Snowbird Tax Planning

Why a few extra weeks in Florida is a tax decision

For most Canadian snowbirds, the southern winter is a lifestyle choice. To the United States Internal Revenue Service, it is a residency question with real money attached. The United States taxes its residents on their worldwide income, and it decides who is a resident largely by counting days. A Canadian who spends roughly half the year in a sunbelt state, year after year, will tip over the day-count threshold without doing anything unusual — and if nothing is filed to counter that result, the IRS can treat that person as a US tax resident liable for US tax on Canadian pensions, Canadian investment income, the gain on a Canadian cottage, and everything else, plus a stack of foreign-asset reporting forms. The day-counting is mechanical and unforgiving; the relief is available but not automatic, and most of it has to be claimed by a deadline, in writing, every year.

The good news is that the rules were built with cross-border lives in mind. A closer-connection statement and, failing that, the Canada-US tax treaty's residency tie-breaker keep the great majority of snowbirds on the Canadian side of the line. But each of those mechanisms has its own form, its own deadline, and its own factual prerequisites, and a missed filing can forfeit relief the underlying facts would otherwise have supported. The sections below set out how the day-count works, the two layers of defence against US residency, the estate-tax exposure that survives even a successful residency defence, the traps that catch snowbirds most often, and how we approach the file. For the wider practice context, see our cross-border tax overview.

The substantial-presence test: how the day-count works

The IRS treats a non-citizen as a US resident for tax purposes if they meet the substantial-presence test (SPT). The test has two parts, and both must be satisfied. First, the individual must be physically present in the US for at least 31 days during the current year. Second, a weighted three-year count must reach 183 days: all days of US presence in the current year, plus one-third of the days in the previous year, plus one-sixth of the days in the year before that. If both thresholds are met, the SPT is satisfied and the IRS treats the individual as a US resident for that year.

The weighting is what surprises people. A snowbird who is in the US for 120 days every year does not obviously look like a US resident — but run the formula and the math is unforgiving: 120 (current) + 40 (one-third of last year's 120) + 20 (one-sixth of the year before's 120) equals 180, just under the line. Add a few weeks — say 130 days a year — and the same person sails past 183 and meets the test. The familiar “six months” snowbird who spends roughly 150 to 180 days a year down south meets the SPT comfortably every single year. The test counts the rolling pattern, not any one winter.

Two counting details matter. A “day” of presence means any day you are physically in the US at any time during the day — a flight that lands at 11 p.m. counts as a full day, and so does the morning you leave. And certain days do not count at all: days you are unable to leave because of a medical condition that arose while you were in the US can be excluded, but only if the condition began in the US (a pre-existing condition does not qualify) and only if you file Form 8843 to document the excluded days. Snowbirds who are hospitalised mid-winter and cannot fly home should keep records and claim those days rather than silently absorbing them into the count.

The first line of defence: Form 8840, the closer-connection statement

Meeting the substantial-presence test is not the end of the analysis. A non-US-citizen who meets the SPT can still be treated as a non-resident under the closer-connection exception, claimed on Form 8840, the Closer Connection Exception Statement for Aliens. The exception is available to someone who: (1) was present in the US for fewer than 183 days in the current year; (2) maintained a tax home in a foreign country (for a snowbird, Canada) throughout the year; and (3) had a closer connection to that foreign country than to the US during the year.

“Closer connection” is a facts-and-circumstances test, not a formula. The IRS looks at where the individual's permanent home is, where the family lives, where the personal belongings and vehicles are kept, the location of the bank that holds the everyday accounts, where the person is registered to vote, which jurisdiction issued the driver's licence, social and religious affiliations, and the country listed on official forms. For a typical snowbird who keeps a year-round Ontario home, a family doctor in Canada, Canadian banking, an Ontario driver's licence, and Canadian voter registration, the closer connection to Canada is straightforward to demonstrate — provided the current-year US day count stays under 183. The 183-day current-year ceiling is the hard edge of this exception: cross it, and Form 8840 is simply unavailable, no matter how strong the Canadian ties are.

