IRS Form 8840 – In an increasingly globalized world, many foreign nationals spend significant time in the United States for work, travel, or family reasons. However, this can trigger U.S. tax residency rules under the substantial presence test, potentially subjecting them to taxation on worldwide income. IRS Form 8840, known as the Closer Connection Exception Statement for Aliens, offers a way to avoid this by proving stronger ties to a foreign country. This article explains everything you need to know about Form 8840, including eligibility, filing requirements, and tips for compliance. Whether you’re a Canadian snowbird, an international student, or a business traveler, understanding this form can help you maintain nonresident alien status and minimize U.S. tax obligations.
What Is IRS Form 8840 and Why Does It Matter?
IRS Form 8840 is a statement used by non-U.S. citizens (aliens) to claim an exception to the substantial presence test, which determines U.S. tax residency. The substantial presence test considers you a U.S. resident for tax purposes if you are physically present in the U.S. for at least 31 days in the current year and a weighted total of 183 days over the current and prior two years (counting the current year at full value, the prior year at 1/3, and the year before that at 1/6).
By filing Form 8840, you assert that despite meeting this test, you have a “closer connection” to one or two foreign countries, meaning your primary ties—such as home, family, and finances—are elsewhere. This exception prevents you from being treated as a U.S. resident, avoiding taxes on global income and complex reporting like FBAR or FATCA. It’s particularly relevant for Canadians, Mexicans, and other frequent U.S. visitors who don’t intend to become tax residents.
Failing to file on time can disqualify you from the exception, leading to potential audits or penalties, unless you can prove reasonable efforts to comply. For the 2025 tax year, the form was updated as of April 2025, reflecting ongoing IRS efforts to clarify international tax rules.
Who Needs to File Form 8840?
Not every foreign visitor must file Form 8840—only those at risk of U.S. tax residency but qualifying for the exception. Key criteria include:
- Meeting the Substantial Presence Test: If your U.S. days add up to 183 or more under the weighted formula, but you were present fewer than 183 days in the current year (e.g., 2025).
- Non-Green Card Holders: You cannot file if you’re a lawful permanent resident (green card holder) or have applied for one.
- Tax Home Abroad: Your main place of business or employment must be in a foreign country for the entire year.
- Exempt Individuals: Students, teachers, or certain visa holders (e.g., F, J, M) may need Form 8843 instead for exemptions, but if the substantial presence test applies, Form 8840 could be required.
Common filers include Canadian snowbirds wintering in Florida or Arizona, who must file annually to avoid U.S. taxation. If you’re from a treaty country, you might use Form 8833 for treaty benefits instead, but consult a tax professional.
Eligibility for the Closer Connection Exception
To qualify, you must demonstrate a closer connection to a foreign country (or two, if your tax home changed mid-year) than to the U.S. This involves proving facts like:
- Personal Ties: Where your family, permanent home, and personal belongings are located.
- Financial Ties: Bank accounts, investments, and income sources primarily abroad.
- Legal and Social Ties: Voter registration, driver’s license, and health insurance in the foreign country.
For two countries, you need to show you met tax residency rules in each during the relevant periods and filed (or will file) returns there. Days excluded from the substantial presence test include commuting from Canada/Mexico, brief transits, medical stays, or crew duties.
If ineligible for this exception, explore income tax treaties or other relief options outlined in IRS Publication 519.
How to Fill Out and File IRS Form 8840?
Form 8840 is straightforward but requires detailed information. Download the latest version from the IRS website: https://www.irs.gov/pub/irs-pdf/f8840.pdf. Here’s a breakdown:
Key Sections of the Form
- Part I: General Information: Include your name, U.S. taxpayer ID (if any), visa type, citizenship, passport details, and U.S. days present over three years.
- Part II or III: Closer Connection Details: Specify your tax home and foreign country(ies). For two countries, explain the change and verify tax residency.
- Part IV: Significant Contacts: List locations of your home, family, vehicles, belongings, banks, business, licenses, voting, documents, income, investments, and health plans. Attach explanations if needed.
Sign only if filing standalone; otherwise, attach to your return.
Filing Process
- Attach to Form 1040-NR: If you have U.S.-sourced income requiring a return.
- Mail Separately: If no return is needed, send to the IRS Service Center in Austin, TX, by the due date (June 15, 2026, for 2025 tax year, or with extensions).
- Electronic Filing: Not available; must be paper-filed.
Each individual files separately—no joint filings.
Deadlines, Penalties, and Common Mistakes
- Deadline: Same as your U.S. tax return (April 15 or June 15 for nonresidents) or extensions. Late filing voids the exception unless you show “clear and convincing evidence” of compliance efforts.
- Penalties: No direct fine for late Form 8840, but losing the exception could mean owing taxes on worldwide income, plus interest and penalties for underpayment.
Avoid these pitfalls:
- Underreporting U.S. days—count all partial days.
- Claiming without a foreign tax home.
- Ignoring green card applications, which disqualify you.
- Failing to attach verifications for tax residency in foreign countries.
For complex cases, use tools like TaxAct or consult an international tax expert.
Final Thoughts on Managing U.S. Tax Residency as a Nonresident Alien
IRS Form 8840 is a vital tool for foreign nationals to preserve nonresident status and avoid unnecessary U.S. taxes. By carefully documenting your closer connections abroad, you can comply with rules while focusing on your global lifestyle. Always use the most current form and consult IRS Publication 519 or a professional for personalized advice. Staying informed ensures smooth cross-border tax management—download Form 8840 today and file on time to protect your status.