, the outside insurance only pays the difference and they will often claim on your behalf from Medicare. (The actual procedure can vary from insurance company to insurance company as to who will claim from Medicare - mine does it on my behalf). Either way, count on LOTS of paperwork.

If you don't make any claim then the point is moot. Apart from ordering more than 3 months of medication (which is coded differently at least here in Que (RAMQ) from the usual 1-2-3 month order .), it would be, as you say, difficult for them to know.

Been there, done that!!

(I see "buchanan", you have learned a great deal about the F8840 and associated rules in the last few days!! GOOD SHOW 8) (but several of the posts you responded to above on the subject  were from 2011!!)  Been there, done that too!!!! heh heh
« Last Edit: July 08, 2014, 08:38:57 AM by Alfa38User »
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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #68 on: July 08, 2014, 08:55:50 AM »
long convoluted  conspiracies    all I said was a province under normal circumstances does not trace nor really have the ability to trace your stay when your out of province
iam not on any medications and see the doc once a year.  never been quizzed about date time. I think if they really wanted to track they could all they would have to do is send a form you must fill out decalring where u have resided on what dates j

Alfa38User

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Re: Foreign Snowbirds in U.S., IRS wants You!
« Reply #69 on: July 08, 2014, 09:23:44 AM »
Quote
I think if they really wanted to track they could all they would have to do is send a form you must fill out......

Heh heh, My company pension plan does that every several years just to see if I am still breathing... They call it an audit.....

You are very fortunate to be in good health. There are many, many of us who require medication on a regular basis, at least according to our "quacks".....

And here, RAMQ (Medicare) does send out a confirm and return form for us confirm a medical services claim from time to time as a check against fraud..... Not quite the same but it does substantiate, for the most part, that you are living where you say you are.

Continued good health :D
Stu
Montréal, Canada 🍁
Snowbird, Naples Florida
Alfa Gold 38 (2000) 5ver (parked!)

"Of course I talk to myself, sometimes I need expert advise!!!"

 

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