For U.S. residents living and working in a foreign country, taxation rates can be much higher than in the United States. However, there are international tax treaty laws in place that can make tax withholding rates extremely low on certain types of income for expatriates. Many countries require proof of U.S. residency for these individuals to take advantage of treaty-reduced rates and to avoid paying foreign taxes on their income. Obtaining a Tax Residency Certificate will provide sufficient proof for foreign governments, and can be obtained through Form 8802.
Have a specific question in mind? Use the links below to jump straight to the answer or keep reading for a full explanation of IRS form 8802:
- What is Form 8802?
- Who Can Apply for a Tax Residency Certificate?
- Instructions on How to Fill Out Form 8802?
- When and Where Do I File Form 8802?
What is Form 8802?
IRS Form 8802 is also known as the Application for United States Residency Certification. It allows individuals and companies to claim tax treaty benefits while working or operating in foreign countries by proving their U.S. residency. This proof comes in the form of a Tax Residency Certificate, also known as Form 6166, and can be issued to the individual or company by filing Form 8802.
Foreign countries set their own withholding rates and frequently withhold tax on income that comes from internal sources, despite an individual’s residency. Thanks to treaties between the United States and other foreign countries, U.S. residents can use treaty benefits to bring their taxation rates on certain forms of income down significantly, sometimes even to 0%. Both business owners and individual workers can use these treaty-reduced rates to keep more money in their pockets.
Who Can Apply for For a Tax Residency Certificate?
Before looking at instructions for Form 8802, determine whether or not you are eligible to apply for a Tax Residency Certificate. Generally speaking, an individual or entity is considered a U.S resident if they are subject to U.S taxes. You can use Form 8802 to apply for Tax Residency Certificate if one of the following applies to the year for which certification is requested:
- You filed an appropriate income tax return
- For a certification year in which a return is not due yet, you filed a return for the most recent year that a return was due
- You are not required to file an income tax return for the tax period on which the certification will be based and other documentation is provided
You cannot apply for a Tax Residency Certificate if any of the following applies to the tax period for the requested certification:
- You did not file a required U.S. return
- You filed a return as a nonresident
- You are a dual resident individual who has made (or intends to make), pursuant to the tie-breaker provision within an applicable treaty, a determination that you are not a resident of the United States and are a resident of the other treaty country
- You are a fiscally transparent entity organized in the United States (that is, 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 United States
- 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 it is not administered by a qualified custodian bank, as defined in 17 CFR 275.206(4)-2(d)(6)(i).
Instructions on How to Fill Out Form 8802
Looking for official IRS Form 8802 instructions? Here’s a step-by-step guide on applying for a Tax Residency Certificate:
- Check any applicable boxes at the top of Page 1. This includes additional Form 6166 requests, additional information, and additional requests made by third party appointees.
- If you have received a foreign claim form by a foreign country, check the Foreign Claim box at the top of Page 1
- Line 1: Fill out the applicant’s name and U.S Taxpayer Identification Number (TIN). Enter the applicant’s name and TIN exactly as they appear on the U.S. return filed for the tax period(s) for which you are requesting the certificate.
- Line 2: Fill out the applicant’s address.
- Line 3a: Fill out the applicant’s mailing address where Form 6166 can be sent to.
- Line 3b: Fill out the third party appointee’s information. This person should be someone who can talk to the IRS should any issues arise during the processing of Form 8802.
- Line 4: Check applicable boxes in regards to your residency status for individuals, and your entity classification for any form of organization.
- Line 5: Check applicable boxes in regards to whether the applicant was required to file a U.S tax form for the tax period(s) on which the certification will be based. Attach any additional explanations as necessary.
- Line 6: Check applicable boxes in regards to whether the applicant’s parent, parent organization, or owner were required to file a U.S tax form. Be sure to only complete this step if you checked the “NO” box on Line 5.
- Line 7: Fill out the calendar year for which the certification is requested. Typically, the certification period is 1 year but you can request certification for both the current year and any number of previous years.
- Line 8: Fill out the tax period(s) for the certification. If the certification will be for a tax period where tax returns aren’t due yet, fill out the four-digit year and two-digit month numbers that correspond to the latest return required to have been filed.
- Line 9: Check applicable boxes in regards to your purpose for obtaining a certification.
- Line 10: Fill out penalty of perjury statements from Table 2 in the form
- Sign and date Form 8802
- Send your completed application to the IRS or seek the help of an IRS tax advocate to answer any additional questions
When and Where Do I File Form 8802?
If you plan to file IRS Form 8802 for U.S residency certification, be sure to do so at least 45 days before you must submit Form 6166. Additionally, the IRS will only start to process Form 8802 for the subsequent calendar year on December 1st of the previous calendar year. So, if you want a Tax Residency Certificate for 2020, you can not file earlier than December 1st, 2019. If there’s a delay in your application, the IRS will contact you after 30 days.
A one-time fee of $85 is required to submit Form 8802, and applies to each application submitted. You can pay by check, money order, or via electronic payment. If you plan to pay by check or money order, send the completed form and any additional documents to:
Internal Revenue Service
P.O. Box 71052
Philadelphia, PA 19176-6052
For individuals who want to pay electronically, enter your electronic payment confirmation number on page 1 of Form 8802. Then send your completed form and any additional documents to:
Department of the Treasury
Internal Revenue Service
Philadelphia, PA 19255-0625
Additional forms that affect foreign income, such as Form 2555-ez, can be found on the IRS website at www.irs.gov