Foreign Snowbirds in U.S., IRS wants You!

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    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
 
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.
 
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.
 
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!
 
catblaster said:
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.
 
[quote author=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.[/quote]

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.
 
I'm confused now...what is it about the last 3 yrs?  I'm obviously missing something, sorry.

D.
 
workingtorv said:
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.
 
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 :eek:
 
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.
 
catblaster said:
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.
 
workingtorv said:
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 ???
 
catblaster said:
  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?
 
Tom said:
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.

workingtorv said:
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
 
Thanks Steve. I missed this part of your earlier message:

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  :eek:
 
Tom said:
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.
 
    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 :mad:
    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
 
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.
 
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