Foreign Snowbirds in U.S., IRS wants You!

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Steve CDN

Well-known member
Jan 31, 2005
8840 Closer Connections
W8-BEN Certificate of Foreign Status

8840 ? Closer Connection Exemption Statement for Aliens

Canadian residents and other foreign visitors who winter in the U.S. are technically subject to U.S. income tax if they exceed a specific number of days (based on a calculation on the form 8840) in the U.S. in any one year.

To avoid U.S. taxation, IRS form 8840 (Closer Connection Exemption Statement for Aliens) needs to be filed annually with the U.S. Internal Revenue Service.

The form, in essence, acknowledges that you met or exceeded the "substantial presence test" BUT are not going to be filing 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 will be paying 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 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, and not solely for short stays.

Canadians and other foreign visitors should pro-actively complete and file a new 8840 form each year with the U.S. Internal Revenue Service. This is a positive acknowledgment that you are entering the U.S. each year as a "temporary visitor for pleasure" and are complying with U.S. tax laws. A photocopy of each year's completed form should also be carried, when crossing the border into the U.S. the following year, to indicate that you are entering the U.S. as a temporary visitor from Canada.

A copy of the current year's 8840 form can be downloaded from the U.S. Internal Revenue Service website by Clicking Here
W8-BEN ? Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding

If you have a bank account with a financial institution in the U.S. that earns interest on deposits, then you should complete IRS form W8-BEN (Certificate of Foreign Status) with your U.S. financial institution to avoid possibly having 30% of any interest earned on your deposits withheld and sent to the IRS.

As Canadian residents are aware, bank interest earned on their accounts (regardless how small) is considered a form of taxable income when completing each year's Canadian income tax return with the Canada Revenue Agency (CRA) ? formerly known as Revenue Canada.

Similarly, Canadian banks are required to withhold 30% (the maximum income tax rate) of any bank interest they pay to foreigners on their Canadian bank accounts because non-Canadians rarely receive T5 slips and complete a Canadian income tax return. Non-Canadians must, in turn, complete a Canadian income tax return in order to receive any refund.

In the U.S., a similar situation exists for U.S. banks and credit unions paying interest earned on the accounts of Canadians (foreigners).

IRS form W8-BEN is a withholding tax exemption form that the bank or credit union must keep on file to explain to the U.S. Internal Revenue Service why they did not hold back any bank interest paid to you or conversely did not issue you the U.S. equivalent of a Canadian T5 income tax slip.

Unlike the 8840 form that is sent directly to the IRS each year, the W8-BEN form is kept on file by the financial institution for IRS audit purposes and is valid for up to three years
If you open a U.S account there is no problem as long as you open a non interest bearing checking account,  Instead of paying interest these accounts will provide you with various services at no charge.  That way there is no need to withhold any tax or to report your account to the IRS.

This is perfectly legal and avoids getting snowbirds like us into the IRS system, which can become problematic.
Hi Steve,

Your post made me stop and consider my situation: that of a sometime snowbird with no bank accounts in the States and doing no business with US clients, but doing income earning consulting work from my motorhome for Canadian clients.

In my case, if I were a regular snowbird with the other conditions above prevailing for three months each year, (and not making any visits to the US during 2005 other than the snowbird trip) it seems that I would pass the first element of the test but fail the second since I was present for only 135 days (90 + 30 + 15), and hence fail the complete test, and therefore would not have to file the 8840. 

Am I reading the test correctly?  Is the income earning work from my motorhome for Canadian clients a factor?

This begs the questin, so for how long can I go snowbirding each year (the same number of days each year) if I'm not visiting the US at other times of the year?  If I understand the test this suggests that four months is a good round number. 

I'm not looking to entrap you, given that these posts just might be monitored ???, how long do you head to Florida each year?  Or is it that you fail the overall exception test for other reasons?



In what Province is your residence?

Steve, we're residents of British Columbia.



The length of time one can be out of their Province and still retain Medicare benefits depends on the Province.  I believe B.C. is 6 months.  IOW you must be in B.C. 6 months of the year to retain benefits.

The formula for snowbirds in the U.S. is calculated over the last three years you have been in the U.S. and as I recall that total must not exceed 183 days, otherwise you have to file with the IRS. 

In our most recent ground border crossings, the U.S. customs officer scanned our passports, so it would seem closer attention is being paid to visitors' activities.

Is the income earning work from my motorhome for Canadian clients a factor?

