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US Government tracking cross border travel


June 1st. 2015

 

Have you ever wondered if you should be filing US Form 8840 (Closer Connection Exception Statement for Aliens)?  This is a simple 2 page form that should be filed by anyone spending significant time in the US on an annual basis, to ensure you are not inadvertently caught in the US tax net.

 

The challenge, of course, is remembering how many days you spent in the US during each of the last 3 years.  Well, there is good news and bad news:  The US government is doing the tracking for you.

 

https://i94.cbp.dhs.gov/I94/request.html is a US government website that will tell you exactly how many days you spent in the US each year.

As a reminder, under US law, anyone who spends more than 183 days in the US under the formula below, is considered a US resident for tax purposes and subject to US tax on worldwide income, as well as all of the foreign asset reporting requirements affecting US citizens and residents.  Many of these foreign asset reporting requirements carry $10,000 non-filing penalties (per form, per year).  If you meet the physical presence test, you are subject to all of these reporting requirements unless you file Form 8840 on a timely basis.

Physical Presence Test:

  1. Did you spend 31 days in the US last year? – If yes, continue to question 2.
  2. Add:
    1.  the number of days spent in the US last year +
    2. 1/3 of the number of days spent in the US the year before +
    3. 1/6 of the number of days spent in the US in the year before that

Is the total 183 or more? – If yes, you are a US resident for tax purposes for last year.Your tax return or Form 8840 is due by June 15.

For example, if you spent 120 days in the US in 2014, 126 days in 2013, and 126 days in 2012, the formula adds to (120 + 42 + 21) = 183.  Form 8840, or a US tax return and related filings must be filed by June 15, 2015.

 

Form 8840 is simple and straightforward, and simply confirms you have closer connections to Canada (or another country of primary residence) and establishes that you are exempt from US tax filings other than those applicable to non-resident aliens.

If you have questions about your possible US reporting requirements, please contact us.


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