Canadians who spend winters in the United States, and executives whose work takes them across the border, face a U.S. residence test that turns largely on arithmetic. The United States can treat a non-citizen as a tax resident based on days of physical presence, regardless of where the individual's home is. Managing the count, and filing the right statement when it gets close, helps keep a Canadian's tax position clear.

U.S. citizens, including dual Canadian–U.S. citizens, and green-card holders are taxed by the United States on worldwide income wherever they live, and are outside the scope of this brief.

The Substantial Presence Test

A Canadian who is neither a U.S. citizen nor a green-card holder is generally treated as a U.S. resident for tax purposes if present in the United States for:

  • at least 31 days in the current year; and
  • 183 days or more over a three-year period, counting all days in the current year, one-third of the days in the preceding year and one-sixth of the days in the year before that.

Any part of a day generally counts as a full day. Limited exceptions apply, including certain days in transit, days on which the individual is unable to leave because of a medical condition that arose in the United States, and days on which the individual regularly commutes to work in the United States from a home in Canada.

Because the weights add up to one and a half, spending 122 days or more in the United States in each of three consecutive years produces a weighted total of at least 183 days, even though no single year approaches that number.

The Closer Connection Exception and Form 8840

An individual who meets the test may still be treated as a non-resident by establishing a closer connection to Canada. The exception is generally available where the individual:

  • was present in the United States for fewer than 183 days in the current year;
  • maintained a tax home in Canada throughout the year; and
  • had a closer connection to Canada than to the United States, based on factors such as home, family, belongings, banking and similar personal ties.

It is not available to an individual who has applied for, or taken steps toward, U.S. permanent residence.

The exception must be claimed by filing Form 8840 for each year it applies. For individuals not otherwise required to file a U.S. return, the form is generally due by June 15 of the following year; where a U.S. return is filed, it is attached to that return. An individual who does not file on time can lose the exception unless able to show, by clear and convincing evidence, that reasonable steps were taken to comply.

When the Count Reaches 183 Days

Once an individual spends 183 days or more in the United States in a year, the closer connection exception is no longer available for that year. A Canadian resident in that position may still claim to be resident in Canada under the tie-breaker rules of the Canada–U.S. treaty, generally by filing a U.S. non-resident return with a treaty disclosure on Form 8833.

That position depends on the individual remaining resident in Canada under Canadian rules, and it can carry consequences for other U.S. filings. U.S. residence without treaty relief would expose worldwide income to U.S. tax and bring extensive U.S. reporting on Canadian accounts, corporations and trusts.

Remaining Canadian Resident

Canadian residence depends on residential ties rather than days alone. For most snowbirds the position is straightforward, but individuals who sell a Canadian home or spend progressively more time in the United States should reassess it. Provincial health coverage carries its own presence requirements, which vary by province and are separate from both tax tests.

Canada and the United States also exchange border-crossing records, so a traveller's day count can be reconstructed independently. Keeping a personal log of entries and exits remains prudent.

Executives Working on Both Sides of the Border

For employees and executives, the question extends beyond residence to where income is earned:

  • Employment income. Pay for work performed in the United States is generally U.S.-source. The treaty can exempt it where amounts are small, or where the individual is present for a limited period and the cost is not borne by a U.S. employer or U.S. permanent establishment.
  • State taxes. Some U.S. states do not follow federal treaty relief.
  • Payroll and social security. Withholding may be required in both countries, and the Canada–U.S. social security agreement can keep a temporarily assigned employee in one system through a certificate of coverage.
  • Equity compensation. Stock options and share awards earned while working in both countries typically need to be allocated between them, and the treaty contains specific rules for stock options.

Canada taxes its residents on worldwide income, generally with credit for U.S. tax paid on U.S.-source income. U.S. executives spending extended periods in Canada face a parallel Canadian rule: sojourning in Canada for 183 days or more in a year can result in deemed Canadian residence, subject to the treaty.

Property Across the Border

U.S. real estate adds further considerations. Rental income is subject to U.S. withholding on gross rents unless the owner elects to be taxed on a net basis by filing a U.S. return. A sale is generally subject to U.S. withholding on the gross proceeds, subject to exceptions and reductions. Canadian residents holding U.S. real estate or shares of U.S. corporations may also be exposed to U.S. estate tax, with treaty relief that depends on the size of the worldwide estate.

On the Canadian side, a U.S. vacation property used primarily for personal use is generally not reportable on Form T1135, while a rental property generally is.

Separately from tax, U.S. immigration rules introduced in 2025 require many Canadian visitors who stay 30 days or more to be registered with U.S. authorities. That question should be confirmed with immigration counsel.

A reliable day count, a timely Form 8840 where it applies and coordinated filings in both countries help keep time spent across the border from becoming a residence question. For executives, reviewing compensation, payroll and equity arrangements before an assignment begins reduces the need to reconstruct the position afterward.

This brief provides general information and is not advice for a specific situation.