Snowbird Tax Guide: How Spending Winters in the US Affects Your Canadian Tax Residency

Every winter, hundreds of thousands of Canadians spend several months in the southern US. Most assume that as long as they do not stay more than six months, they have no US tax obligations. That assumption is partially right and partially dangerous. The US does not use a simple 183-day rule. It uses a weighted three-year formula called the substantial presence test, and a Canadian who spends 120 days per year in the US for three consecutive years can trigger US tax residency without ever staying six months in a single year.

How does the substantial presence test work?

The test uses a rolling three-year window. For the current year (say 2025), the calculation is:

• Days present in the US in 2025 (count every day, including arrival and departure days)
• Plus one-third of the days present in 2024
• Plus one-sixth of the days present in 2023

If the total is 183 or more, and the individual was present in the US for at least 31 days in the current year, they meet the substantial presence test and are treated as a US tax resident.

What is the closer connection exception?

The closer connection exception allows an individual who meets the substantial presence test to avoid US tax residency if they can demonstrate a closer connection to a foreign country (Canada) than to the US. The exception is claimed by filing Form 8840 (Closer Connection Exception Statement for Aliens) with the IRS.

The requirements:

1. The individual was present in the US for fewer than 183 days in the current year (this is a hard 183-day cap for the current year alone, separate from the three-year weighted test).
2. The individual maintained a “tax home” in Canada during the year (their principal place of business or, if no business, their regular place of abode in a real and substantial sense).
3. The individual had a closer connection to Canada than to the US during the year.

The IRS evaluates the closer connection based on a list of factors:

• Location of the individual’s permanent home (owned or long-term rented)
• Location of personal belongings (furniture, clothing, jewelry)
• Location of social, political, cultural, or religious organizations the individual participates in
• Location of the individual’s driver’s license
• Location where the individual votes
• Country of residence designated on forms and documents
• Location of banks where the individual conducts personal banking
• Location where the individual’s family lives

A Canadian snowbird who keeps their primary home in Canada, maintains Canadian bank accounts, holds a Canadian driver’s license, votes in Canadian elections, belongs to Canadian clubs and organizations, and has their personal belongings in Canada has a clear closer connection to Canada. The Florida condo (even if owned) is a secondary residence, not the primary one.

How do you file Form 8840?

Form 8840 is filed with the IRS by the due date for a nonresident alien return (June 15, or the extended due date if an extension is filed). It is not filed with a tax return because the whole point is to avoid being treated as a US tax resident (and therefore avoid the need to file a full US return).

The form asks for:

• Days present in the US for the current year and the two prior years
• The country to which the individual claims a closer connection
• The address of the individual’s permanent home in Canada
• A list of factors demonstrating the closer connection (checked boxes for home, family, belongings, organizations, etc.)

The form is purely informational. It does not require any tax payment. But failure to file it by the deadline can result in the closer connection exception being denied, which would trigger US tax residency and the obligation to file a full return.

The IRS can challenge the closer connection claim. If a Canadian snowbird has purchased a US home, moved most of their belongings to the US, obtained a US driver’s license, or established deep US social ties, the closer connection to Canada may not hold. The test is not mechanical; it is a facts-and-circumstances determination.

What about the treaty tiebreaker?

Even if a Canadian snowbird meets the substantial presence test and does not file Form 8840 (or fails the closer connection test), the treaty provides a tiebreaker rule under Article IV. If an individual is a tax resident of both Canada and the US under each country’s domestic law, the treaty resolves the dual residency by looking at:

1. Permanent home (if available in both countries, then…)
2. Centre of vital interests (personal and economic relations closer to)
3. Habitual abode
4. Citizenship

For most snowbirds, the permanent home and centre of vital interests are in Canada, so the treaty tiebreaker favors Canada. The individual is treated as a Canadian resident for treaty purposes and can claim treaty benefits to reduce or eliminate US tax.

But relying on the treaty tiebreaker instead of Form 8840 is a worse position. The treaty tiebreaker does not eliminate the US filing obligation entirely; the individual must still file a US return (Form 1040-NR) with Form 8833 (Treaty-Based Return Position Disclosure), and the filing is more complex and more expensive. Form 8840 is simpler: one form, no tax return, done.

What about US-source income?

