Residency and Taxation
If you are planning to spend the winter season in the United States, then you should be ensured to have all your documents-passport and other travel papers, as well as your bags packed.
Being snowbirds you need to realize that you have potential liability to pay taxes based on your permanent residency. U.S. citizens along with green card holders pay taxes on their income regardless of the place of their residence.
Although snowbirds only visit the United States for the winter season, they can be referred to as U.S. residents due to income tax purposes. In some situations they can be required to pay taxes on their worldwide income.
Counting the Days of your Stay
If you are neither a U.S. citizen nor a green card holder, you can still be expected to pay taxes, thus, making you a U.S. resident. A calculation table called Substantial Presence Test is a medium in computing your number of stay in the U.S., and the basis of the equivalent tax to pay. If the total calculation exceeds 182 days, you may be subjected to income tax. To keep track of your number of stay, you must keep a written record to avoid issues. (general rule of thumb, stay less than 4 months per year, if you plan on staying every year)
On the other side, if you accumulated less than 183 days from the calculation, then you are subjected to Closer Connection Exception. In this case, you are not considered as a U.S. resident. Several factors may help in determining a closer connection, these are:
> Permanent residence
> Family’s residence
> Location of personal resources
> Country of issuance of driver’s license
> Residence issued on documents
> Country where you obtain the majority of your income
These factors are also contained in the Canada-US Treaty. If you belong to this bracket, then you must be able to present papers and documents to receive its benefits.
It is true that requirements for tax filing and residency determination can be complicated, it is essential that you consult with an expert- professional advisor, skilled in cross-border taxation to certify that you are meeting the terms of all your tax obligations.
Remember to pay respect to the mandated law in the United States as you are doing in your home country. It is a great way of returning the good experience you had or will have in the future. Avoid problems as early as you can rather than piled up with all the different issues, making your vacation miserable and chaotic instead of quiet and fun. In this case, you can always call your second home your dream abode or “your home away from home”.
Sam Kakembo - Auxo Homes
Sam Kakembo, an Entrepeneur & Investor, plays a key role in management of the company portfolio of emerging markets. The majority of his investments are made in single family rental properties. He is responsible for property evaluation, marketing, acquisitions and in addition, asset managment of the Company’s property portfolio. Mr. Kakembo possesses 10 years’ experience in Canadian real estate, and currently manages a private real estate portfolio, Richland Investments and Property Management