One of the most common questions a Canadian will encounter in Florida is, how long can you stay in the USA? Or maybe what the questioner really means is, when will you be leaving? That is a complex question indeed. There are at least five considerations for most Canadian snowbirds, all with slightly different timelines.
US Taxation – The US IRS take a keen interest in how many days a Canadian is in the US. If that number is more than 182 in a calendar year, the Canadian is automatically considered a tax resident of the USA, taxable on their worldwide income (see section below on US Immigration which could in future alter this test). The IRS also has a second test consisting of a simple formula which adds together the days present in the US in the current calendar year, 1/3 of the previous year and 1/6 of the second previous year to determine if a person has a substantial presence in the USA. If the total is over 182, which means on average more than four months and two days per year (122 days), then the Canadian has a substantial presence and is deemed to be a US resident for tax purposes. A Canadian can apply to disclaim that residency assumption by filing Form 8840 with the IRS to demonstrate that, despite having a substantial presence, they have a “closer connection” to Canada for tax purposes. If you earn US rental income you must file a US tax return.
Canadian Taxation – Revenue Canada can also take an interest in how long a Canadian is out of the country. If deemed to be a tax resident of the US by the rules above, a Canadian could be subject to the Departure tax which requires capital gains tax to be paid on the deemed disposition of certain capital assets (exclusions include directly held real estate, pension assets and directly owned business assets).
US Immigration – The rule of thumb used by Customs and Border Protection (CBP) is that Canadians are allowed to visit the US for up to six months (182 days) per rolling twelve month period. This is better than the rules which apply to most other visitors to the US who only get three months. Every day during which a Canadian touches US soil, with the exception of airport transits, counts toward the 182 days for immigration purposes. Controversially, some CBP agents also consider that departures from the US of less than 31 days in the middle of an extended stay (for example a three week trip home for Christmas) do not reduce the time spent in the US. This interpretation is not documented in any legislation or public guidance, but the CBP agents have absolute discretion and power to interpret the rules. See article by David Altro and Melissa Salvador in the following link for the best discussion of this topic which I have found (30 day “rule”). Calculating days in the US in the previous rolling 365 days can therefore be an onerous record keeping task. In September 2019 U.S. Senators Marco Rubio (R-FL) and Rick Scott (R-FL) introduced the Canadian Snowbirds Act (S. 2507), legislation that would allow some Canadian citizens to spend up to eight months a year vacationing in the United States, two months longer than they are allowed to stay now . To qualify, a visitor to the US would have to be a Canadian citizen, over 50, own a residence or have a lease for the full period of their visit and not work for US employers. This legislation would be very much appreciated by Canadians who are running afoul of the current immigration test due to short trips home. Similar legislation has been introduced multiple times over the last ten years by both Democrats and Republicans in both the House of Representatives and the Senate. No one should hold their breath expecting this new version to pass as typically fewer than 5% of the 5,000+ Bills introduced annually ever pass.
Canadian Provincial Health Insurance Coverage – Each province in Canada has its own set of rules regarding out-of-province coverage. Ontario and most provinces have traditionally allowed a resident to be out of their home province for seven months without losing benefits. If you lost benefits, there was a three month disqualification period once you returned to Canada. Some provinces allow different periods out of the home province. It is important to recognize that the calculation is time out of your home province, not just out of the country. It is also important to realize that the provincial health plans only reimburse at Canadian rates, often a fraction of the costs incurred at a US health facility. As of January 1, 2020 Ontario has declared that it will no longer provide medical insurance to Canadians outside of Canada. As such, supplemental health coverage is essential for a snowbird.
Supplemental Health Coverages – Many Canadians have access to a supplemental health plan provided by their employer or retirement plan. These usually provide benefits to top up the provincial plans to US rates, but often only for a short period of time. For example, the federal government retiree plan only allows 40 days of coverage, but those 40 days can be reset by a trip back to Canada, even for a single day. Once again, there is a need to carefully document days out of the province (not just in the US).
Snowbird Health Plans – There are many insurance companies and programs which specialize in topping up the provincial plans and the retiree health plans of snowbirds. Such purchase is essential and it is important to be able to articulate how long you will be out of the country when deciding which program is appropriate to your circumstances. These programs must be purchased before you leave Canada.
Canadians would be well advised to maintain good records of time spent in the US over the last three years. Some advisors also recommend that you have a full dossier with you when you cross the border which includes copies of your US visit record, Canadian bank account statements, property tax invoices and a photocopy of your most recent IRS Form 8840. The consequences of being flagged at the border by a Customs and Border Protection agent could be a ban from entering the USA for up to five years. Financial penalties for not reporting taxes are substantial.