What is the benefit of obtaining a certificate of U.S. residency?
U.S. residents often conduct business globally and are subject to various taxes in foreign jurisdictions. Foreign countries may require withholding on certain types of income paid from sources within those countries to residents of the U.S. The rate of withholding is set by that country’s local law. Form 8802, Application for U.S. Residency Certification, is used to request a Certificate of U.S. Residency (Form 6166) that can be a valuable tool for claiming income tax treaty benefits between the U.S. and other countries. These treaties often reduce withholding rates (sometimes to zero) for certain types of income paid to U.S. residents. Additionally, this certification can be used to substantiate eligibility for value-added tax (VAT) exemption. Individuals, corporations, partnerships, trusts, estates, exempt organizations, and government entities can apply for a certificate of U.S. residency.
How to obtain a certificate of U.S. residency
Applicants can refer to Form 8802 instructions for detailed line instructions. A summary of the process is outlined below.
- Complete Form 8802, Application for United States Residency Certification to request a letter of U.S Residency Certification, Form 6166. The application should be submitted at least 45 days before the date you need to submit Form 6166.
- There is a nonrefundable user fee due with each application which must be paid before an application is processed. The user fee is $85 per individual applicant or $185 for nonindividual applicants. The fee can be paid by check, money order, or remitted electronically through Pay.gov. Once the Internal Revenue Service (IRS) processes the electronic payment, users will receive a confirmation number that must be entered on Form 8802. Payments by check or money order should be included with the mailing of Form 8802.
- Applicants can request certification for multiple years by attaching a statement to Form 8802 that identifies the country, year, and number of certifications by year. The IRS encourages each applicant to include all Form 6166 requests on a single Form 8802.
- Applications can be mailed or faxed (if payment is remitted electronically by Pay.gov). Taxpayers can contact the IRS by calling 267-941-1000 and selecting the U.S. residency option if they have any questions regarding their application.
Who is not eligible for Form 6166
You’re not eligible for Form 6166 if any of the following applies to the tax period you are requesting certification for.
- You did not file a required U.S. return,
- You filed a return as a nonresident (including Form 1040-NR, Form 1040 NR-EZ for tax years before 2020, Form 1120-F, Form 1120-FSC, or any of the U.S. possession tax forms),
- You are a dual resident individual who has made or intends to make the decision of not being a resident of the U.S.,
- You are a fiscally transparent entity organized in the U.S. (such as a domestic partnership, domestic grantor trust, or domestic LLC disregarded as an entity separate from its owner) and you do not have any U.S. partners, beneficiaries, or owners,
- The entity requesting certification is an exempt organization that is not organized in the U.S., and/or
- The entity requesting certification is a trust that is part of an employee benefit plan during the employee benefit plan’s first year of existence, and is not administered by a qualified custodian bank
If you have any questions about applying for U.S. residency certification and how it can benefit your tax situation, please reach out to a member of our team.
Aura Advisors is a boutique tax consulting and compliance firm working with start-ups, emerging growth companies, and affluent individuals. Making it safer for good people and good companies to continue to do good things.