Why read this?

  • › Your client is a snowbird
  • › Your client owns U.S. property

Tips

  • Unsure if your client is considered a Canadian resident? Fill out Form NR73, Determination of Residency Status (Leaving Canada), send it to the International Tax Services Office and CRA will evaluate her.
  • When completing the identification section of the return, don’t fill out a date of entry or departure. That’s for immigrants and emigrants—not snowbirds. Entering a date may cause CRA to reduce your client’s non-refundable tax credits.
  • Did a client forget to convert costs from U.S. to Canadian dollars? CRA offers an average exchange rate for the year on its website.

What to do?

  • › If your client doesn’t have significant Canadian residential ties, and spent fewer than 183 days in the country during the tax year, she may be a non-resident. But it’s rare for someone to become a non-resident inadvertently, says Jennifer Horner, senior manager, tax, at BDO Canada.

Reporting foreign rental property

  • › CRA suggests your client keeps records to support her income and expense claims.

Warning!

› Regardless of profit, if your client is collecting rent, she’ll also have to pay U.S. tax on the net income, note experts.

› The new T1135 form is more extensive than past versions, and it’s causing concern (see “Last year’s tax traps,” AER February 2014). Recover the U.S. tax on the Canadian return with Form T2209, Federal Foreign Tax Credits.

Claiming U.S. health costs

    To do this, she’ll need:

  • › If your client, or her spouse or dependants, needs medical help while away, she can claim some expenses.
  • › Any 12-month period ending in a given tax year is eligible.
  • › Expenses must be more than the lesser of $2,152 or 3% of net income.

Sources: CRA, Jennifer Horner, senior manager, tax, at BDO Canada.

Compiled by Jessica Bruno

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