Do winter stays in the US make a Canadian a US tax resident?

What decides it?

Your US days, counted under the substantial presence test. If you meet the test, what matters next is whether you were in the US under 183 days this year. "This year" means the year you are checking.

A US resident is generally taxed on worldwide income, including Canadian pensions and investments, and files Form 1040 like a US citizen (Pub. 519).

How do you count your days?

You meet the test if you were physically in the US on at least (IRS):

1. 31 days this year, and
2. 183 days over three years, counting all of this year's days, 1/3 of last year's and 1/6 of the days two years ago.

Keep fractions of a day; do not round them (26 CFR 301.7701(b)-1(c)(1)).

If you spend the same number of days each year, the total is 1.5 times that number:

Count days, not months: December 1 to March 31 is 121 days, 122 in a leap year.

The count covers the 50 states and DC, not US territories such as Puerto Rico (Pub. 519, chapter 1).

Which days don't count?

A day counts if you are in the US at any time during it. Arrival days, departure days and a day trip to shop across the border each count as a full day. Pub. 519 excludes these days; 26 CFR 301.7701(b)-8(a) sets which need a form:

The medical exclusion does not cover a condition you knew about before arriving, a return trip for treatment of a condition from an earlier stay, or days beyond a reasonable time to arrange leaving once you could. Form 8843 is due by the Form 1040-NR due date. If you do not file it on time, you cannot exclude those days, unless you show by clear and convincing evidence that you took reasonable steps to learn of the requirement and significant steps to meet it.

Days as a regular crew member of a foreign vessel, under a NATO visa, or as an "exempt individual" (certain diplomats, students, teachers, trainees and athletes at charity events) also do not count. See Pub. 519 for their conditions.

Under 183 days this year: how can you be treated as a nonresident?

Claim the closer connection exception on Form 8840. Even if you meet the test, you are not treated as a US resident for the year if all of these hold (Form 8840 instructions):

• You were in the US fewer than 183 days this year.
• Your tax home was in Canada for the whole year. It is your main place of work; if you do not work, it is where you regularly live (26 CFR 301.7701(b)-2).
• You had a closer connection to Canada than to the US: more significant contacts there, such as your permanent home, family, cars and belongings, bank, driver's licence, where you vote, the country you list as your residence on forms, and whether you gave US banks or brokers Form W-8BEN (foreign status) or Form W-9 (US person) (Pub. 519).

You cannot use the exception if, during the year, you held a green card, applied or took other steps to apply for one (a relative or employer filing an immigrant petition for you counts), or had an application pending to change to permanent resident status (26 CFR 301.7701(b)-2(f)).

How do you file Form 8840?

• Each person, including each spouse, counts their own days and files their own form.
• File a new form for each year you meet the test. One year's form does not carry over.
• Attach it to Form 1040-NR if you file one. If you do not have to file a US return, mail it on its own to the address in the instructions.
• It is due by the Form 1040-NR due date, including extensions. For a calendar year, that is June 15 of the following year if you had no US wages subject to withholding, or April 15 if you did (Pub. 519, chapter 7).
• The form asks for your US days in each of the three years, so keep a record of your travel dates.

What if you miss the deadline?

The Form 8840 instructions say that if you do not file Form 8840 on time, you are not eligible for the exception and may be treated as a US resident. This does not apply if you show by clear and convincing evidence that you took reasonable steps to learn of the filing requirement and significant steps to comply. The same instructions note that someone who cannot use the exception may still qualify as a nonresident under a treaty (next section).

183 days or more, or no Form 8840: what then?

Form 8840 is not available at 183 days or more, or if you missed its deadline or do not meet its conditions. You are then a US resident under US law. If you are also a resident of Canada under Canadian law, the tie-breaker in Article IV of the Canada–US tax treaty decides where you reside for the treaty, in this order:

1. The country where you have a permanent home available to you.
2. If you have one in both countries or neither, the country where your personal and economic ties are closer (your centre of vital interests).
3. If that cannot be settled, the country where you have a habitual abode (the treaty does not define the term).
4. If you have one in both or neither, the country of your citizenship.
5. If you are a citizen of both or neither, the two countries' tax authorities decide by mutual agreement.

Keeping a home available to you in the US may mean step 1 does not settle it. Each step depends on your facts.

If the tie-breaker makes you a resident of the US, you file as a US resident. Canada then treats you as not resident in Canada from that time (Income Tax Act 250(5)). Canada's rules for people leaving Canada apply, including a deemed sale of certain property and Canadian withholding tax on certain Canadian income paid to you (CRA Folio S5-F1-C1, 1.38).

How do you claim treaty residence?

If the treaty makes you a resident of Canada and you claim treaty benefits, file Form 1040-NR, figure your tax as a nonresident, and attach Form 8833 (Pub. 519). It is due by the Form 1040-NR due date, including extensions (26 CFR 301.7701(b)-7). If you would not otherwise have to file a US return, you must still file one to make this disclosure. Form 1040-NR needs a US taxpayer number: if you have no Social Security number, apply for an ITIN on Form W-7 and attach it to the front of the return (Form W-7 instructions). Failing to disclose a treaty position may bring a penalty of US$1,000 (Form 8833).

What does the treaty not change?

You are still treated as a US resident for purposes other than figuring your US income tax (26 CFR 301.7701(b)-7). Examples:

• FBAR (FinCEN Form 114, the yearly report of accounts outside the US): treaty provisions do not change your residency for the FBAR (IRM 4.26.16.2.1.2). If your accounts outside the US total more than US$10,000 at any time in the year, you may need to file one (FinCEN). See Foreign account reporting.
• Companies outside the US you own: you still count as a US resident when deciding whether a non-US company is controlled by US owners (a "controlled foreign corporation") (26 CFR 301.7701(b)-7(a)(3)). If you own shares in a Canadian company, US filings may apply: Cross-border tax.
• Form 8938: you do not report foreign assets on it for the part of the year covered by Form 1040-NR, provided you file Form 1040-NR with Form 8833 on time (Form 8938 instructions).

Do states use the same test?

Not necessarily. A state with an income tax sets its own residency rules. Arizona, for example, presumes that someone who spends more than nine months of the year in the state is a resident (A.R.S. 43-104).

Example

Illustrative figures. Anne is retired in Ontario and winters in Florida. She has no US job or US income. Her home, family, bank, driver's licence, health coverage and vote are in Ontario. She usually spends 120 days a year in the US; this year she stayed 150.

• Test met: 150 is at least 31, and 210 is at least 183.
• Exception available: 150 is under 183, her tax home and ties are in Ontario, and she has taken no green card steps. She files Form 8840 on its own by June 15 of the following year, and again each year she meets the test. If her husband travelled with her, he counts his own days and files his own form.
• If she had stayed 120 days this year: 120 + 40 + 20 = 180. She would not meet the test, so no exception is needed.
• If she had stayed 190 days this year: Form 8840 would not be available. She would look to the treaty tie-breaker and, if it makes her a resident of Canada, file Form 1040-NR with Form 8833.

Different for you?

• You are a US citizen: see Americans living in Canada.
• You hold a green card, or this year you applied or took other steps to apply for one (including a petition filed for you): Form 8840 is not available. Cross-border tax.
• You have US rental income or are selling US property: other US filings may apply. Cross-border tax.
• The treaty tie-breaker points to the US: Cross-border tax.
• You missed Form 8840 in past years: Cross-border tax.
• You are using the treaty route and have accounts outside the US: Foreign account reporting.
• You work in the US or commute to a US job: Cross-border tax.