Snowbirds and U.S. Residency Rules

Understanding snowbirds and U.S. residency rules is essential for Canadians who spend significant time in the United States each year. Thousands of Canadians winter in Florida, Arizona, California, Nevada, and Texas — but very few understand the U.S. tax rules that apply when they stay too long. The United States uses the Substantial Presence Test (SPT) to determine U.S. tax residency. If you meet this test, the IRS may classify you as a U.S. resident for tax purposes, requiring you to file a full U.S. tax return and pay tax on worldwide income. At the same time, Canada may still consider you a Canadian tax resident. This creates a dual-residency situation unless you file the proper forms. This guide explains everything you need to know about snowbirds and U.S. residency rules, how to avoid unwanted U.S. tax residency, and how to remain fully compliant with CRA and the IRS.

Legal and Regulatory Framework
Snowbirds and U.S. residency rules are governed by the U.S. Internal Revenue Code, Substantial Presence Test rules, IRS Form 8840 (Closer Connection Exception Statement), IRS Form 8833 (Treaty Disclosure), the Canada–U.S. Tax Treaty, CRA residency rules under the Income Tax Act, Québec’s Taxation Act, and provincial health-care residency requirements. Snowbirds must also comply with U.S. withholding rules, estate tax rules, and U.S. state residency laws where applicable.

The Substantial Presence Test (SPT)
The SPT is the IRS formula that determines whether you are considered a U.S. resident for tax purposes. You become a U.S. resident if:
days in current year + (1/3 × days last year) + (1/6 × days two years ago) ≥ 183
Even if you do not stay 183 days in a single year, the three-year weighted formula can still trigger U.S. residency. Snowbirds who spend 120–150 days in the U.S. every year will often exceed the SPT without realizing it.

The 120-Day Rule (Snowbird Threshold)
Most snowbirds follow the guideline of staying under 120 days per year because:
120 + 40 + 20 = 180 (below the SPT threshold)
This keeps snowbirds under U.S. residency limits. However, even staying 121 days can cause problems depending on the pattern of previous years. Tracking U.S. presence is essential.

IRS Form 8840 — The Closer Connection Exception
If you exceed the SPT but can prove you have a closer connection to Canada, you can file Form 8840 to avoid being treated as a U.S. resident. Snowbirds must file Form 8840 every year by June 15 to claim the exemption. Without filing this form, you may be deemed a full U.S. tax resident even if you are still a Canadian resident under treaty rules.

Eligibility for Form 8840
You must maintain:
a home in Canada
Canadian health coverage (RAMQ, MSP, OHIP, etc.)
Canadian driver’s licence
bank accounts
investment accounts
Canadian residency ties
You must also show that your personal, social, and economic ties remain stronger in Canada than in the United States.

IRS Form 8833 — Treaty Tie-Breaker
If you fail the Closer Connection Exception or do not qualify for Form 8840, you may still avoid U.S. residency under the Canada–U.S. Tax Treaty tie-breaker rules. This requires filing Form 8833 with the IRS. This form is much more technical and used only when the substantial presence test cannot be avoided.

U.S. Tax Consequences of Snowbird Residency
If you become a U.S. tax resident unintentionally, you may need to file:
U.S. Form 1040
worldwide income reporting
FBAR foreign account reporting
Form 8938 FATCA reporting
state tax returns depending on location
U.S. estate tax exposure
Social Security implications
This is a serious and expensive mistake for snowbirds, especially retirees with large investment portfolios.

Canadian Consequences of Snowbird Residency Errors
Even if the IRS considers you a U.S. resident, CRA may still consider you a Canadian tax resident because you maintain significant ties in Canada. This leads to dual residency unless you file treaty forms properly. Failure to coordinate residency may result in double taxation.

Québec Snowbird Rules
Québec residents must:
declare worldwide income
track U.S. travel days
maintain RAMQ eligibility
file Québec provincial returns even if abroad
Québec’s health insurance plan may suspend benefits if you spend too many months outside the province. Québec snowbirds must follow RAMQ travel day limits closely.

U.S. Estate Tax Exposure for Snowbirds
Snowbirds who own U.S. real estate, condos, or investment accounts may be exposed to U.S. estate tax even if they are Canadian residents. Estate tax thresholds are lower for non-U.S. persons. Proper structuring — such as Canadian corporations, partnerships, or trusts — may minimize this exposure but must be implemented carefully to avoid unintended tax consequences in Canada.

Tracking Days and Compliance Requirements
Snowbirds must track every day spent in the United States, including part-days, overnight stays, travel days, and days in transit through airports. Errors in tracking are a major cause of IRS and CRA disputes.

Common Mistakes Snowbirds Make
Common errors include failing to file Form 8840, staying too many days year-over-year, buying U.S. real estate without tax planning, misunderstanding state taxes, failing to consider U.S. estate tax risk, and assuming “I’m Canadian, so the U.S. can’t tax me.” These misconceptions often lead to IRS residency, penalties, or long-term tax disputes.

Key Court Decisions
Courts confirm that actual day counts control U.S. residency even if taxpayers do not intend to live in the U.S. Courts have upheld IRS decisions declaring snowbirds as U.S. tax residents based solely on tracking formulas. Canadian courts reinforce that tax residency is based on factual ties, not personal intention.

Why CRA and IRS Audit Snowbirds
Both agencies audit snowbirds to detect:
misreported worldwide income
U.S. residency errors
Canadian residency misrepresentation
unreported foreign accounts
estate tax exposure
dual residency filings
FBAR/FATCA non-compliance
U.S. real estate rental income not reported to CRA
Snowbirds are high-risk taxpayers due to cross-border complexity.

Mackisen Strategy
Mackisen CPA provides complete cross-border planning for snowbirds. We calculate day-count exposure, complete IRS Form 8840 or 8833 filings, manage Canada–U.S. Treaty residency claims, prepare Canadian and U.S. tax returns, evaluate U.S. estate tax exposure, optimize U.S. property ownership structures, coordinate Québec travel-health eligibility, and defend snowbirds in CRA or IRS audits.

Real Client Experience
A Montréal couple spent winters in Florida but unknowingly exceeded the SPT. Mackisen filed Form 8840 and corrected two years of IRS exposure. A Québec snowbird purchased Arizona property without planning; we re-structured ownership and eliminated estate tax risk. Another client faced dual residency issues because of RSUs taxed in both countries; we resolved this through treaty tie-breaker analysis. A retired engineer received IRS notices due to misreported rental income on a Florida condo; we corrected filings and prevented penalties.

Common Questions
How many days can I stay in the U.S. as a snowbird? Generally under 120 days per year to avoid residency issues.
Do I need to file Form 8840? Yes if you exceed the substantial presence test.
Can I use the treaty to avoid U.S. residency? Yes through Form 8833.
Does Québec have its own rules for snowbirds? Yes for RAMQ and provincial residency.
Will the U.S. tax my worldwide income? Yes if you are considered a U.S. tax resident.
Can I own U.S. real estate as a snowbird? Yes with proper estate tax planning.

Why Mackisen
With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps snowbirds navigate U.S. residency rules, avoid accidental U.S. tax residency, comply with both CRA and IRS rules, and protect their wealth. Whether filing cross-border returns, completing IRS exemptions, or planning U.S. property ownership, our expert team ensures precision, security, and peace of mind.