Every year, many Quebec retirees prefer to spend the cold season with our neighbors to the south. With the emergence of teleworking, many employees are also leaving Quebec to work remotely when their employer authorizes them to do so.
But there may be tax implications and even health insurance coverage.
Here’s what you need to know about it.
Tax residency and earned income
Josée Cabral, senior tax specialist at H&R Block, reminds us that determining tax residency is important if you are away from Quebec for long periods of time.
“If your tax residence is in Quebec, you must file a tax return here. But in some situations you may also have to report to the US tax authorities, the Internal Revenue Services (IRS),” she explains.
For example, if you own a condo in Florida that you rent out when you don’t live there, this income will have to be declared to the IRS as well as to the Quebec and Canadian tax authorities.
Under the tax agreements, however, you will not have to pay tax in both countries, only in the United States.
Also note that if you rent for periods of less than six months, you must also pay sales tax to the State of Florida and, depending on the county, an additional tourist development tax.
Are you selling your condo? In this case, the capital gain must be declared to the IRS as well as in Quebec and Canada.
“If you live in the United States the majority of the time, you could still be considered a factual resident as long as you have certain ties here, such as a spouse, a bank account, etc. “says Josée Cabral. You will then have to file tax returns with our neighbors to the south, but also in Quebec and Canada. Thanks to the tax agreements, however, you would not be taxed twice on the same income. It is the Canada Revenue Agency that will determine your status, for this you must send them forms NR74 or NR73 (Determination of Residence Status).
Eligibility for credits and RAMQ
Your tax residence also depends on your eligibility for several credits and payments such as family allowances and for
children, GST and solidarity credits.
Therefore, do not forget to notify the government if you are leaving the country for an extended period. You may no longer be entitled to these payments and if you continue to receive them despite everything, the tax authorities will catch up with you and you will have to reimburse them, in addition to penalties.
183 day rule
As for the Quebec Health Insurance Plan (RAMQ), to continue to have access to it, you must not be absent for 183 days or more, consecutive or not, during the same calendar year (from January 1 to December 31).
Don’t expect to go under the radar of the authorities, because the Canada Border Services Agency and its equivalent in the United States keep an eye on things and exchange information.
Advice
- The RAMQ provides citizens with a tool for calculating absences. This will help you determine if you risk losing your insurance coverage if you leave Quebec: ramq.gouv.qc.ca/en/citizens/absence-quebec/calculation
- Periods are not counted in the calculation: the day of departure and the day of return, as well as absences of 21 days or less.
- There are certain exceptions to the 183-day rule, for example if you are hospitalized outside Quebec or if you are providing assistance to a hospitalized person. Exceptions also apply when you go to work, study or do an internship outside Quebec. In addition, once every seven years, it is permitted to be absent for more than 183 days. To learn more, visit this RAMQ page: ramq.gouv.qc.ca/en/citizens/absence-quebec/exceptions-rule-presence
- In certain situations, you will have to notify the RAMQ of your extended absence. Check if this is your case here: ramq.gouv.qc.ca/en/citizens/absence-quebec/inform-ramq-depart-quebec