Chapter 06 · Topic 06.2 · Substantial Presence Test
Closer Connection Exception (Form 8840) for Canadians
Form 8840 (Closer Connection Exception) protects a Canadian from SPT if they stay under 183 days in the current year, maintain tax home and closer ties to Canada, and haven't applied for green card. Deadline June 15 (extends to October 15).
Direct answer · 60-second summary
The 60-second version
The Closer Connection Exception (Form 8840) lets a Canadian who exceeds the weighted SPT threshold but stays under 183 days in the current year retain US non-resident tax status. The form must be filed each year by June 15 (extendable to October 15 via Form 4868). It's the primary defense for typical snowbirds.
- Strict cap: fewer than 183 days in the US in the current year.
- Tax home in Canada (primary place of business).
- Closer ties to Canada (housing, family, banking, license, etc.).
- No green-card application pending.
- Form 8840 filed on time.
Acronyms used in this guide
- IRS — Internal Revenue Service
- SPT — Substantial Presence Test (IRC §7701(b))
- IRC — Internal Revenue Code
- LPR — Lawful Permanent Resident
- PR — Permanent Resident (green card holder)
The 5 cumulative conditions
- US presence < 183 days in the current year (calendar, not weighted).
- Tax home in a foreign country all year — your principal economic activity is in Canada.
- Closer connection to one foreign country (Canada) than to the US.
- No application pending for Lawful Permanent Residence (green card).
- Form 8840 filed before the deadline.
If even one condition fails, the exception does not apply — you become a US tax resident.
Tax home: what it is
The tax home is defined by IRS as the principal place of business or employment, regardless of where the family home is. For a retired snowbird with no employment, it's the regular abode. For a consultant, it's where they do most of their business.
The tax home must be maintained all year in Canada (per Treasury Reg §301.7701(b)-2(c)). A short absence does not break the tax home as long as the principal residence stays in Canada.
Closer connection factors
IRS examines several factors to determine closer ties to Canada vs. US:
- Permanent home in Canada (property title, lease).
- Family (spouse and children in Canada).
- Personal belongings (furniture, car, pets).
- Social activities (clubs, organizations, places of worship).
- Business activities (consulting, board memberships).
- Political activities (voting, active citizenship).
- Official documents (CA driver's license, CA passport, provincial registration).
- Primary bank account in Canada.
- Permanent mailing address in Canada.
No single factor is decisive — IRS weighs the whole. The majority must lean toward Canada.
Form 8840: complete and file
The form is short (2 pages). Key sections:
- Part I: general information (name, SSN/ITIN if any, Canadian address, US address if applicable).
- Part II: US days of presence over 3 years + weighted SPT calculation.
- Part III: tax home (principal place of business/abode during the year).
- Part IV: closer connection — answer 13 questions about Canadian ties.
- Part V: signature and date.
Deadline and where to send
If you have other US income (rentals, sales, interest), Form 8840 attaches to your Form 1040-NR — deadline June 15. If no US income, mail alone to: Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301-0215.
With Form 4868 extension, filable until October 15.
Common mistakes
- Exceeding 183 days in the current year = CCE unavailable. Treaty tie-breaker remains possible but more complex.
- Not filing Form 8840 = default, IRS may treat as US residency.
- Having a green card or pending application = CCE automatically unavailable.
- Ambiguous tax home: if you spend more time in FL than CA, IRS may requalify your tax home as US.
- Filing late without extension = exception denied.
Official forms mentioned (direct links)
Links to the latest known version of each form as of the last review date. Verify you are using the current version before any filing — it is your responsibility. CanadaFlorida.com is not responsible for your use of these links.
- Form 8840 — Closer Connection Exception Statement. https://www.irs.gov/forms-pubs/about-form-8840
- Form 1040-NR. https://www.irs.gov/forms-pubs/about-form-1040-nr
- Form 4868 — Extension to file. https://www.irs.gov/forms-pubs/about-form-4868
- IRS Publication 519. https://www.irs.gov/publications/p519
- Treasury Reg §301.7701(b)-2 (Cornell). https://www.law.cornell.edu/cfr/text/26/301.7701(b)-2
Every figure, rate, threshold, and deadline in this guide is drawn from a verifiable primary source listed at the bottom of the page. The article is updated whenever the underlying rules change, with a fresh review date stamped at the top.
Sources and references
Public sources verified as of the last review date.
- IRS — Closer Connection Exception. irs.gov/closer-connection
- IRS Publication 519 — U.S. Tax Guide for Aliens. irs.gov/p519
- IRC §7701(b)(3)(B) — Closer Connection Exception (Cornell). cornell.edu/§7701
- Treasury Reg §301.7701(b)-8 — Procedural rules. cornell.edu/§301.7701(b)-8
- Form 8840 instructions. irs.gov/pdf/f8840
Logical next step
If the 183-day current-year threshold is breached, Treaty Tie-Breaker remains your option.
Disclaimer
This guide is for educational purpose only. Figures, rates, thresholds, timelines and rules are drawn from public sources at the date shown and may change.
For any concrete decision, consult a licensed US immigration attorney and a cross-border tax attorney.