Even if a snowbird successfully avoids US tax residency (through Form 8840 or the treaty), they may still have US filing obligations if they earn US-source income:

US rental income: A Canadian who owns a Florida condo and rents it out while they are in Canada earns US-source rental income. This income is taxable in the US on Form 1040-NR. The snowbird can elect under IRC 871(d) to treat the rental income as effectively connected income, allowing deductions for expenses, depreciation, and mortgage interest. Without the election, the US taxes gross rental income at 30% (reduced to 15% by the treaty, but with no deductions).

US investment income: Interest from US bank accounts is generally exempt from US tax for nonresident aliens (IRC 871(i)). US-source dividends are taxable at 15% under the treaty (domestic rate: 30%). Capital gains from the sale of US property (other than real property) are generally not taxable to nonresidents who are present in the US for fewer than 183 days in the year.

Sale of US real property (FIRPTA): If the snowbird sells the Florida condo, FIRPTA applies. The buyer withholds 15% of the gross sale price under IRC 1445, and the snowbird files a US return to report the gain and claim a refund of any excess withholding. The gain is the difference between the sale price and the adjusted basis (original cost plus improvements, minus depreciation if the property was rented).

What about Canadian tax on US property?

Canadian residents are taxed on worldwide income, including gains from the sale of US property. If the snowbird sells the Florida condo, the gain is reported on the Canadian return (Schedule 3, converted to CAD). A foreign tax credit is claimed for the US tax paid on the same gain (Form T2209).

For rental income, the Canadian return includes the US rental income as worldwide income, with a foreign tax credit for US tax paid.

The result: US-source real property income and gains are taxed in both countries, with foreign tax credits in Canada preventing double taxation. The effective tax rate ends up being the higher of the two countries’ rates (usually Canada’s).

Day counting rules

Getting the day count right is critical. The IRS counts any day (or part of a day) during which the individual is physically present in the US. This includes:

• The day of arrival and the day of departure (both count)
• Days spent in transit through the US (a layover at a US airport counts if you clear customs)
• Days when you are unable to leave the US due to a medical condition that arose while in the US (an exception exists for days you intended to leave but could not due to a medical condition, under the “medical condition exception” in Reg 301.7701(b)-3(c))

Days that do not count:

• Days spent commuting from a residence in Canada to work in the US (if you live in Windsor and work in Detroit, commuting days do not count if you regularly commute)
• Days when you are an “exempt individual” (students on F/J visas, teachers/researchers on J visas, foreign government-related individuals, professional athletes competing in charitable events)

Documentation: Keep a travel log. Note every date of entry to and departure from the US. Save boarding passes, passport stamps (though US-Canada land border crossings do not always produce stamps), toll records, credit card statements with US transactions, and cellphone records showing US usage. If the IRS challenges your day count, contemporaneous records are the best defense.

What about state tax?

Some US states impose income tax on part-year residents or nonresidents with state-source income:

• Florida: No state income tax. The most common snowbird destination, and the simplest from a state tax perspective.
• Arizona: Taxes nonresidents on Arizona-source income. Rental income from an Arizona property is taxable. If you spend enough time in Arizona to be a part-year resident, Arizona taxes your worldwide income for the resident portion of the year.
• California: Taxes nonresidents on California-source income. California’s definition of “resident” is aggressive: if you are present in California for other than a temporary or transitory purpose, California considers you a resident for that period.

Snowbirds who spend time in states other than Florida should check the specific state’s residency and filing rules. The state analysis is separate from the federal substantial presence test.

What about health insurance?

Provincial health insurance coverage (OHIP in Ontario, MSP in BC, etc.) generally requires the insured to be physically present in the province for a minimum number of days per year (typically 153 days in Ontario). A snowbird who spends more than 212 days outside Ontario (365 minus 153) in a 12-month period risks losing OHIP coverage.

Separately, the snowbird should carry private travel health insurance for the US stay. Canadian provincial health plans cover very little outside Canada, and US healthcare costs are high. A medical emergency in Florida without private insurance can be financially devastating.

The health insurance question is not a tax issue, but it interacts with the residency analysis. If a snowbird loses provincial health insurance due to extended absence, the CRA may view that as a factor weakening the closer connection to Canada.

Related guides:

• Form 8840: the closer connection exception for snowbirds, a step-by-step walkthrough of the form, the filing deadline, and the evidence the IRS looks for when evaluating a closer connection claim

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.