IRS Form 8840

Foreign nationals who spend significant time in the United States may face an important federal tax question: Are they considered U.S. residents for income tax purposes, or can they remain nonresidents under the applicable tax rules?

The answer can affect which income is taxable, which tax return must be filed, and what information must be reported to the Internal Revenue Service (IRS).

IRS Form 8840, Closer Connection Exception Statement for Aliens, allows eligible foreign individuals to claim an exception to the substantial presence test when they maintain stronger personal and economic connections to a foreign country than to the United States.

For foreign workers, international business owners, consultants, and individuals who frequently travel to the United States, understanding Form 8840 can help prevent tax residency mistakes. AIM Financial provides tax preparation information to help taxpayers understand federal filing requirements and recognize when professional assistance may be appropriate.

What Is IRS Form 8840?

Form 8840 is used by eligible foreign individuals to claim the closer connection exception to the U.S. substantial presence test.

Generally, the IRS uses two main tests to determine whether a foreign individual is a U.S. resident for federal income tax purposes:

  • The green card test.
  • The substantial presence test.

The substantial presence test generally considers how many days an individual spends in the United States during the current year and the two preceding years.

However, a person who meets the substantial presence test may still qualify for the closer connection exception if specific conditions are satisfied.

Form 8840 documents the individual’s claim that their tax home and closer personal connections remained in a foreign country rather than the United States.

It is important to understand that Form 8840 does not automatically establish nonresident status. The taxpayer must meet the eligibility requirements and file the form correctly and on time.

Who May Need to File Form 8840?

Form 8840 may be relevant to a foreign individual who spends substantial time in the United States but maintains their tax home and stronger personal connections in another country.

Examples may include:

  • Foreign business owners who regularly visit the United States.
  • International consultants working temporarily in the United States.
  • Foreign employees who travel frequently for business.
  • Individuals who maintain homes and family relationships outside the United States.
  • Foreign nationals who meet the substantial presence test but may qualify for the closer connection exception.

For example, imagine a foreign business owner spends several months each year visiting U.S. customers. The individual maintains a permanent home, family life, and primary business relationships in another country. Depending on the number of U.S. days, tax home, immigration status, and other facts, the person may qualify for the closer connection exception.

Not every foreign national who spends time in the United States qualifies. The specific requirements must be reviewed before making a claim.

Understanding the Substantial Presence Test

The substantial presence test generally requires an individual to be physically present in the United States for at least:

  • 31 days during the current calendar year; and
  • 183 weighted days over the current year and the two preceding calendar years.

The weighted calculation generally counts:

  • All qualifying days in the current year.
  • One-third of the qualifying days in the first preceding year.
  • One-sixth of the qualifying days in the second preceding year.

For example, suppose a foreign national spends 120 days in the United States in 2026, 120 days in 2025, and 120 days in 2024.

The weighted calculation would be:

Tax yearDays counted
2026120
202540
202420
Total180

In this example, the individual would not reach the 183-day weighted threshold, even though they spent substantial time in the United States. Other residency rules and exceptions must still be considered.

Certain days may be excluded from the calculation under specific rules. For instance, some days spent in the United States by qualifying students, teachers, or other exempt individuals may be treated differently.

What Are the Requirements for the Closer Connection Exception?

To qualify for the general closer connection exception, an individual typically must satisfy all of the following conditions for the tax year:

1. Fewer than 183 days in the United States during that year.

The individual must have been present in the United States for fewer than 183 days during the calendar year. This is separate from the weighted three-year calculation used for the substantial presence test.

2. A tax home in a foreign country.

The individual must maintain a tax home in a foreign country during the relevant period. A tax home generally relates to the location of the individual’s regular place of business or, in certain circumstances, their principal place of abode.

3. A closer connection to a foreign country.

The individual’s personal, economic, and social connections must demonstrate a closer connection to a qualifying foreign country than to the United States.

4. No disqualifying steps toward permanent residency.

The individual generally cannot claim this exception if they are a lawful permanent resident of the United States or have taken specified steps to obtain lawful permanent resident status, including having a qualifying application pending.

The IRS also has rules for certain individuals whose tax home changes between two foreign countries during the year. Those cases require additional analysis.

