Retiring Abroad: How long can a Canadian spend in the U.S. each year?

Milestone Wealth Management Ltd. - Mar 12, 2018

How Long Can a Canadian Spend in the U.S. Each Year?

The United States is a very popular destination for Canadians seeking to leave the winter behind.  But how long can a Canadian resident stay in the U.S. without being considered a U.S. resident for tax purposes, and while still maintaining their provincial health coverage?

The short answer is 182 total days in the past three years under what is called the Substantial Presence Test.  But that isn’t the full story - the key is in the calculation of what is considered a ‘day’ for these purposes.  In the most recent year, each day is considered a day; for the previous year, each day is considered 1/3 of a day; and for the year prior to that, each day is considered 1/6 of a day.

A common way to think of it is to spend roughly 120 days per year.  That way, the most recent year would be 120, plus 40 for the previous year and 20 for the year before that.  Adding these three years up comes to 180 days and keeps you under the 182 day limit.

In early 2017, there was some discussion in the U.S. about increasing the amount of days that Canadians could spend in the U.S.  This hasn’t been passed into law yet.  However, even if this did come into law, Canadians would still need to stay under the 182 day limit in order to keep their provincial health coverage intact.

One final note: if a Canadian snowbird accidentally does exceed the limit as defined by the Substantial Presence Test above, there is a chance that they could file for an exemption.  The U.S. IRS has a Form 8840 that a Canadian can file which is referred to as the Close Connection Exemption.  On this form, a Canadian can attempt to establish that they have a closer connection to Canada and therefore not be deemed a resident of the U.S. for tax purposes.