44
www.snowbirds.org
CSA TRAVEL INFORMATION GUIDE
Travelling to the United States –
Daily questions about the United
States
U.S. Internal Revenue Service Form 8840 - Closer Connection
Exemption Statement for Aliens
Canadian residents who winter in the United States are technically subject to U.S. federal income tax
if they meet or exceed a specific number of days in the U.S. in any one year. This “substantial presence
test” is based on a calculation that is completed on the 8840 form related to your travel to the U.S.
over the last three consecutive years.
It is important to note that becoming a U.S. taxpayer is not conditional on receiving U.S.-based
income but also by being physically present in the United States for more than a certain time each
year. Taxation in the United States is based on world-wide income just as it is in Canada by the
Canada Revenue Agency.
Generally speaking, if you consistently spend four (4) months or more each year in the United
States, your total score on the “substantial presence test”makes filing the form mandatory to avoid
paying U.S. income tax. If your three-year calculation score falls below the threshold, it is your choice
whether to submit the form or not.
To avoid U.S. taxation, IRS form 8840 (Closer Connection Exemption Statement for Aliens) needs to be
filed annually – by the appropriate deadline – with the U.S. Internal Revenue Service.
The form acknowledges that you met or exceeded the “substantial presence test” but are not going
to file a U.S. income tax return due to the fact that you maintain “a closer connection” to a foreign
country, such as Canada, where you pay annual income tax.
You will be considered to have a “closer connection”with a country other than the U.S. based on the
location of:
•
•
Your permanent home
•
•
Your family
•
•
Your personal belongings, such as cars, furniture, clothing, and jewellery
•
•
Your current social, political, cultural, or religious affiliations
•
•
Your business activities (other than those that constitute your tax home)
•
•
The jurisdiction in which you hold a permanent full driver’s licence
•
•
The jurisdiction in which you vote
It does not matter whether your permanent home is a house, an apartment, or a furnished room. It
also does not matter whether you rent or own it. It is important, however, that your home is available
at all times, continuously, 24-hours per day seven days per week, and not solely for short stays.
The “substantial presence test” includes a mathematical calculation based on your travel to the U.S. in
the previous three years. For example, for the 2011 tax year, the calculation is based on: