Form 8840: Closer Connection Exception Statement for Aliens

A non-U.S. citizen’s tax responsibilities in the United States hinge on their classification as either a “resident alien” or a “nonresident alien.” Resident aliens are typically taxed on their worldwide income, similar to U.S. citizens. The Internal Revenue Service (IRS) uses the Substantial Presence Test to determine this status by measuring an individual’s physical presence over time. The “closer connection exception” is a provision that allows individuals who meet this test but maintain significant ties to another country to be treated as nonresidents for tax purposes.

Qualifying for the Closer Connection Exception

The closer connection exception is for those who meet the Substantial Presence Test (SPT). An individual meets the SPT if they are physically present in the U.S. for at least 31 days during the current year and a total of 183 days during a three-year period. This total is calculated by adding all days present in the current year, one-third of the days from the first preceding year, and one-sixth of the days from the second preceding year. Reaching 183 days under this formula generally makes an individual a U.S. resident for tax purposes.

To claim the exception, an individual must meet three conditions. First, they must have been present in the U.S. for fewer than 183 days during the current year. Second, they must have maintained a “tax home” in a foreign country for the entire year. A tax home is the area of your main place of business or, if you have no regular place of business, the place where you regularly live.

The third condition is demonstrating a “closer connection” to that foreign country than to the U.S. The IRS evaluates this by looking at various facts and circumstances, including:

• The location of your permanent home
• The location of your immediate family
• The location of personal belongings, such as cars and furniture
• The location of your primary business activities
• Where you hold a driver’s license
• Where you are registered to vote
• The country designated as your residence on official documents

However, certain actions will automatically disqualify an individual. You cannot claim this exception if you have applied for lawful permanent resident status (a “green card”) or have a pending application to change your immigration status to that of a lawful permanent resident. This action indicates an intent to reside permanently in the U.S., contradicting the basis of the closer connection claim.

Information and Documentation for Form 8840

To claim this relief, you must file Form 8840, Closer Connection Exception Statement for Aliens. You should always consult the IRS website for the most current version of the form and its instructions to ensure you have the correct information.

Part I of the form gathers general information, such as your name, U.S. taxpayer identification number, and foreign address. You must also list your country of citizenship and the foreign country where you maintained your tax home and claim a closer connection.

Part II requires you to list the number of days you were physically present in the U.S. during the current and two preceding tax years. The IRS uses these numbers to verify that you meet the Substantial Presence Test and were present for fewer than 183 days in the current year.

Part III is where you provide evidence of your closer connection to a foreign country. This section contains a series of detailed yes/no questions that correspond directly to the factors the IRS uses to evaluate your ties. You will be asked to identify the location of your permanent home, where your family resides, and where your personal belongings are kept. Part IV, titled “Significant Contacts,” requires you to provide more detailed, narrative information to support the answers given in Part III, such as the address of your foreign home and details about any driver’s licenses you hold.

How to File Your Statement

Generally, you must file Form 8840 by the due date for filing Form 1040-NR, which is June 15 of the year following the tax year in question. This deadline is important and applies even if you do not have enough U.S. source income to require filing a tax return.

The method for submitting Form 8840 depends on whether you are also required to file a U.S. income tax return. If you are filing a Form 1040-NR, you must attach the completed Form 8840 to your tax return and mail it to the address specified in the Form 1040-NR instructions. If you do not have a requirement to file a U.S. tax return, you must still submit the standalone Form 8840 by mailing it to the address in the form’s instructions.

The IRS does not send a confirmation of receipt for Form 8840, so you should keep a complete copy of the signed form for your records. Failing to file the form on time can result in being treated as a U.S. resident for tax purposes, which could subject your worldwide income to U.S. taxation.