Form 8840 is filed on its own (it does not require a US tax return) and is due by June 15 of the year following the tax year — the non-resident filing date — mailed to the IRS service centre in Austin, Texas. Timeliness is not a formality. The IRS position is that a snowbird who does not timely file Form 8840 cannot claim the closer-connection exception at all, unless they can show by clear and convincing evidence that they took reasonable steps to learn of the requirement and to comply. Many snowbirds have never heard of Form 8840 and have unknowingly forfeited a clean defence for years. Filing it annually, on time, is the cheapest insurance in the entire snowbird file.

The second line of defence: the treaty tie-breaker (Article IV)

If US presence in the current year reaches or exceeds 183 days, the closer-connection exception is gone and the SPT is met. The next line of defence is the Canada-US Income Tax Convention. When both countries consider the same person a resident under their own domestic rules — a “dual resident” — Article IV of the treaty breaks the tie by working through a fixed sequence of tests, stopping at the first one that points to a single country:

• Permanent home available. The country where the individual has a permanent home available wins. If a home is available in both, move to the next test.
• Centre of vital interests. The country with which the person's personal and economic relations are closer — family, employment, business, banking, social life.
• Habitual abode. Where the person more customarily lives.
• Citizenship. The country of citizenship.

A Canadian snowbird who keeps a permanent home in Canada, whose family and financial centre of gravity is Canadian, and who is a Canadian citizen will, on ordinary facts, tie-break to Canada at the first or second step. The result is that even though the person met the SPT, the treaty treats them as a Canadian resident, and they compute their US tax as a non-resident alien — US tax only on US-source income, not on worldwide income.

Claiming this position is a filing exercise, not a self-help one. The individual must file Form 1040-NR for the year and attach Form 8833, the Treaty-Based Return Position Disclosure. The position is annual — it must be re-supported by the facts and re-disclosed every year the SPT is met — and it carries a real consequence on the Canadian side that snowbirds rarely anticipate: asserting that you are not a US resident under the treaty necessarily asserts that you remain a Canadian tax resident. That is usually what the snowbird wants. But it means the treaty defence and any thought of someday claiming non-residency from Canada (with its departure-tax consequences) have to be reconciled — you cannot tell the IRS you are Canadian and the CRA you have left. See our departure tax planning page for the emigration side of that coin.

What still applies even after the residency argument is resolved

Establishing that you are not a US income-tax resident does not switch off every US obligation. Two exposures survive a clean treaty or closer-connection position.

US estate tax on US-situs assets. Snowbirds who buy a Florida or Arizona home accumulate US-situs property quickly, and US estate tax reaches that property at death regardless of where the owner was resident for income-tax purposes. A non-resident, non-citizen owner gets only a $60,000 exemption under US domestic law before estate tax applies — far below the exemption available to US citizens. The Canada-US treaty improves this dramatically. Under Article XXIX-B, a Canadian estate can claim a pro-rated share of the US unified credit — the same credit that shelters a US citizen's estate — in proportion to the share that US-situs assets bear to the deceased's worldwide estate. The US basic exclusion amount is $15 million for 2026 (up from $13.99 million in 2025), and the 2025 One Big Beautiful Bill Act made that higher amount permanent and indexed for inflation from 2027, removing the sunset that earlier planning assumed. The practical upshot: a snowbird whose worldwide estate is comfortably below that figure often owes little or no US estate tax even on a substantial US home, because the pro-rated credit covers it; a snowbird with a large worldwide estate gets only a thin slice of the credit and can face genuine exposure. Because the relief is measured against the worldwide estate, the US home cannot be analysed in isolation. Our US estate tax for Canadians page works the treaty math through with examples.

