Saturday, May 25, 2013

Certificate of Residency

I haven't written for some time because I've started my summer research position, dog-/house-sitting, and have been finishing up my online course. I'm almost there!


As a teacher, it's important to invest in those that follow after, so I decided that I need to at least put up a page on this blog about obtaining a U.S. Certificate of Residency.  What this document does is exempts a person from paying taxes abroad in addition to those paid to your home country.  The length of time you are exempt (generally 2-3 years) depends on the specific tax agreement between your country and the country where you plan on living.  You are still required to file taxes with the U.S. government even if you are living abroad, but unless you make a certain amount of money, you will not actually have to pay in much.  It is also important to know that the tax exemption is only valid if you are living abroad so many days out of a calendar year.  If you choose to travel while you are abroad, you must be wary about how many days you are out of the country, either visiting neighboring locations or just traveling to/from those locations.

Note that this process can be lengthy (2-3 months is the usual turn-around), so it is important to start early.  As of May 2013, there is an $85 processing fee for the application, but you can request multiple certificates on that one form at no extra cost.

Anyway, on to the stuff that will be useful:

To obtain a U.S. Certificate of Residency (known as Form 6166), you need to fill out an Application for U.S. Residency Certification (known as Form 8802).


The form you need to fill out (Form 8802) can be found here: http://www.irs.gov/pub/irs-pdf/f8802.pdf

Here are the instructions for filling out Form 8802: http://www.irs.gov/pub/irs-pdf/i8802.pdf
This document contains information on how to fax the document and how to pay electronically online.  I used both of these options and as a result, my application was turned around in a little more than one month.

On to the actual form:

Initial Section: Make sure you apply under the same name you file taxes with.

Section 1: Self-explanatory.

Section 2: Your home address in the U.S.  This should be the address that you put on the most recent taxes you filed.

Section 3: Self-explanatory or read the instructions.

Section 4: If you are an individual, check box (a). And if you are a U.S. citizen, check the first box beneath it.  Again, the instructions can help you out here.

Section 5: What kind of taxes did you file? Check the box and continue to Section 7.  If you did not, follow the directions (check the appropriate reason in this section and then fill out Section 6).

Section 7: The most confusing part of this whole document in my opinion.  The year that you fill out here is for the calendar year in which you will first be living abroad and will be filing taxes from abroad.  That's probably the best way to phrase it.  So, for example, I filed taxes for 2012 at the beginning of 2013, but I plan on being in South Korea when I have to file taxes for 2013 at the beginning of 2014.  So I put 2013 in Section 7.  If I chose to live in Korea for a second year, I may need to apply for another Certificate of Residency, but this time requesting the certification for 2014.  Because I am requesting certification for a year (2013) in which I have not yet filed taxes, I will have to include a penalties of perjury statement in Section 10 (more on that later).

Section 8: Using the format, YYYYMM, this is the section where you put the last year that you filed taxes in the U.S.  This is what the government will use to show that, yes, you file(d) taxes with the U.S.  In my case, I last filed taxes for 2012.  The last month of that calendar year was December, or MM=12, so I fill in 201212.  The examples in the instructions can be really helpful here (as are the support service at the IRS so do not be afraid to give them a call!).

Section 9: Check 'Income Tax' because that is what you will be exempt from if you have the certification of residency.  

Section 10: The statement.  You can find examples of what to write, depending on your individual circumstances in the Form 8802 instructions (link above), but if you are an individual planning on teaching abroad in South Korea, your statement should look something like:

"This certification is given under penalties of perjury and to the best of my knowledge and belief, the statements are true, correct, and complete. YOUR FULL NAME (YOUR TAX #) was a U.S. resident within the meaning of Article 4 of the U.S.-Korea treaty (including, in some cases, physical presence in the United States) immediately before entering Korea. The assignment began on DATE and ends on DATE. Article 20 of the U.S.-Korea treaty provides a 2 year exemption from income tax."

The treaty and the appropriate section related to teaching can be found here: http://www.irs.gov/pub/irs-trty/korea.pdf

If you're going abroad somewhere else, here's the list of all of the treaties: http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z


Section 11: Mark the country for which you are requesting your certificate for.  Remember, you can get more than one and it will not cost you additional money.  However, if you have to send in Form 8802 again, you will be required to pay the processing fee once more.  I would suggest at least three copies: one for your employer (even if they end up not needing it), one for your records, and one in case you need to submit it elsewhere.

I think I covered all of the main and most confusing points of applying for this certificate.  Hopefully this will help others down the road!


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