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Crossing the border? You could owe US taxes

In 2015, Canada and the US began sharing information on who leaves and enters each country. This allows for progress in tracking down any security threats.  It also means that each country knows exactly how many days an individual spends in either country.

The Internal Revenue Agency (IRS) will be interested to know how many days a person spends in the US since US law requires anyone considered a "resident" to pay tax. 

While most Canadian entrepreneurs will only see the enhanced movement of goods and services due to the sharing of information, some will now have to count the days they spend in the US.

Anyone staying in the US too long could receive a tax bill from the IRS.

To know if you may be exposed, check out the IRS test to determine residency. The "Substantial Presence Test" gives timelines and conditions under which a person may be liable for taxes. By limiting the number of days in the US to those allowed under the test, you will likely see little or no change in your cross-border activity.

Questions?  Contact a CFIB Business Counsellor at 1-888-234-2232 or cfib@cfib.ca.

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