Canadian Residents Going Down South — Montreal CPA Firm Near You: Snowbirds, U.S. Stays, Residency, and Cross-Border Tax Rules

Many Canadians spend part of the year in the United States for health reasons, warmer weather, or extended vacations. If you keep your home and other ties in Canada, you are often still considered a Canadian resident for tax purposes, even if you spend months “down south.” In these situations, Canadian tax law continues to apply to you as if you never left Canada, and U.S. tax rules may also apply.

This guide explains how Canadian tax laws apply to snowbirds and other part-year U.S. visitors, what it means to be a factual resident, how to complete your Canadian return, when foreign reporting rules apply, how U.S. tax rules interact, and what you should watch out for before and during your stays.

1. Factual Resident: When You Go South But Stay Canadian for Tax Purposes

If you spend part of the year in the U.S. for health reasons or vacation and you maintain residential ties in Canada, the CRA usually considers you a factual resident of Canada.

You are generally a factual resident if you:

• Keep a home in Canada

• Maintain a spouse or common-law partner in Canada

• Have dependent children in Canada

• Maintain provincial health coverage, bank accounts, driver’s licence, and social ties in Canada

Unless one of the following applies, the CRA will generally treat you as a Canadian factual resident:

• You are a U.S. citizen

• You have a U.S. green card (permanent resident status)

• You have stronger residential ties in another country (and possibly treaty residency there)

As a factual resident of Canada, you are taxed as though you had never left Canada.

2. How Canadian Income Tax Laws Apply When You Spend Time in the U.S.

As a factual resident, you must continue to:

• Report all income from sources inside and outside Canada (worldwide income)

• Claim all income deductions that apply to you

• Claim all federal and provincial or territorial non-refundable tax credits that apply

• Pay federal and provincial or territorial tax for the province or territory where you keep residential ties

• Claim all federal and provincial or territorial refundable tax credits that apply

• Apply for the GST/HST credit and related provincial/territorial credits if eligible

In short, your Canadian tax life continues as usual. Physically being in the U.S. for part of the year does not by itself change your Canadian tax residency.

3. Completing Your Canadian Income Tax Return as a Snowbird

You use the income tax package for the province or territory where you maintained residential ties on December 31 of the tax year.

Key points:

• If you are a factual resident, attach Form T1248, Schedule D – Information about your Residency Status to your return.

• On page 1 of your return (Identification section):

  • Do not enter a date of entry or departure; those fields are for immigrants and emigrants. If you enter dates, CRA may incorrectly treat you as a part-year resident and reduce personal credits.

  • Under “Your province or territory of residence on December 31,” enter the province where your ties are (for example, Quebec, Ontario, British Columbia, etc.).

All income must be reported in Canadian dollars, including any U.S. income.

Foreign Property and Information Returns

Special foreign-reporting rules may apply if you:

• Owned or held specified foreign property costing more than CAD $100,000 at any time in the year

• Loaned or transferred money or property to a non-resident trust

• Received funds or property from, or were indebted to, a non-resident trust as a beneficiary

These may require:

• Form T1135 – Foreign Income Verification Statement

• Form T1141 – Contributions to Non-Resident Trusts, Arrangements, or Entities

• Form T1142 – Distributions From and Indebtedness to a Non-Resident Trust

These are separate from your main return, but penalties for not filing can be significant.

NR4 or NR4(OAS) Slips

As a factual resident, you should not receive NR-series slips (which are for non-residents). However, if you do:

• Report the income on your Canadian return

• If tax was withheld (shown on the NR slip), claim it on line 43700

• Contact the issuer to correct your residency status so future slips are issued correctly

4. Common U.S.-Related Income Items for Snowbirds

U.S. Lottery or Gambling Winnings

As a Canadian factual resident:

• U.S. lottery and gambling winnings are not taxable in Canada

• Do not report this income on your Canadian return

• You generally cannot claim a foreign tax credit for U.S. withholding taxes on such winnings

U.S. tax might still apply; see the U.S. rules section below.

U.S. Rental Income

If you own rental property in the U.S.:

• You must report the net rental income (or loss) on your Canadian return in Canadian dollars

• Keep complete records of income and expenses, including property taxes, mortgage interest, repairs, and management fees

• CRA expects a full rental calculation, typically on Form T776 – Statement of Real Estate Rentals

U.S. tax rules may also require a U.S. return and/or withholding.

