Plain English
The closer connection exception (Form 8840) allows a non-US person who meets the substantial presence test to nonetheless be treated as a non-resident — if they can show their tax home and closer connections are in a foreign country. Requires fewer than 183 days in the US in the current year.
How it actually works
The IRS evaluates a list of facts and circumstances: location of permanent home, family, personal belongings, social/political/cultural affiliations, business activities, driver’s license, voter registration, and the country claimed on official documents. No single factor controls; the test is the overall pattern.
What it means for you
For HNW principals splitting time between countries, the closer-connection exception is one of two main escape valves from US residency (the other being treaty tie-breaker rules). Plan deliberately: maintain a foreign tax home, document the connections, file Form 8840 contemporaneously, and avoid weakening any of the factors during the relevant year.
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