For NRIs managing income in both India and the USA, navigating cross-border taxes can be challenging. The Double Taxation Avoidance Agreement (DTAA) ensures that you don’t pay taxes twice on the same income, but to avail its benefits, obtaining a Tax Residency Certificate (TRC) from the USA is essential. Here’s everything you need to know to streamline your tax compliance.

Why NRIs Need a Tax Residency Certificate (TRC)

A TRC is indispensable for NRIs who wish to access DTAA benefits. Here’s why:

• Claim DTAA Benefits: A TRC verifies your US residency, enabling you to claim exemptions or credits under the DTAA.
• Avoid Double Taxation: Prevent paying taxes on the same income in both India and the USA.
• Reduced Tax Withholding: Tax authorities require a TRC to apply reduced withholding rates or grant exemptions.

Without a TRC, you may face higher tax rates, lose out on significant tax savings, and miss the opportunity for effective NRI tax planning.

Step-by-Step Guide to Obtaining a TRC in the USA

• File Form 8802: Submit this form to the Internal Revenue Service (IRS) to request a residency certificate.
• Pay the Application Fee: The fee is $85 for individuals and $185 for corporations.
• Submit the Form: Send your application via mail or fax to the IRS. Note: This process is manual.
• Include Supporting Documents: Attach your most recent US tax return, marked as "Do Not Process," to support your application.
• Request Multiple Years: If needed, request certificates for multiple countries or overlapping years within one application.

Application Timeline for NRIs

• Submit in Advance: Apply at least 45 days before you need the TRC.
• For Upcoming Years: Applications for a new calendar year can be submitted after December 1 of the previous year.

Being proactive ensures you can claim DTAA benefits without delays or complications, and with expert DTAA Consultancy, you can navigate the process more efficiently and ensure compliance with all tax regulations

Who Cannot Apply for a TRC?

Certain individuals and entities are ineligible to apply for a TRC:

• Non-Filers: NRIs who haven’t filed US tax returns.
• Dual Residency Cases: Non-resident aliens or those with dual residency whose tiebreaker rules favor another country.
• Ineligible Entities: Fiscally transparent organizations without US partners.

Important Details About TRCs for NRIs

• Annual Validity: TRCs are issued on a calendar-year basis.
• Fiscal Year Adjustments: If India’s fiscal year (April–March) overlaps multiple US calendar years, you may need separate TRCs for each year.
• Express Delivery: Attach prepaid envelopes for expedited delivery if necessary.
• Authorized Representation: Appoint a CPA, enrolled agent, or attorney via IRS forms 2848 or 8821 to handle correspondence on your behalf.

How Dinesh Aarjav & Associates Can Help NRIs

Obtaining a TRC is just one part of cross-border tax compliance. At Dinesh Aarjav & Associates, we specialize in assisting NRIs with:

• Preparing and filing Form 8802.
• Managing documentation and communication with the IRS.
• Ensuring timely and accurate submission of applications.

With our expertise, you can seamlessly claim DTAA benefits and optimize your tax liabilities.