5. Federal Tax, Credits, and Foreign Tax Relief

As a factual resident:

• You file a standard federal income tax and benefit return

• You claim medical, donations, and other personal credits as usual

Medical Expenses Paid in the U.S.

You can claim eligible medical expenses paid in the U.S. for:

• Yourself

• Your spouse or common-law partner

• Eligible dependants

You can claim expenses in any 12-month period ending in the year, provided they have not been claimed in another year.

Premiums to qualifying private health-services plans (including some travel medical plans) may also be considered medical expenses.

Donations to U.S. Charities

If you report U.S. income on your Canadian return, you may claim a credit for donations to U.S. charities that would be eligible on a U.S. return.

Limit:

• Total donations to U.S. charities claimed cannot exceed 75% of net U.S. income reported on your Canadian return.

Federal Foreign Tax Credit (FTC)

If you pay U.S. tax on U.S. income that is also reported on your Canadian return:

• You may claim a foreign tax credit to avoid double taxation.

• The FTC is the lesser of:

  • U.S. tax paid on that income, and

  • Canadian tax otherwise payable on that U.S. income

To claim:

• Complete Form T2209 – Federal Foreign Tax Credits

• Use the provincial foreign tax credit calculation in your provincial package if applicable

6. Provincial or Territorial Tax and Health Coverage

You pay provincial or territorial tax to the province or territory where you maintain residential ties on December 31.

That province or territory:

• Determines your non-refundable provincial credits

• May offer its own refundable credits (e.g., Quebec credits, Ontario energy credits)

To understand the provincial component:

• Use the appropriate provincial/territorial income tax package.

Health-Care Coverage

Spending time in the U.S. can affect your provincial health coverage if you are absent too long. Before you go:

• Confirm with your provincial Ministry of Health how long you can stay outside Canada and still be covered

• Consider supplementary health insurance for U.S. stays

Each province has its own rules about maximum days abroad and requirements to keep coverage active.

7. How U.S. Tax Laws May Apply to You

As a Canadian factual resident spending part of the year in the U.S., U.S. tax law may require you to file a U.S. return depending on your status.

For U.S. tax purposes, you can be:

• A resident alien (taxed on worldwide income), or

• A non-resident alien (usually taxed only on U.S.-source income)

Determination is based on:

• The substantial presence test (days in the U.S. over a 3-year period)

• Green card status

• Treaty tie-breaker rules in some situations

If you are a resident alien for U.S. purposes, you may face worldwide U.S. taxation in addition to Canadian worldwide taxation, and you must rely on treaty relief and foreign tax credits to avoid double tax.

U.S. issues snowbirds often face:

• Whether they must file Form 1040NR or Form 1040

• Reporting U.S. rental income

• Treatment of U.S. gambling/lottery winnings

• U.S. estate and gift tax exposure on U.S. real property

U.S. rules are complex; when in doubt, you should consult cross-border tax counsel.

8. Practical Planning Considerations for Snowbirds

Before going south:

• Confirm your provincial health coverage rules

• Track U.S. days to avoid unintended U.S. residency

• Keep detailed records of:

  • U.S. income (rental, interest, dividends)

  • U.S. tax withheld

• Review whether you meet foreign reporting thresholds (T1135, T1141, T1142)

• Ensure your Canadian tax profile (address, marital status) is up to date with CRA

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps Canadian residents who spend part of the year in the U.S. understand and manage their cross-border tax obligations. We assist with:

• Determining whether you are a factual resident, deemed non-resident, or emigrant

• Completing your Canadian return correctly as a snowbird

• Handling U.S. rental income, pensions, and investment income

• Calculating and claiming foreign tax credits for U.S. tax paid

• Advising on T1135 and other foreign reporting forms

• Coordinating with U.S. tax advisors to reduce double taxation

• Protecting your provincial credits and health coverage

• Planning long-term stays to avoid accidental U.S. residency

If you spend part of the year “down south” and want to be sure your Canadian and U.S. tax situations are fully coordinated, Mackisen can review your facts, file the right forms, and help you enjoy the sun—without tax surprises.