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A scary Hallowe’en thought: winter is coming!


Oaken Financial

October 1, 2014
Oaken Update

While our minds may be on witches and goblins and all that fun, it’s worth remembering that there’s another big seasonal fright on the horizon: winter is just around the corner.

Yes, we’re less than two months away from the official start. And our September poll about how to cope reveals some interesting results. Most of you are split evenly between heading south and staying put—while a smaller share jump into activities to keep the winter blues away:

Tips for Snowbirds: There’s more to think about than just taxes

Congrats to those hardy souls who brave it out at home. But for those who head south for at least a week or two (and that includes some of us here at Oaken), there are lots of things to think about: what to pack, things to do, friends to connect with. And some more serious things too…including this list of tips that can help make your happy travels even happier:

– If you travel to the United States for more than a specific number of days, you could be subject to U.S. income tax. You can avoid being taxed by making sure you don’t exceed that magic number of days—but there’s an easier way. Simply fill out IRS form 8840. Its full name is the Closer Connection Exemption Statement for Aliens, and it’s a form that that lets you state that you maintain a “closer connection” to Canada than the U.S. Remember, though—you have to fill this form out every year, otherwise you could end up dealing with a big tax headache courtesy of the IRS.

– Canada and the U.S. now participate in something called the Entry/Exit Initiative, which involves the sharing of cross-border information. Whereas previously each country only kept a record of when you entered, now they know when you exited as well. This means that you no longer have to self-disclose when you left the U.S. But it also means that the IRS can easily determine if you passed the “residency threshold”—which can trigger a tax assessment. And remember that short visits, even for a business trip, can also be counted against your maximum allowable stay; and that the IRS calculation actually involves your travel and residency data for a three-year period, not just the current year. So the bottom line: file form 8840 every year if you have any doubt.

– Health care abroad can be cripplingly expensive—don’t make the mistake of assuming that your provincial program will cover everything if you need medical assistance! Visit your provincial government website for current out-of-country coverage to see what is and what is not insured. You can also visit the Canada Revenue Agency’s webpage, Canadian residents going down south, which provides valuable information on healthcare coverage and tax-related matters.

– Consider joining the Canadian Snowbird Association (www.snowbirds.org), non-profit advocacy organization with more than 70,000 members. It is dedicated to improving the rights and privileges of Canadian travellers, and joining is a good way of keeping up to date on issues that matter to snowbirds.

– If you’re thinking of buying property down south, remember: location, location, location. Visit your location at least a few times before taking the plunge. Rent a home or condo in the area you’re considering so that you become familiar with the neighbourhood. Does it feel safe? Are amenities good? Is it easy to go shopping for the things you want regularly, like groceries?

– There’s a lot to consider when buying a second property. In addition to location, think of the type of housing you’d like to buy: a traditional home? A condo? Or maybe a motor home, for travelling around and seeing more of the country? The type of housing you ultimately choose will determine more than just the purchase price. You have to take into account things like taxes, maintenance, condo fees and—if you’re planning on renting out your property while you’re back home—rentability.

– Are you taking currency fluctuations into consideration? We’ve recently become accustomed to parity with the U.S. dollar, but it wasn’t so long ago that things were very different. (In January 2002 $1.00 US cost as much as $1.61 CAD.) Keep that in mind if you’re planning on a lengthy period abroad.

Hot reads

If you’re thinking about ways to warm up this winter, we hope these articles will help. From hot housing markets to hot travel tips, they’re full of great advice.

The new question for Canadian Snowbirds heading south: to buy or rent? Gary Marr of the National Post looks at the pros and cons of buying in some of America’s sunny states

How to avoid wasting money at the airport: Six travel tips. Simple ways of saving money before you even get on the plane

Free as a Snowbird? Maybe not. A good summary from the Calgary Herald of the complex rules about residency and taxes in the U.S.

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