Closer Connection Exception
A provision allowing a non-citizen who would otherwise be a US tax resident under the Substantial Presence Test to remain a non-resident if they have a closer connection to a foreign country.
Detailed Explanation
Filed on Form 8840 with a US tax return, the closer connection exception requires the taxpayer to be present in the US for fewer than 183 days in the current year, maintain a tax home in a foreign country during the entire year, and have a closer connection (family, social, economic ties, voter registration, etc.) to that foreign country than to the US. Particularly relevant for cross-border professionals splitting time between the US and another country.
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Learn about International TaxationRelated Terms
Substantial Presence Test
A US tax residency test under IRC Section 7701(b) treating a non-citizen as a US tax resident if they meet a specific weighted day-count of physical presence in the United States.
Tax Treaty
A bilateral agreement between the United States and a foreign country that allocates taxing rights and provides benefits to reduce or eliminate double taxation on cross-border income.
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