How Does the IRS Determine a Closer Connection?

The IRS considers the overall facts and circumstances. No single factor automatically determines the outcome.

Relevant factors may include:

  • Where the individual maintains a permanent home.
  • Where their spouse and children live.
  • Where personal belongings are located.
  • Where the individual conducts business activities.
  • Which country issued their driver’s license.
  • Where they vote, when applicable.
  • Where they maintain social, cultural, and personal affiliations.
  • Which country they identify as their country of residence on official documents.
  • Where they maintain significant financial and personal relationships.

For example, a foreign national who maintains a home, family, business operations, and long-standing personal relationships abroad may have evidence supporting a closer connection to that country. However, the IRS considers the entire situation rather than relying on one factor.

Keeping supporting records can be important if questions arise about the individual’s residency status.

What Information Does Form 8840 Request?

Form 8840 asks for information that helps establish the individual’s eligibility for the exception.

Depending on the applicable tax year, the form generally requests:

  • The individual’s name and taxpayer identification number, if applicable.
  • The type of U.S. visa and the date of entry.
  • Citizenship and passport information.
  • The number of days present in the United States during the current and preceding years.
  • Information about applications or steps toward lawful permanent resident status.
  • The location of the individual’s tax home.
  • The foreign country to which the individual claims a closer connection.
  • Additional information when the tax home changed between two foreign countries.

Taxpayers should answer the questions accurately and retain supporting records, such as travel calendars, passport information, housing records, and documentation showing where their business and personal connections are located.

When and How Should Form 8840 Be Filed?

Form 8840 generally must be filed by the applicable deadline for the individual’s U.S. income tax return.

If the individual must file Form 1040-NR, Form 8840 should generally be attached to that return. If the individual is not required to file a federal income tax return, the form generally must be submitted separately to the IRS by the applicable due date.

Filing on time is important. The IRS generally states that a person who does not timely file Form 8840 cannot claim the closer connection exception unless they meet a limited relief standard involving clear and convincing evidence of reasonable efforts to learn about and comply with the filing requirement.

Taxpayers should verify the current instructions for the applicable tax year, including the proper mailing address and filing deadline.

Common Form 8840 Mistakes to Avoid

Common mistakes include:

  • Counting U.S. travel days incorrectly.
  • Confusing the 183-day annual limit with the weighted three-year calculation.
  • Assuming that maintaining a home overseas automatically establishes a closer connection.
  • Overlooking the requirement to maintain a foreign tax home.
  • Failing to consider immigration-status restrictions.
  • Filing the form late or omitting it from a required tax return.
  • Assuming Form 8840 replaces Form 1040-NR or other required tax filings.
  • Failing to maintain records that support the claimed foreign connection.

These mistakes can affect an individual’s residency classification and federal income tax obligations.

How AIM Financial Can Help With Tax Preparation

International tax residency rules can be difficult to understand, particularly for foreign nationals who spend time in the United States for employment, business, or personal reasons.

AIM Financial helps taxpayers organize their tax information and understand their federal tax preparation needs. If you have questions about Form 8840, nonresident tax filing, or the documents needed to prepare a federal income tax return, reviewing your circumstances before filing can help identify potential issues.

For individuals and businesses in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan, AIM Financial is a resource to consider when you need help understanding federal tax forms and preparing your tax return.

Contact AIM Financial to discuss your tax preparation needs. If your situation involves international income, foreign tax residency, or nonresident filing requirements, ask about the information needed to evaluate your tax filing responsibilities. Complex residency or treaty questions may require a tax professional with specialized international tax experience.

Final Thoughts

IRS Form 8840 provides an important way for eligible foreign individuals to claim the closer connection exception to the substantial presence test.

However, qualifying requires more than simply spending time outside the United States. The individual must meet the applicable day-count, tax-home, closer-connection, and immigration-status requirements, as well as the filing rules.

Understanding these requirements and maintaining accurate records can help foreign nationals determine their appropriate U.S. tax status and avoid preventable filing errors.

This article is for general educational purposes only and is not individualized tax or legal advice. Eligibility for the closer connection exception depends on the taxpayer’s circumstances and current IRS rules.

Official IRS resources

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