CDN Us Taxes

From Yahoo Canada:
"What Canada’s snowbirds need to know about U.S. taxes"

With the weather getting colder, now’s the time for Canadian snowbirds to start preparing to head south of the border for the winter. They need to bring with them a keen awareness of all the potential tax hits they might face. For starters, proposed legislation in the U.S. could have serious tax consequences for Canadian visitors. Under the current rules, those who spend more than 182 days out of 365 days in the calendar year, or more than 120 days per year on average over a three-year period, may be considered a U.S. resident for tax purposes. The new JOLT Act, (Jobs Originated through Launching Travel), would allow Canadian retirees to spend up to 240 days each year in the U.S. without a visa. But snowbirds who spend that long in the U.S. may be required to pay U.S. income and estate taxes. To avoid U.S. taxation, IRS form 8840 (Closer Connection Exemption Statement for Aliens) needs to be filed annually with the U.S. Internal Revenue Service. Not filing it could result in a US$10,000 fine. There are several other possible tax implications. Those with a bank account in the U.S. need to know that interest earned on deposits could be subject to taxation. They should complete IRS form W8-BEN (Certificate of Foreign Status) with the U.S. financial institution to avoid possibly having 30 per cent of any interest earned withheld and sent to the IRS. Tax considerations come into play if you own property in the States, too. If you sell, a withholding tax of 10 per cent of the gross sales price is normally payable under the Foreign Investment in Real Property Tax Act. A government regulation stipulates that, if you own an American property when you die and your worldwide assets are worth more than US$2million, that property is subject to a 45-per cent estate tax. One solution to U.S. estate tax is to hold real estate in a Canadian corporation rather than personally, according to the American Chamber of Commerce in Canada (AmCham). Because shares of a Canadian corporation are not considered property within the U.S, no U.S. estate tax will apply.

Another way to reduce exposure to the U.S. estate tax is split interest ownership of the property. According to AmCham, an individual would acquire a life interest in American property under such an arrangement, and his or her children would acquire the remainder interest in the property. Upon the death of the individual, there would be no estate tax on the life interest.

^ I added this because of the point that if you stay in the US for 240 days a Canadian would need to pay US taxes if/when JOLT becomes law. ^

http://ca.finance.yahoo.com/blogs/pay-day-/canada-snowbirds-know-u-taxes-161842793.html