Each year, there are new tax rules, most of which are not disseminated to the public in a convenient or effective way. However, as you have no doubt heard many judges and police officers say, “Ignorance of the law does not exonerate you from the law.” While this may seem unfair, it is an unfortunate truth of the ever-changing tax code.
This is especially true of “snowbirds,” those people who live in the colder climates of the northern United States and Canada during warmer months, then migrate south as winter descends.
Many snowbirds believe the income taxes of their southern refuges do not apply to them, because only a certain number of carefully-counted days are spent in their warm weather paradise.
Unfortunately, this is not always true. The best way to avoid tax court and punitive IRS fees is to be full apprised of the laws, even as they change each year.
However, how does the typical snowbird gain access to and understand of the ever-changing, new tax rules? The list below provides some vital information and tips.
- Very few snowbirds intentional violate United States or Canadian tax codes. However, this is little protection when a law is accidentally borken. Not knowing the law has absolutely no effect on the level of penalties one can incur. Always research the most recent tax laws in both Canada and the United States before taking a long-term vacation to the southern parts of the US.
- Tax laws can often be confusing, even for the most astute travelers. Since they also change year by year, turning to a tax expert like a certified professional accountant (CPA) or a tax attorney is an excellent option. These people are trained and undertake constant research when it comes to the tax codes of different provinces, territories, states, and countries. They can help you preemptively solve any problems that could occur.
- Another option, especially those snowbirding to the southern climes of the US is to contact the Internal Revenue Service (IRS) directly. A phone call, online consultation, letter, or email can help elucidate many of the less-than-clear laws that have just been instated. However, keep in mind that inquiries to the IRS can take some time, especially during tax season. Be sure to request information well ahead of time (before the end of February, at least) and follow through with your inquiries.
- The United States Government has been progressively instituting closer border inspections of individuals. This agreement between the US and Canada began in 2011. In 2015, the US Department of Homeland Security has been working in concert with the Canada Revenue Agency and Employment and Social Development Canada to strengthen background checks of those moving back and forth across the border. By 2020, this will ensure both governments will save nearly $1 billion a year in benefits to which snowbird are not entitled.
To use a sports metaphor: the best defense is a good offense. Speak with tax attorneys, tax bureaus on both sides of the border, CPAs, and trusted financial advisers to assure you aren’t a snowbird trapped in the cage of unforeseen revenue penalties.