November Newsletter

The weather today is a harsh reminder of what winter looks like after we have had an incredible fall.  I hope you have some plans for enjoying your family and friends over the holidays and maybe even down south for awhile (if your are PLEASE read below). Our family has a few trips planned and is very much looking forward to them.

October ended up being refreshing positive for all our portfolios after two negative months back to back.  I will say that our client meetings this past week have been very positive as most clients think their accounts are in much worse shape and are pleasantly surprised at their one year rates of return. Canada made back some ground last month so the TSX(Canada) has a net negative return for the year of -5.8%.  The S&P500(USA) is now up 15.6% while Europe has a gain of 14.8% this year.  Japan continues to lead this year with a gain in their stock market of 24% so far this year.  These returns are all expressed in Canadian dollars and therefore include our gains from a declining Canadian Dollar.  As of the end of October our 12 month return on our conservative portfolios is now close to long term averages while our more aggressive portfolios continue to exceed our expectations for long term results.  (source:Fidelity Investments:Datastream)

Are you a SNOWBIRD, do you know one??
You could be setting yourself up for trouble with US taxes and not even know it.  Most people know your not supposed to be in the USA for more than 183 days. However, most people also do not realize how this calculation is done. You are supposed to file tax returns in the United States IF:

The sum of the following totals at least 183 days:

+ total days in the U.S. in the current year (e.g. 2015),  for our example January 1 to March 31 and November 1 to December 31 is about 150 days

+ 1/3 of days in the U.S. in the prior year (e.g. 2014), for our example January 1 to March 31 and November 1 to December 31 is about 150 x .333 = 50 days

+ 1/6 of days in the U.S. in the second preceding year (e.g. 2013). for our example January 1 to March 31 and November 1 to December 31 is about 150 x .16 = 25 days

Therefore, this individual has been in the US for tax purposes: 150+50+25=225 days. This is, of course, greater than 183 days and they should be filing IRS Form 8840 to assert a closer connection to a different country, due by April 15 or June 15 of the following year.
Basically, if an individual is in the U.S. for 120 days in each of the last three years they would be very close to meeting this test (120 + 40 + 20 = 180 days) and should consider U.S. filings.
You may be thinking, how come I have never had trouble and I haven't heard of anyone having trouble?

In the past, neither Canada nor the USA had a good way of tracking your time spent in the USA. This has all changed, below is my actual travel data to the USA from their border security website:  Here

Travel History:

Arrival/DepartureDatePort of Entry/Exit
Departure2014 August 20
Arrival2014 May 08POR - PORTAL
Departure2014 January 07DUL - DULUTH, MN
Arrival2014 January 06DLH - DULUTH INTERNATIONAL
Arrival2013 November 10MSP - MINNEAPOLIS/ST. PAUL, MN
You might want to check yours out as well, and tell anyone snowbirding to be careful. US taxes are complicated so ensure you get professional, personalized advice.