If you spent part of the year in the United States (U.S.) for health reasons, on vacation, or for other reasons, and you still maintained residential ties in Canada.
How Canadian income Tax Laws Apply…
If you spend part of the year in the U.S. for health reasons, on vacation, or for other reasons, and you maintain residential ties in Canada, we usually consider you to be a factual resident of Canada.
As a factual resident, we tax your income as if you never left Canada. You will continue to:
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report all income you receive from sources inside and outside Canada for the year, and claim all deductions that apply to you;
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claim federal and provincial or territorial non-refundable tax credits that apply to you;
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pay federal tax and provincial or territorial tax where you keep residential ties in Canada;
- claim federal and provincial or territorial refundable tax credits that apply to you; and
- be eligible to apply for the goods and services tax/harmonized sales tax (GST/HST) credit.
Did you receive U.S. lottery or gambling winnings?
This income is not taxable in Canada, so you do not have to report it on your Canadian return. Additionally, you cannot claim a credit for the taxes withheld on your winnings.
Can you claim medical expenses paid in the U.S.?
You can claim eligible expenses that were paid for yourself, your spouse or common-law partner, and certain other individuals who were dependent on you for support. You can claim medical expenses that were paid in any 12-month period ending in the year, if they were not claimed in the previous year.
Did you pay premiums to private health-services plans?
If so, you can claim most of them as a medical expense on your return.
Did you donate to U.S. charities?
If you are including U.S. income on your return, you can claim a credit for donations to U.S. charities that would be allowed on a U.S. return. The total donations to U.S. charities you can claim cannot be more than 75% of the net U.S. income you report on your Canadian return.
How U.S. Tax Laws Apply…
As a Canadian resident who spends part of the year in the U.S., you are considered either a resident alien or a non-resident alien of the U.S. for tax purposes.
Resident aliens are generally taxed in the U.S. on income from all sources worldwide, and non-resident aliens are generally taxed in the U.S. only on income from U.S. sources. Therefore, it is important for you to determine if you are a resident alien or a non-resident alien.
Are you a resident alien?
You are considered a resident alien if you meet the substantial presence test.
- If you were in the U.S. for 183 days or more in 2010, you meet the substantial presence test. If this is your situation, you are considered a resident alien of the U.S.;
- If you were in the U.S. for less than 31 days in 2010, you do not meet the substantial presence test. If this is your situation, you are considered a non-resident alien of the U.S. If you were in the U.S. for 31 to 182 days in 2010, you may meet the substantial presence test.
What is the substantial presence test?
This test uses the number of days you were in the U.S. during a three-year period (the current and the two previous years) to determine if you are a resident alien or a non-resident alien.
To determine whether you meet the substantial presence test for 2010, calculate the number of days you were present in the U.S. during 2010, 2009, and 2008. The days do not have to be consecutive, and you are treated as being present in the U.S. on any day you were there for part or all of the day. Each day:
- in 2010 counts as a full day;
- in 2009 counts as one-third of a day; and
- in 2008 counts as one-sixth of a day.
- If your total is at least 183 days, you have met the substantial presence test and you are considered a resident alien for 2010.
- If your total is less than 183 days, you are considered a non-resident alien for 2010.
Example
Florence and Henry are residents of Canada and own a trailer home in Florida, where they spend each winter. Although they have no U.S. source income, they need to determine their U.S. residency status. To do this, they have to determine how many days they were in the U.S. during 2010, 2009, and 2008.
During 2010, they were in the U.S. from January 1 to April 11, and from November 13 to December 31 (150 days).
During 2009, they were in the U.S. from January 1 to March 30, and from November 14 to December 31 (138 days).
During 2008, they were in the U.S. from January 1 to April 5, and from November 1 to December 31 (156 days).
Each day they were in the U.S. during 2010 counts as a full day (150). Each day they were in the U.S. during 2009 counts as one-third of a day (138 × 1 ÷ 3 = 46). Each day they were in the U.S. during 2008 counts as one-sixth of a day (156 × 1 ÷ 6 = 26).
They add the subtotals:(150 + 46 + 26 = 222). Since this total is at least 183 days during the three-year period, they meet the substantial presence test, and they are considered resident aliens by the U.S. for 2010.
For more information go to: http://www.cra-arc.gc.ca/E/pub/tg/p151/p151-e.html