By Bethany Bouw
Often when doing business or living overseas, foreign countries ask people to prove that they are US residents for tax purposes to eliminate or reduce foreign tax withholding. You may need residency certification to claim tax treaty benefits or exemptions from value added tax (VAT). Doing so is not as simple as showing a copy of your driver’s license or other government issued identification. Instead, there is an important process you must follow to obtain the proper documents which prove your US residency to foreign jurisdictions.
Process to request Certification of US Tax Residency
|Step 1||Determine which country requires the certification documentation and obtain, if needed, the foreign claim form/UK certification form.|
|Step 2||Ask your tax preparer to complete a Form 8802 (We advise against filling out the form yourself. Even though it looks easy, it is not uncommon for individuals to make errors on the form).|
|Step 3||Send the request and fee to the address your tax preparer provides.|
|Step 4||Be patient (allow at least 45 days before when you need the certification documentation).|
|Step 5||Receive Form 6166 Certification of U.S. Tax Residency.|
There are many important things to remember when following the steps above. Remember the following five tips when going through the certification of residency process:
- The request is often for only one tax year, so you will probably be making the request each year.
- Many foreign countries want the original certification (most nations will not accept copies, be safe and use the original). Also, be aware that you will incur fees for each time you submit a Form 8802. Because of this, we recommend the following:
- Submit the request for multiple countries all on the same Form 8802.
- Request multiple copies of each document needed, all on the same Form 8802.
- They will NOT charge a higher fee to request the multiple copies if you request them all on one form. However, if you need to submit the form multiple times to request additional copies, they WILL charge you for each subsequent submission.
- In general, we recommend requesting a few extra for any documents needs. For example, if you think you will only need two copies of the form, request four, just to be safe. Your tax preparer should ask you how many you need and for which countries you need them.
- In most cases, you need to have a prior tax return filed for the IRS on which to base their certification.
- There are penalties of perjury statements that you must enter based on answers throughout the form. You should pay attention to these so that you do not perjure yourself in making the claim. Furthermore, your tax preparer will be able to select the proper statements to include in the request.
- Partnerships, S Corporations, and disregarded entities are not considered US residents. There are additional steps that you must take for the partners, members, or owners in order to obtain the certification statement. These situations are complex and, therefore, you should address them with your tax preparer.
Ryan & Wetmore has assisted clients with their certification of US tax residency requests over the years. We would be happy to assist you in preparing the certification request or addressing concerns you have regarding the request.
The International Tax Team
The International Tax Team at Ryan & Wetmore is well-versed in foreign informational filings. For questions or concerns regarding your international accounts and assets, click here to email our foreign tax team. Please be aware that tax issues are complicated and may vary based on the details of your situation. For this reason, we generally require an initial phone call to obtain the facts and address the questions.
Bethany Bouw CPA, is a manager at Ryan & Wetmore and has been with the firm for over eight years. She has experience with offshore voluntary compliance and assisting taxpayers with foreign asset and entity reporting requirements.
Traci Getz CPA, is a partner with Ryan & Wetmore, P.C. Traci has over fifteen years of experience providing accounting, tax, and consulting services to small and medium-sized business owners. She works with clients to understand their accounting and tax issues while specializing in international tax, healthcare, and construction.
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information we provide herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.
In addition, Tax articles in this e-newsletter do not intend to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. Ryan & Wetmore provides the information “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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