By iA Private Wealth, October 6, 2022
Many Canadians learn to tolerate or even embrace winter, but those who hate the cold and snow may wish to explore the “snowbird” option.
U.S. income taxes
Depending on your time spent in the U.S., you might be considered a U.S. resident for tax purposes, which means filing a U.S. tax return to report your worldwide income (in addition to a Canadian return).
You can avoid being deemed a U.S. resident if you satisfy one of the following:
You can learn more about these options by reading this article from Snowbird Advisor.
Unless you purchase property in the U.S. – which brings its own tax-related complications – you’ll need to rent.
But beware of scammers.
They’ll advertise a great rental property at an amazing price, often well below market rates. Once you’re hooked, they may demand a wire transfer for a substantial deposit or even the cost of the entire rental period. When they receive your transfer, you’ll likely never hear from them again.
You can avoid rental scams by doing your homework to ensure you’re dealing with people who can legally rent out the property. Consider properties from legitimate rental websites or reputable real estate brokers/property managers. If someone claims to own the property or is an agent for the owner, insist they verify their identity and provide credible references.
Qualifying snowbirds have access to insurance policies designed to address their specific needs. Which policy is right for you will depend on factors such as how long you’ll spend in the U.S. or how many trips you’ve planned in a given year. Snowbird insurance helps cover the cost of accidents, health issues and other emergencies.
The cost of U.S. medical care can be exorbitant and may shock those accustomed to Canada’s universal health care system. While provincial health insurance may cover some U.S. medical costs, coverage is limited and you’ll need additional insurance. To get the coverage you require, it’s best to purchase a snowbird policy from a reputable insurance provider before leaving Canada.
If you have a reliable vehicle and both the desire and ability to drive to the U.S., you can bring your vehicle across the border with few issues. Just know that keeping your vehicle there for more than one year may lead to import taxes or duties. Also, provided you didn’t make any value-enhancing modifications to your vehicle while in the U.S., taxes or duties won’t apply when returning to Canada.
Another popular option for snowbirds is to fly to their destination and rent a vehicle during their stay, or buy a vehicle in the U.S. and keep it there year-round. Investigate ahead of time so you know what rules and stipulations may apply.This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.