This is beyond my understanding, and should be clarified with a competent adviser.

how long do you head to Florida each year

Ontario allows retired residents to be out of Province 7 months, so we can remain in FLA the max based on the U.S. requirement formula we're talking about and still have a bit of time left over for other trips.
Hi Steve,

Thanks for your further response.

In my case, I think the critical factor is the cost of getting medical coverage while in the US.  Between age and medical history the cost is now approaching exorbitant :).


Between age and medical history the cost is now approaching exorbitant .

I understand Doug!  Several of our friends have complex medical histories and have had to cut back on their time spent in the U.S.  Hope you find a suitable solution.

This is an old post but likely still applicable.  So if I understand correctly if you visit Florida year after year as a snowbird you must file this B8840 form??

Also, Ontario residents can stay 7 months in the US each yr?  If we were to go to Florida for 6 or 7 months would we still be able to enter the US for multiple weekend trips to the US?

I also read in another of Steve's posts (legal PDF document in Visitors to the US) that as a Canadian you can only be out of country for 153 days per year to receive your govt pensions is this correct?

I searched prior to posting but want to be sure I understand for my parents who would like to go to Florida from November to April but they would also like to make frequent weekend trips to the US during the summer months.

Thanking you all in advance for your assistance.
Geese  Steve, you had me worried there for a moment... :eek:
Thought I was going to have to spend winter here on the wet coast.. ;D instaed of AZ.
    Tom, is it possible to add this string to the library under "Visitors to the USA".  It addresses some of the points I was trying to make in a recent string when a UK couple were wanting to cross into Canada to retain visitor status.  It effects our stay, with a big IRS hook over our backs if we overstay the 6 month limit.

Remember that if you're Canadian, you must report on your worldwide income!!! If you pay taxes in the US, you can claim a foreign tax credit to offset the Canadian taxes.

Residency is a very complicated thing. If you are unable to determine without a doubt, I'd recommend a professional opinion.

[quote author=Hfx_Cdn]Tom, is it possible to add this string to the library under "Visitors to the USA".[/quote]

Hi Ed and thanks for the suggestion; Don't know why we hadn't thought of it before  :-[

Let me create (copy/paste) a draft for review; This is an old discussion, and things can change over time.
The first draft is in our library here. Hopefully, Steve and others can verify the accuracy and add any missing information.
This is an old post but likely still applicable.  So if I understand correctly if you visit Florida year after year as a snowbird you must file this B8840 form??

Also, Ontario residents can stay 7 months in the US each yr?  If we were to go to Florida for 6 or 7 months would we still be able to enter the US for multiple weekend trips to the US?

I believe you are limited to 182 days out of province (6 months) in order to preserve your Medicare status. It can vary by province but I think most are now at 182 days.  We arrange to stay about 155 days on our winter sojourn (Nov to April). That  leaves us room for those summer visitations. Be sure you have sufficient emergency medical insurance for that long period. For example, 1/2 day in emergency, treatment etc, cost my insurance company over 21000$ last winter.  (I had a 1000$ deductible).

You may also  be limited by the visa you are issued by US Immigration service. You are not required to have a 'paper visa' but the B1 visa is 'issued' to you verbally as the officer allows you to enter the USA. It may be limited, plus or minus, to the time period you stated as you entered. 

And Yes, after several years, technically, you have to fill out the 8840 form. A mathematical calculation based over 3 years of visits will establish whether or not it is required for you. I do know of some longtime snowbirds who have 'never heard' of the form though.

Remember When you pass the Immigration people, your passport is scanned so they "know where you are" and that applies to both sides of the border should they feel the need. I know Quebec can and do check your absences for Medicare purposes...."should they feel the need".

A good source for information on this is The Canadian Snowbird Association. For the small membership fee of 20$ you have access to all the current info.
    Thank you Tom, it may not be fully current, but it does give one a starting point.  However, as far as I have been told, the US Laws haven't changed.  As for Canadian medical, it is still the case that each province governs alowable time out of province, and they do vary.  As I read the NS website, it allows regular out of province of up to 6 months, but periodic times of a year, and a caveat that allows people to do volunteer work out of province, and retain medical coverage for up to 2 years.

Thanks for the additional comments Stu and Ed. I won't be signing up for, but it sounds like a good resource for Canadian snowbirds.
OK...maybe I'm being a little dishonest here do they catch you? The gvmnt cant send 20 million undocumented (note the PC) workers back south so how will they catch our Canadian friends???

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