IRS Provides Relief for Stranded Canadian Snowbirds
The emergence of the COVID-19 pandemic created significant challenges for Canadian travelers as millions of Canadians were caught out of Canada when the official travel advisory was issued. Many travel restrictions were imposed, airlines eliminated and reduced many flight options, and some travel insurance companies even cancelled policies or provided a 10 day window to return to Canada. This unprecedented action put many Canadians in a tough position with few options.
In particular, these restrictions made it difficult for the hundreds of thousands of Canadian snowbirds who spend their winters in the southern United States. As the limited number of flights filled up, many were stuck with few options to return.
This has created concerns for Canadian who typically use their allotted time in the US each year with little flexibility to extend their stay. Canadians are typically allowed to stay in the United States for up to 6 months each year as a visitor without triggering any IRS tax consequences. This is monitored by the IRS Substantial Presence Test using a 3 year calculation of days spent in the United States. Canadians who exceed the amount of days under the Substantial Presence Test are considered U.S. residents for tax purposes and may be required to pay tax in the U.S.
But finally, some good news for Canadian snowbirds who need to stay in the U.S. longer than anticipated due to the COVID-19 pandemic. On April 21, 2020, the IRS released Revenue Procedure 2020-20, which allows up to 60 days that can be excluded when calculating the number of days you spent in the U.S. under the Substantial Presence Test.
The Revenue Procedure provides that an individual who intended to leave the United States but was unable to do so may exclude up to 60 calendar days of presence in the United States for purposes of applying the substantial presence test.
The COVID-19 Emergency Period is a single period of up to 60 consecutive calendar days selected by an individual starting on or after February 1, 2020 and on or before April 1, 2020 during which the individual is physically present in the United States on each day.
The Emergency Travel Disruption includes any of the following broad travel disruptions experienced by an individual, regardless of whether such individual was infected with the COVID-19 virus:
- severe restrictions in movement, including by order of government authorities;
- cancelled flights and disruptions in other forms of transportation;
- shelter-in-place orders, quarantines, and border closures; and
- feeling unsafe traveling due to recommendations to implement social distancing and limit exposure to public spaces.
At this time, the U.S. has not offered any specific relief for Canadian snowbirds who violate U.S. immigration laws and regulations by spending too much time in the U.S. All Canadians are encourages to monitor their allowable days in the United States for both the IRS and US Immigration. Learn more about counting your days in the US here: Counting Your US Visitor Days
