How long you visit the United States matters
Are you a snowbird? Do you spend our cold, dark, wet, winters down south? If so, you need to be aware that there is a very specific rule that will be applied to your travels. This rule, or test, is known as the “Substantial Presence Test” (SPT), which is based on the total time spent in the United States.
This newsletter was written to help provide some additional clarity around the SPT and how to avoid the common misconception that if you spend 182 days or less in the United States each year, you’re within the allowable limit; The reality is more complex than that.
As a non-U.S. citizen or permanent resident, the Internal Revenue Service (IRS) will use the SPT to determine if you qualify as a “resident for tax purposes” or a “non-resident for tax purposes”. Under the SPT, you are considered a resident of the United States if you spend 183 days or more in any particular year. However, you will also fall under the SPT if during the last three-year period, including the current year, your total number of days exceeds the 182-day limit.
When calculating these 182 days, as mentioned, it’s not as simple as just adding up the days spent in a single year. The calculation actually goes back two years. As an example, in order to figure out how many days you have spent in the United States in 2019 you would need to count every day spent in the United States between January 1, 2019 and December 31, 2019. Then you’ll need to add one-third of your total days last year (2018), plus one-sixth of your total days in 2017.
Using this formula, should your total number of days spent in the United States exceed 182, you’ll be considered a “resident alien” and will be required to file a U.S. individual income tax return. However, should your total number of days exceed 182 days, there may still be a way for you to avoid failing the SPT. Given that you have a closer connection to Canada, you can file IRS Form 8840 which is also known as the “Closer Connection Exception Statement for Aliens”. By filling out this form, it confirms with the IRS that you have closer personal, social, and economic connections to Canada rather than the United States. This results in you not being taxed as a U.S. resident. You must file this form by April 15th each year if your total number of days in the last three years (including the current year) exceeds 182 days. However, if you spent more than 182 days across the border in the current year, you won’t be able to file Form 8840.
If you have any questions regarding the SPT or how to calculate the number of days you have spent in the United States, feel free to reach out to our office and our team would be more than happy to assist or point you in the direction of an accountant who has experience dealing with this topic.
Calculating the number of days spent in the United States
When calculating the total number of days spent in the United States, you are treated as present on any day you are physically in the country, at any time during the day. However, there are exceptions to this rule. The following days are not included in the SPT:
- Days you commute to work in the U.S. from a residence in Canada or Mexico, if you regularly commute from Canada or Mexico.
- Days you are in the U.S. for less than 24 hours, when you are in transit between two places outside the United States.
- Days you are unable to leave the U.S. because of a medical condition that develops while you are in the United States.