Cross Border Travelers
There are three types of people who travel to U.S from Canada.
We may call first category of people as vacationers. These are short term visitors to the U.S who like to take a break from Canadian winters. These people are full time working people who take vacations with their family and visit different places in the U.S each year. Vacationers are not required to file U.S taxes.
Another category is of the people who are committed to settling into a full-time cross border life style. These people enjoy tax relief from high Canadian income taxes. They usually visit Canada for a short time. These type of people are generally retired or have well established businesses and are not required to work on day-to-day basis. This category of people sell their Canadian homes and buy a property in the U.S. These type of people obtain some kind of immigration status like a Green card. They are required to file U.S taxes and declare worldwide income on their taxes. They must pay taxes to Canada on their Canadian source income.
We may call next category as snowbirds. These type of people like to spend majority of winter in the U.S Sunbelt States. These people usually keep their stay less than six months in the U.S. Snowbirds are usually retired and have a flexibility to be away from their homes for a long time. Many of the snowbirds own a U.S permanent vacation property in their Sunbelt area of choice.
Snow birds must file their U.S taxes for rental income they obtain from the U.S and also report capital gains if they end up selling their U.S properties. Both rental income and capital gains have to be integrated in their Canadian taxes. Cross border taxation is challenging and proper foreign tax credits should be taken to avoid double taxation.
