Canadian residents going down south

This page offers information for Canadians who spent part of the year in the United States (U.S.), for example, for health reasons or on vacation, and still maintained residential ties in Canada. It will give you information about certain income tax requirements that may affect you.

It does not apply if you:

  • are a U.S. citizen;
  • have been granted permanent resident status by the United States Citizenship and Immigration Services (USCIS), (granted a "green card"); or
  • have residential ties to a country other than the U.S. and Canada.

Topics

How Canadian income tax laws apply

If you spend part of the year in the U.S., for example, for health reasons or on vacation, and you maintain residential ties in Canada, we usually consider you to be a factual resident of Canada.

As a factual resident, we tax your income as if you never left Canada. As such, you should continue to:

  • report all income you receive from sources inside and outside Canada for the year, and claim all deductions that apply to you;
  • claim federal and provincial or territorial non-refundable tax credits that apply to you;
  • pay federal tax and provincial or territorial tax where you keep residential ties in Canada;
  • claim federal and provincial or territorial refundable tax credits that apply to you; and
  • be eligible to apply for the goods and services tax/harmonized sales tax (GST/HST) credit and any related provincial credits.

Completing your Canadian return

As a factual resident, you will find most of the information you need to complete your return in the General Income Tax and Benefit Guide and the forms booklet for your province or territory.

However, this section includes more information that will help you complete your return.

If you are a factual resident of Canada, complete Form T1248, Information About Your Residency Status (Schedule D), and attach it to your return.

Identification

When you complete the "Identification" area on your return, do not enter a date of entry or departure. Only immigrants and emigrants use these spaces. If you enter a date of entry or departure, we may reduce your claim for federal and provincial or territorial non-refundable tax credits.

On the line called "Enter your province or territory of residence on December 31, 2015", enter the name of the province or territory where you maintained residential ties.

Do you hold foreign property?

You may have been in one of the following situations:

  • at any time in 2015, you owned or held foreign property with a total cost of more than CAN$100,000;
  • in 2015 or a previous year, you loaned or transferred funds or property to a non-resident trust; or
  • in 2015, you received funds or property from, or you were indebted to, a non-resident trust under which you were a beneficiary.

If you are in any of these situations, special rules may need to be applied. For more information, see your income tax guide.

Income

As a factual resident, you will continue to pay tax on your world income (income from all sources both inside and outside Canada) as though you had lived in Canada for the whole year. Report all amounts in Canadian dollars.

Did you receive an NR4 or NR4-OAS information slip?

An NR4 or NR4-OAS information slip shows income from Canada (such as old age security pension, Canada Pension Plan benefits, and Quebec Pension Plan benefits).

As a factual resident, you should not receive slips that begin with NR, because they apply only to non-residents. If you received this type of slip, report the income on your Canadian return. If the slip also shows that tax was withheld from the income, include it on line 437.

Note

If you received an NR4 or NR4-OAS, contact the issuer of the slip to correct your residency information.

Did you receive U.S. lottery or gambling winnings?

This income is not taxable in Canada, so you do not have to report it on your Canadian return. Additionally, you cannot claim a credit for any taxes withheld on such winnings.

Did you have rental income from property in the U.S.?

If so, keep records to support your income and expense claims. For more information, see Guide T4036, Rental Income.

Federal tax and credits

To calculate your federal tax and the credits that apply to you, use Schedule 1, Federal Tax.

Federal non-refundable tax credits

Can you claim medical expenses paid in the U.S.?

You can claim eligible expenses that were paid for yourself, your spouse or common-law partner, and certain other individuals who were dependent on you for support. You can claim eligible medical expenses paid in any 12-month period ending in the year, if they were never claimed before in any other year.

For more information, see lines 330 and 331 in your General Income Tax and Benefit Guide, or see Income Tax Folio S1-F1-C1, Medical Expense Tax Credit.

Did you pay premiums to private health-services plans?

Generally, you can claim the premiums paid to a private health-services plan as a medical expense on your return.

For more information, see line 330 in your General Income Tax and Benefit Guide, or see Income Tax Folio S1-F1-C1, Medical Expense Tax Credit.

Did you donate to U.S. charities?

If you are including U.S. income on your Canadian return, you can claim a credit for donations to U.S. charities that would be allowed on a U.S. return. The total donations to U.S. charities you can claim cannot be more than 75% of the net U.S. income you report on your Canadian return.

Can you claim a federal foreign tax credit?

If you paid U.S. tax on U.S. income that you are reporting on your Canadian return, you may be able to claim a federal foreign tax credit to reduce your Canadian federal tax payable.

For information on how to claim the foreign tax credit, see line 405 in your General Income Tax and Benefit Guide. For more information, see Form T2209, Federal Foreign Tax Credits, or Income Tax Folio S5-F2-C1, Foreign Tax Credit.

Note

The province or territory where you maintained your residential ties may offer a similar tax credit. For more information, see the forms book for that province or territory.

Provincial or territorial tax

You have to pay tax to the province or territory where you maintained residential ties.

Provincial or territorial non-refundable tax credits

The province or territory where you maintained residential ties also offers non-refundable tax credits. For more information, see the forms book for that province or territory.

Refund or balance owing

Provincial or territorial tax credits

For information about the credits available in the province or territory where you maintained residential ties and how to claim them, see the income tax guide and the forms book for that province or territory.

Your provincial or territorial health-care coverage

Before you go to the U.S., you should verify if your provincial or territorial health-care coverage will continue while you are outside of Canada.

In any case, you may want to get supplementary health-care coverage.

For more information, contact the ministry responsible for health care in your province or territory. See the provincial or territorial government listings in your Canadian telephone book for the address and telephone number of your provincial or territorial Ministry of Health office.

How U.S. tax laws apply

As a Canadian resident who spends part of the year in the U.S., it is important for you to determine how the U.S. tax laws apply to you. You are considered either a resident alien or a non-resident alien of the U.S. for U.S. tax purposes.

Generally, resident aliens are taxed in the U.S. on income from all sources inside and outside the U.S., and non-resident aliens are taxed in the U.S. only on income from U.S. sources. Therefore, it is important for you to determine if you are a resident alien or a non-resident alien.

For more information on resident and non-resident aliens and whether or not you have to file a U.S. tax return, visit the Internal Revenue Service (IRS). You will also find information on the tax implications of receiving U.S. gambling or lottery winnings, owning U.S. real property, and the transferring of a deceased person's taxable estate on their website. For more information about U.S. tax laws, visit How to contact the IRS.

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