Substantial Presence Test

Depending on the interpretation of the web page or article you read, and if you are a Snowbird or long-term traveller into the U.S., their Substantial Presence Test might affect you. It might cost you money.

The purpose of the U.S. substantial presence test is, as we understand it, a method that the U.S. Internal Revenue people can use to determine if your  time spent in the U.S. can be considered as a “substantial presence”, and if so, by golly, they’d very much like to tax you, if they could.

The substantial presence test is not to be used by U.S. citizens, but only us “aliens” from the North, us Canadian Snowbirds.

Substantial Presence Test

Are you going to be in the United States for more than 31 days in the present year?

Have you traveled and spent time in the U.S. last year, and the year before?

If so, you may want to calculate if you have had a substantial presence in the U.S. Here’s the simple way.

  1. How many days are you going to be in the U.S. this year? (For example we’ll use: 95)
  2. How many days were you in the U.S. last year? (For example we’ll use: 85)
  3. How many days were you in the U.S. the year before last? (For example we’ll use: 106)

The math:

  1. This year – 95 days
  2. Last year – 85 days divided by 3 = 29 (we round up for safety’s sake)
  3. Year before last – 106 days divided by 6 = 18 (again we rounded up for safety’s sake)

Total days = 142 according to this formula that is provided by the IRS.

Did we have a substantial presence then?

No, we did not, so we don’t have to worry about having to pay U.S. income tax.

Why?

According to the I.R.S., the total number of days over the 3 years has to be 183 (when using the formula) for a traveller that has a substantial presence in the U.S., and as such is potentially a U. S. income tax payer.

 And if I have a Substantial Presence?

If you time in the U.S. exceeds the 183 days based on using their formula, all is not lost. You can, and certainly should, file an 8840 form.

What the heck is an 8840 form? IRS Form 8840

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Jim SmithlisesnowwillyDon S. Recent comment authors
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lise
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lise

I have 2 questions:
1- Does the day that we arrived in US (lets say by plane) count as a day in the US, and is it the same as we return home
2-Did the littles interest that are in a checking account (less than $1.00) count as an income source ?

Don S.
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Don S.

Do you have a number to get answers about form 8840 from us government. If you know and are sure of it would be appreciated cause I’m getting different answer on this topic.
We are Canadian and are planning to go to the states in October or November and return by plane to Canada at Christmas for about two weeks. Are these days counted towards my USA days.

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