BIRD TALK

I’m writing to find out what I’m missing, based on the below excerpt from the 2020 Form 8840. It specifically states on page 3, that: “… you will not be treated as a U.S. resident for 2020 if: You were present in the United States for fewer than 183 days during 2020.” Given the above, how does this put a snowbird in jeopardy of being taxed in the U.S. based on a “rolling” 12-month period as was noted in a previous Bird Talk question/answer? The 8840 Form plainly states that one can remain in the U.S. for 182 days in any calendar year, so isn’t this all that a snowbird needs to keep records for, or be concerned with? Closer Connection Exception − Even though you would otherwise meet the substantial presence test, you will not be treated as a U.S. resident for 2020 if: You were present in the United States for fewer than 183 days during 2020; You establish that, during 2020, you had a tax home in a foreign country; and, You establish that, during 2020, you had a closer connection to one foreign country in which you had a tax home than to the United States, unless you had a closer connection to two foreign countries.

Phil Wooster

Victoria, BC

Ed.: This is one of our most common questions. There are two U.S. agencies that monitor snowbirds; one is the U.S. Customs and Border Protection which monitors our time in the United States and our right to be there. Their rule is that a person may not be in the United States for more than six months in any 12-month period. This has nothing to do with a calendar year. For instance, if you normally go to the U.S. for six months every year starting on October 1^st each year and returning at the end of March, you are fine − as that is a six-month period. But, let’s say that you had a wedding in Canada to attend, and you did not leave until November 1^st. You still decided to stay for six months, and left at the end of April. You are still fine. But, next year, if you decide to go back to your normal patterns, you are NOT fine. You would count the normal early three months – October, November and December – but, due to the wedding, you spent four months in the U.S. in the earlier part of the year. That is seven months and it is illegal. Penalties can be severe, including being barred from entering the U.S. Be very careful about those extra days.

The other U.S. agency that is interested in snowbirds is the Internal Revenue Service. They are the tax collectors. Anyone who spends longer than six months in the U.S. is considered to be a resident of the U.S. and is taxed on their worldwide income. This has nothing to do with earning money in the U.S.; it has to do with residency. So, in any Calendar Year, you must be there for less than six months, too. These people are very serious and you must stay on the right side of the six months to avoid being taxed. We file a Form 8840 to alert them that we are staying for an extended period, but are still compliant. Filing this form has been very helpful in prior tax cases. Some snowbirds in the West have had to pay millions of dollars in taxes when they were “caught.” Need I say more?