What is the Closer Connection Exception?
A statutory exception under Section 7701(b)(3)(B) lets a foreign individual avoid US tax
resident status even if meeting SPT, provided they have a "closer connection" to a foreign
country. Filed on Form 8840.
Who should consider it?
NRIs who: - Travel frequently to the US for work but maintain primary residence in India - Have
meaningful India ties — home, family, employment — stronger than US ties - Want to remain
Indian tax residents and avoid US worldwide income reporting
Particularly useful for senior executives, frequent business travellers, and second-home owners.
Eligibility requirements
ALL of these must be true: 1. Present in US fewer than 183 days in the current year 2. Have a
tax home in a foreign country for the entire current year 3. Have a closer connection to that
foreign country than to the US
If you're in the US 183+ days in the current year, Closer Connection is NOT available — only the DTAA tiebreaker (Form 8833) may help.
What is "tax home"?
Your tax home is the location of your principal place of business or employment. For NRIs
Maintaining primary residence in India with periodic US visits, the tax home is India.
What factors show "closer connection"?
The IRS looks at totality. Strong indicators: - Permanent home in India (owned or rented year-round) - Family — spouse and children primarily live in India - Personal belongings — car,
furniture — in India - Indian bank accounts, credit cards, investments - Indian driver's license,
passport, voter ID - Religious / cultural / political affiliations in India - Local government
documents filed in India
How do I file Form 8840?
Attach Form 8840 to Form 1040-NR by the due date. If you have NO US-source income and
aren't required to file 1040-NR, file Form 8840 standalone — better to file 1040-NR with $0 US
income to formalise. Form 8840 is a questionnaire about ties. Be specific and document-backed. Photos of India's
home, utility bills, and employment letters — all supportive.
Common mistakes
Filing Form 8840 late
Insufficient documentation when audited
Inconsistency with other forms
Not considering DTAA tie-breaker first — sometimes cleaner
What if I'm in US 184+ days?
Form 8840 unavailable. Options: - Accept US tax residency and file Form 1040 with worldwide
income - Use DTAA tie-breaker (Form 8833 + treaty Article 4) — break tie based on permanent
home, vital interests, habitual abode, nationality
We model both options for high-day-count clients.
Explore our complete US Tax Return Guide to understand refunds, filing rules, and IRS procedures for NRIs.