Got Snowbirds? Check these tax changes

By Terry F. Ritchie | July 25, 2014 | Last updated on September 15, 2023
3 min read

On October 31, 2013 the Internal Revenue Service released its annual inflation adjustments for more than 40 tax provisions, including the 2014 tax rate schedules and other rates, exemptions and changes.

This was provided for in Revenue Procedure 2013-35, which can be found here.

Advisors who have U.S. citizens as clients, or those who help Canadian clients who own U.S. property or shares, should take a look at the U.S. estate tax exemption for 2014.

Read: 5 tips to help cross-border clients

The basic exclusion amount will be US$5.34 million, up from $5.25 million in 2013. The maximum estate tax rate of 40% for estate taxable assets exceeding $1 million still applies for the 2014 tax year.

For your typical snowbirds—Canadian clients who are not U.S. residents for income, gift or estate tax purposes—a married couple who personally owns U.S. real property, but don’t have a joint worldwide estate of greater than US$10.68 million ($5.34 million exclusion amount multiplied by 2), then no U.S. estate tax exposure would exist at the death of the first spouse.


If the value of the personally held U.S. real property or shares exceeded US$60,000, a U.S. non-resident estate tax return (IRS Form 706NA) would still have to be filed. But after applying the exemption and additional marital credit available under the Canada-U.S. Treaty, no estate tax would exist.

Depending on the ultimate worldwide estate of the surviving spouse, though, additional planning to reduce or eliminate U.S. estate tax for the surviving spouse at death should be considered.

Read: Handle U.S. estate tax exposure

The annual exclusion for gifts remains at US$14,000 for 2014.

An annual gift from a U.S. citizen to their non-citizen spouse however increases to US$145,000 for 2014 from US$143,000.

The lifetime gift tax exclusion continues to be linked with the U.S. estate tax exemption. So for 2014, that will be $5.34 million. Any annual gifts exceeding the annual exclusion of $14,000 to anyone other than someone’s non-U.S. citizen spouse ($145,000), will require the filing of a U.S. Gift Tax Return (IRS Form 709). And, the lifetime gift tax exclusion will be reduced by the amount of taxable gift.

For advisors who have U.S. resident clients who would qualify for the foreign earned income exclusion on their Canadian source employment income, the exclusion rises to US$99,200 for 2014 from US$97,600 in 2013.

U.S. marginal tax rates—10%, 15%, 25%, 28%, 33%, 35% and 39.6%–are the same in 2014. However, the taxable income thresholds have increased for 2014.

Read: Don’t forget obscure U.S. tax deadlines

The U.S. standard deduction, which is used by U.S. taxpayers who don’t itemize, rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly.

The personal exemption rises to $3,950 from $3,900 from 2013. However, the phase-outs to both itemized deductions and personal exemptions still apply for U.S. taxpayers with high levels of adjusted gross incomes.

Lastly, the 3.8% Medicare surtax on net investment income still applies in 2014.


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Terry F. Ritchie, R.F.P, TEP is licensed to practice before the IRS as an Enrolled Agent. He is Director of Cross-Border Wealth Management for Cardinal Point Wealth Capital (

Terry F. Ritchie