June 15, 2013
Snowbirds – Filing Deadline
Do you travel to the US for the winter for long periods of time? If so, you may need to file an exception to filing a US tax return that is due June 15 each year.
If you don’t want to face some possible penalties, you may need to file a form called the Closer Connection Exception Statement for Aliens, IRS form 8840.
Many people think that if you spend less than 180 days in the US, you do not need to file. But that is not completely correct. It depends on how many days you spent in the US in the past three years. If you spent more than 121 days in each of the past three years (2012, 2011, and 2010) you should be filing for an exception.
The exception acknowledges that you had a significant presence in the US, but that you have closer ties to Canada and therefore do not need to file an actual tax return with the IRS.
Here’s how the formula works: calculate the number of days you were in the US in 2012 (for some snow birds that is often January to April and sometimes November and December). Then calculate the number of days for 2011 and for 2010. Remember to include any additional days you went on short trips for gambling and shopping!
You need to file for an exception if you are considered to have a “substantial presence” in the US in the past three years. If it exceeds 182 days, you need to file.
The actual formula works like this: you include all the days in 2012, one third of the days in 2011 and one sixth of the number of days in 2010.
You are near the 183 days if you spent more than 121 days in each of the three years (2012 – 121 days; 2011 is 40 days (1/3 of 121) and 2010 is 20 days (1/6 of 121). That totals 181. You likely have to file; remember the magic number is 183 days.
Why has this not been a big deal in the past? Well, it was harder for the US government to keep track of you. Remember we could cross the border with just our driver’s licenses and birth certificates. Now we need our passports. And don’t you think they are keeping track of when you came into the country and when you leave??
So if you think you might qualify as having a “substantial presence” in the US, better get that form completed. You can find it on the US taxation (IRS) website: www.irs.gov/pub/irs-pdf/f8840.pdf
If you don’t have access to the internet, or you need some help, give me a call or drop by my office.
And another quick reminder to the self employed and their spouses: you have until June 15 to file your personal income tax return without facing any penalties. If you have an amount owing, interest has been accruing since May 1, but at the least the penalties can be avoided by filing by June 15. Actually the deadline this year is Monday June 17 because the 15th falls on a Saturday. That’s good, because I likely need a couple more days in June to get everyone’s done including my own!
Even if you don’t have everything to complete your income taxes, file it as an incomplete tax return to avoid the penalties. We can always do an adjustment later.
Anni Markmann is a Tax Professional and owner of Ste Anne Tax Service. She lives, works, and volunteers in our community. Contact her at 204-422-6631, firstname.lastname@example.org or 36 Dawson Road in Ste Anne.