Tax Savings For Snowbirds

Careful planning with a Chartered Accountant is warranted. Contact Keith Anderson CA at (780) 447-5830 if you need advice. 

1. Avoid becoming a U.S. resident while visiting. If you spend a significant amount of time in the U.S., you may become a U.S. resident for tax purposes and thus be subject to tax in the U.S.

2. Don’t forget to claim the pension income credit.

3. Maximize your charitable donation credit by claiming your and your spouse’s donations on one return. Remember, U.S. donations may only be claimed to the extent you have U.S. source income and donations to U.S. charities are generally limited to 20% of your U.S. net income.

4. Remember, the medical expenses credit can be based on the "best" 12-month period ending in the year. So, if you don’t have enough this year to get you over the threshold save those expenses for next year. Also, the cost of additional health insurance you get while in the U.S. may generally be claimed as a medical expense for Canadian income tax purposes.

5. Minimize the amount of U.S. property you hold before death. U.S. estate taxes can impose a very serious burden on the death of Canadians who own U.S. stocks and real estate.

6. File the appropriate U.S. disclosure returns to protect your treaty position.

7. If you are receiving rental income from a U.S. property, elect the net rental method.

8. Consider taking out life insurance to cover U.S. estate taxes.

9. Make a will or review your existing will. It allows you to provide for an orderly distribution of your assets in a way that minimizes the tax burden on your estate and your beneficiaries.

10. Consider the advantages of establishing one or more family trusts. Setting up the trust while you are alive can provide some advantages.

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