A number of individuals are now getting ready to head South for extended periods of time in order to avoid the harsh Canadian winter. A recent article in the October issue of Investment Executive highlighted a number of considerations that should be taken into account prior to leaving for the sunny South.
Firstly, the amount of time one spends in the USA has to be carefully reviewed. The Substantial Presence test is used by the IRS to determine whether a person might be considered a USA tax resident. Canadians are allowed to remain in the States for up to 182 days over a three year period. If a person has been in the USA for 31 days or more in the current calendar year all of these days plus one-third of the days from the previous year and one-sixth of the days from the year are totalled and if that total exceeds 183 days one could be considered a tax resident. Keep in mind that cross border shopping trips exceeding two hours count as a full day in the calculation.
Secondly, Health insurance must be carefully reviewed. If you are a resident of Ontario and insured under OHIP you are entitled to VERY limited coverage for a certain range of medical services when you are travelling outside of Canada. Be aware that OHIP will only cover an illness or injury if is acute, unexpected, arose when out of Canada and requires immediate treatment. Accordingly it is important to purchase additional health insurance each time you leave the country and ensure it provides adequate coverage for the full time you are away.
Finally, one should consider some of the following:
- making back-up copies of documents such as passport, drivers licence and credit cards in the event that the originals are lost or stolen.
- establishing USA bank accounts with affiliates of Canadian banks to lessen foreign transaction fees
- ensuring the home insurance policy covers the property if unoccupied for extended time periods
- if driving to and from the USA to have at least 2 million in liability coverage as damage claims will be in US dollars as the Canadian insurers pay only in Canadian funds
With proper planning an enjoyable winter away will ensue. Happy holidays to all!!