Increased Border Monitoring

You may need to file a tax form in the US if you spend too much time in the country.

You may need to file a tax form in the US if you spend too much time in the country.

A significant change is coming this year for people who regularly cross the border into the United States.

In the past, neither the Canadian nor US governments has been able to independently track the number of days that somebody has spent in either country.

Starting on June 30, under the Entry/Exit Initiative of the Perimeter Security and Economic Competitiveness Action Plan, both governments will be working together to share this information with each other.

This may have an effect on the requirement of certain Canadians to file tax return in the United States. You may recall in a previous edition of our newsletter, we noted that individuals would need to complete a US tax form if they spent on average more than four months per year over the last three years in the United States.

In order to avoid filing a complete US income tax return, you need to file an 8840 form, the Closer Connection Exception Statement for Aliens, with the IRS.

In previous years, many people may have not filed the form, assuming the US government would have difficulty determining whether they had spent enough days in the US. With the increased diligence, people may need to rethink this assumption.

For those living near the border, keeping track of the amount of time spent in the US may be difficult, particularly if they cross the border every week for gas or groceries.

For example, a person may think that they do not need to file the form because they spent only three months on average in the US over the last three years. However, they also crossed the border every week to shop while they were in Canada. Over a period of nine months, this would result in another 39 days spent in the US, and they would then be over the threshold.

Because of the difficulty in tracking these dates, you can make a request to Canada Border Services to obtain this information.

The 8840 form is due by June 15th every year.