How to Fill Out Form 8840 for Canadian Snowbirds
As the seasons change and the weather cools down in Canada, many Canadians choose to spend their winters in warmer climates, often referred to as “snowbirds.” If you’re a Canadian snowbird and need to file U.S. tax returns, you’ll likely encounter Form 8840, the “Closer Connection Exception Statement.” This form allows you to claim an exception from the substantial presence test for U.S. tax purposes. Here’s a step-by-step guide on how to fill out Form 8840 for Canadian snowbirds.
Step 1: Gather Required Information
Before you begin filling out Form 8840, gather all the necessary information. This includes your personal details, such as your name, address, and Social Security number (or Taxpayer Identification Number). You’ll also need information about your U.S. and Canadian income, as well as the number of days you were present in the United States during the tax year.
Step 2: Complete Part I – Personal Information
In Part I of Form 8840, you’ll need to provide your personal information. Enter your name, address, and Social Security number (or Taxpayer Identification Number). If you’re married, you’ll also need to indicate whether you’re filing jointly or separately.
Step 3: Complete Part II – Closer Connection Exception
Part II of Form 8840 is where you’ll claim the Closer Connection Exception. To qualify for this exception, you must meet one of the following conditions:
– You are a resident of Canada and have a closer connection to Canada than to the United States.
– You have a closer connection to a foreign country than to the United States.
– You have a closer connection to a U.S. possession than to the United States.
To prove your closer connection to Canada, you’ll need to provide information about your Canadian residence, employment, and other factors that demonstrate your stronger ties to Canada.
Step 4: Complete Part III – Presence in the United States
In Part III, you’ll need to calculate the number of days you were present in the United States during the tax year. This is crucial, as the Closer Connection Exception is based on the substantial presence test. You’ll need to provide the total number of days you were present in the U.S. and any days you were present in the U.S. as a crewmember on a vessel or aircraft.
Step 5: Sign and Date the Form
Once you’ve completed all the required sections of Form 8840, sign and date the form. If you’re filing jointly, both you and your spouse must sign the form.
Step 6: Attach Required Schedules and Statements
If you’re required to attach any additional schedules or statements, such as Schedule C or a statement explaining your closer connection to Canada, make sure to include them with your Form 8840.
Step 7: File Your Tax Return
Finally, file your completed Form 8840 with your U.S. tax return. You can file your tax return electronically or by mail, depending on your preference.
By following these steps, you’ll be able to successfully fill out Form 8840 for Canadian snowbirds and ensure that you meet the requirements for the Closer Connection Exception. This will help you avoid potential penalties and interest on your U.S. tax liability.
