A number of Canadians who own second homes in Vermont have been carefully counting the days they spend here.
They’re afraid that, if they spend more than 182 days here in a 12-month period, they won’t be allowed to cross the border again.
It turns out those fears are largely unfounded, despite rumors that have caused a wave of panic among some second-home owners.
“The issue of how long someone can stay depends on circumstances,” said Leslie Holman, a Burlington-based immigration lawyer and a member of the American Immigration Lawyers Association.
Under U.S. immigration law, foreign visitors can spend up to six months or 182 days of a 12-month period in the U.S. as tourists; longer stays require authorization from the U.S. government.
The U.S. Department of Homeland Security Customs and Border Security tracks border crossings between the U.S. and Canada. Additionally, Canadians who spend large amounts of time here might be asked for proof that they are full-time Canadian residents.
But the 182-day policy is more of a benchmark than an absolute test, Holman said.
“The issue isn’t the amount of time they spend here; it’s residence,” Holman said. “They want to make sure that someone’s primary residence isn’t in the U.S.”
Canadians need to be able to prove that the bulk of what they do — work, school, family ties — is based in Canada.
“I tell people to be proactive at the border,” Holman said. “If you’re going to visit (the U.S.) every week, from Thursday through Sunday, perhaps you want to stop at the border and explain who you are and say, ‘I have a vacation home in Stowe. Here’s my temple, my library card, my mahjong club.’”
Retired Canadians are more likely to experience delays crossing the border because they don’t have pay stubs or other proof of employment.
“That’s where you look at health club, doctors’ bills, all the indicia of what someone does in their normal life,” Holman said.
The 182-day rule has been on the books for decades, but it’s been more strictly enforced over the last 10 years.
“This has always been what’s on the books, but entrances and exits are tracked more carefully than they ever were in the past,” Holman said. “We do it for security reasons.” The terrorist attacks of Sept. 11, 2001, “had a profound impact on how we look at the border and who comes in. It changed our concerns. It changed what we do.”
Part of the problem, Holman said, is that the Homeland Security rules are applied equally to all visitors, whether entering the U.S. regularly from Canada or flying in from Europe for a vacation.
“Laws aren’t just tailored for our border neighbors,” Holman said. “It’s very different than a person flying in from Germany. We are each others’ biggest trading partners. Our economy benefits from Canadian people who vacation here. They can’t own a home here without paying taxes.”
Canadians who pass through the border are subject to having their cell phones and computers searched to see if they’ve been working while in the U.S., but such searches are fairly rare, Holman said.
Holman said none of her clients have sold their vacation homes because of the increased border security.
“I have clients who are more aware of their time,” Holman said. “There’s no question that things are stricter now. What we advise our clients who have vacation homes is to make sure they can show primary residence is Canada.”
The majority of Canadians who travel to Vermont aren’t given a hard time, though glitches can happen, Holman said.
“Sometimes incorrect determinations are made,” Holman said. “And, if you are here nine months out of 12, well, perhaps there is the issue of: Is this your primary residence?”
Tax implications
If a Canadian’s visit to the U.S. extends more than 182 days in a calendar year, he or she is considered a “resident alien” for tax purposes and must file a regular U.S. income-tax return with the U.S. Internal Revenue Service.
The Canadian can avoid this by filing Form 8840, the Closer Connection Exception Statement for Aliens, which asks a series of questions to determine residency.
Most Canadian citizens will not have to pay U.S. income tax because of a tax treaty between the two countries, but the IRS does collect taxes on income generated through U.S. investments, including rental income.
Failure to file a U.S. tax return could result in hefty fines, even if no taxes were owed.
The IRS crosschecks several databases, including property-tax records and vehicle registration records, to ensure that Canadians who are required to file U.S. tax returns do so.
The IRS shares its tax database with the Vermont Department of Taxes so it can determine if any state income taxes are owed.
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