Accounting firms in Toronto and across Canada are often approached by Canadians who vacation in Florida (or snowbirds, as they’re affectionately known) and want to know if they have to pay income tax in the US during their stay.
Basically, if you’re in US for a certain amount of time, you do have to pay US income tax.
On the 8840 form, you calculate the total number of days you have spent in the U.S. for the last year, add one-third of that sum to the total days in the U.S. the previous year, and then add on one-sixth of the total from the year prior.
According to the formula, if you spend less than 120 days in the US, consider yourself Canadian and live in Canada, you should be exempt from paying US income tax and don’t need to fill out the form. Anyone with more than 182 days in the U.S., would have to fill out the form
You can vacation in the U.S. for up to 180 days each year without a visa, but that’s in the eyes of the Immigration Department. The IRS has different rules.
There are steep fines for not filling out the 8840 form, as you could be facing a daunting $10,000 fine.
If you have any questions about what our accounting firm can do for you, please don’t hesitate to contact our Toronto office.