FIRPTA on a sale and section 116 on the way back. When a snowbird sells the US property, the Foreign Investment in Real Property Tax Act requires the buyer to withhold a percentage of the gross sale price — not the gain — and remit it to the IRS. As of 2026 the standard FIRPTA rate is 15%, with reduced tiers (10% on residences priced between $300,000 and $1,000,000, and 0% on residences at $300,000 or less) where the buyer signs a residence affidavit. Because it withholds on gross proceeds, FIRPTA routinely takes far more than the real US tax; a withholding certificate (Form 8288-B), filed before closing, right-sizes it. Our FIRPTA for Canadian sellers and section 116 clearance pages cover the withholding-certificate process on each side of the border.

Foreign-asset reporting if the day-count goes wrong

The reason the residency question is not academic is the reporting cascade that follows a finding of US residency. A snowbird who is treated as a US resident — because they crossed 183 current-year days and failed to file the treaty position, or simply never filed anything — picks up the full slate of US information returns: the FBAR (FinCEN Form 114) on foreign financial accounts, and Form 8938 under FATCA on specified foreign financial assets. These attach to the Canadian RRSPs, RRIFs, TFSAs, bank accounts, and brokerage accounts the snowbird has held in Canada for decades. The penalties for non-filing are severe and are assessed per form, per year. Our FATCA and FBAR compliance page details the forms and thresholds.

This is also the cross-border direction many snowbirds discover too late — a Canadian who already holds foreign property of their own must watch the T1135 Foreign Income Verification Statement, required where the total cost of specified foreign property exceeds CAD $100,000; a personally used US vacation home is excluded, but the moment it earns rent its cost counts toward the threshold. The residency and reporting questions are intertwined, and a snowbird who has unknowingly been on the wrong side of the line for several years needs a remediation plan rather than a quiet correction.

Common traps

• Counting “six months minus a day” and assuming you are safe. The substantial-presence test is a weighted three-year count, not a single-year 183-day rule. A steady annual pattern well under six months can still meet the SPT. The single-year 183-day figure only governs the separate closer-connection ceiling.
• Never filing Form 8840. The closer-connection exception can be lost for failure to file on time, even when the facts plainly favour Canada. Filing annually by June 15 is the simplest protection in the file.
• Letting US ties drift. A Florida driver's licence, US voter registration in a state that allows it, a US club membership, or moving the everyday banking south can erode the closer-connection and centre-of-vital-interests arguments. The defence depends on keeping the centre of life visibly Canadian.
• Treating arrival and departure days as half-days. Any part of a day in the US is a full day for the count. Border-crossing dates, not just “nights stayed,” drive the math.
• Ignoring US estate-tax exposure because no income-tax return is filed. Resolving the residency argument in Canada's favour does nothing about the US home in the estate. Estate exposure has to be measured separately, against the worldwide estate.
• Assuming immigration day-counts and tax day-counts are the same. The number of days a visitor may stay under US immigration rules is a separate question from the tax substantial-presence test; complying with one does not resolve the other.

How Barrett Tax Law approaches snowbird tax planning

The cross-border practice is led by Simone Barrett, who is admitted in Ontario and in Florida and works both sides of the file. For snowbirds who are current, we calculate the weighted three-year presence count from actual border-crossing dates, confirm whether the closer-connection exception is available, and prepare Form 8840 each year — or, where the current-year count has crossed 183 days, the Form 1040-NR with Form 8833 treaty position — and we review the file for US estate-tax exposure on US-situs holdings and for any FBAR, Form 8938, or T1135 reporting that the facts trigger. We also help shore up the closer-connection record before it is needed, so the documentation exists if the IRS ever asks. For snowbirds who have not filed for several years and have just realised they may have been on the wrong side of the line, the Streamlined Foreign Offshore Procedures — which the IRS continues to list as an active program in 2026 — often offer a route back to compliance, for genuinely non-willful taxpayers, without the civil offshore penalty. If your winters in the US have grown longer, or you have never filed anything to protect your Canadian residency, we offer a free initial consultation to map where you stand before a deadline forces the issue.

This page is general information, not legal or tax advice. Snowbird and cross-border tax outcomes depend on the specific facts and on both countries' rules, which change; figures stated here are current as of 2026 and should be confirmed for your situation before you act.