Claiming a Tax Treaty Benefit in a Foreign Country or Want to avoid Paying VAT? Make Sure You Obtain a Form 6166

Claiming a Tax Treaty Benefit in a Foreign Country or Want to avoid Paying VAT? Make Sure You Obtain a Form 6166

Tax Law
By Anthony Diosdi The United States has income tax treaties with approximately 58 countries. These treaties allow for various forms of tax relief. In order for a U.S. corporation or U.S. individual to obtain a tax treaty benefit in a foreign country that has a tax treaty with the United States, many U.S. treaty partners require that the Internal Revenue Service (“IRS”) certify that the entity or individual claiming treaty benefits is a resident of the United States for federal tax purposes. The IRS provides this residency certification on Form 6166, a Letter of U.S. Residency Certification. A Form 6166 may also be used as a proof of U.S. residency for purposes of obtaining an exemption from a value added tax (“VAT”) imposed by a foreign country.Below, please find two…
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How a Non-Resident Can Use a Tax Treaty to Eliminate the U.S. Tax Consequence of Withdrawing Money from an IRA or 401(k) Plan

How a Non-Resident Can Use a Tax Treaty to Eliminate the U.S. Tax Consequence of Withdrawing Money from an IRA or 401(k) Plan

Tax Law
By Anthony Diosdi We often receive inquiries from non-U.S. citizens that are concerned with the U.S. tax implications of withdrawing money from an Individual Retirement Accounts (“IRA”) or 401(k) plan. Often these individuals are in the U.S. for a temporary work assignment and they are concerned with the U.S. withholding tax of 20% or 30%. They are also concerned about the 10% early withdrawal penalty. This article discusses how non-U.S. citizens may use a tax treaty to eliminate the U.S. tax associated with the withdrawal of funds from an IRA or 401(k) plan.Taxation of Distributions from IRAs and 401(k) Plans Under U.S. Federal Tax LawUnder the Internal Revenue, any distribution from a qualified plan such as an IRA or 401(k) plan that does not qualify as an eligible rollover-distribution is…
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