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Closer Connection Form 8840
TO FILE OR NOT TO FILE
The Canadian Snowbird Association recommends that all snowbirds who
consistently spend four (4) months or longer in the United States each year
file an 8840 Closer Connection Formwith the United States Internal Revenue
Service.
The form, in essence, acknowledges that you meet or exceed the
“substantial presence” test, BUT are not going to be filing a U.S. income tax
return since you maintain “a closer connection” to a foreign country, such as
Canada, where you will be paying annual income tax.
To determine if you are obligated to file the 8840 in order to be exempt from
U.S. taxation, despite the fact that you qualify to pay taxes due to your status
as a resident alien, complete the calculation below. It could save you a lot of
grief at some point in the future.
Remember:
If you are a current CSA annual or lifetime member, the new
8840 form for this year will be sent to you with your membership renewal in
early May 2012.
If you are not a CSA member, you can visit the Canadian Snowbird
Association website at
d click on the 8840 link to
download the form on your own.
Filing deadline (mail to IRS, not to the CSA office):
April 15, 2012 – if you do have U.S. income
June 15, 2012 – if you do not have U.S. income
Note:
One 8840 form per person, NOT one per couple!
Take the Substantial Presence Test!
A. Total days in the U.S. for 2011
B. Total days in the U.S. for 2010
x 0.333 (1/3)
C. Total days in the U.S. for 2009
x 0.166 (1/6)
Total of A + B + C =
If the sum of A + B + C is
less than 183
, then completing and submitting the 8840
form is optional.
If the sum of A + B + C is
greater than 183
, then the 8840 form
must
be submitted
to the IRS.
2012 Federal Budget
Raises Duty-Free Limit
Beginning June 1, 2012, travellers
returning to Canada will be allowed to
spend $200 in a 24-hour period without
paying taxes.
The current duty-free limit for
24 hours
is $50.
The limit for 48 hours
will be bumped
up to $800, which is double the current
limit of $400.
The limit after 7 days
changed the least,
going from $750 to $800.
Every year, Canadians take 30 million
overnight trips outside of Canada, and the
federal government says that it wants to
streamline the cross-border process for
Canadians who shop abroad.
24 Hours
$200
48 Hours
$800
7 Days
$800
CRA Pinches
Snowbird Budgets
The Canadian Snowbird Association
has been receiving reports from
individuals that their deduction for
emergency travel medical insurance
from their taxable income has been
reversed by the Canada Revenue
Agency. If this has happened to you,
please advise the CSA immediately
and write to your MP to express your
dissatisfaction with this practice.