Chile Forum

Does anybody have experience of proving that they have taken up Chilean tax residency?

The reason for asking is that I worked in the USA for five years up to my visa expiring in November 2008 and, as such, I filed as US tax-resident through to and including 2008 but want to ensure I am considered US non-resident from 2009 onwards. I gather that it is not sufficient to prove to the IRS that you have simply left the USA - the rules require that you prove that you have become tax resident again in your home country (the UK, in my case) or alternatively, in a third country (e.g. Chile - where my wife is from and where i worked in 2000-2002).

I have a RUN mumber and a Residente Temporario, moved here in December 2008 (but have also spent a lot of time since outside the country). Any experience on what documents might help prove that I am now Chilean tax resident and any idea what tests I would be subject to on days spent in Chile?

My last question was may have been a little too specific (or at least, i do not seem to have attracted any replies). Maybe I could ask the question another way - has anybody voluntarily filed a Chilean tax return and any idea how the process works and what the reporting periods/ filing deadlines are?

As long as you are not a U.S. citizen, for the U.S. IRS your off the hook for money you make outside the country. As far as I understand anyway, from crude understanding of the requirements. Has nothing to do with your Chilean tax status.

Admin,

unfortunately it is not that simple. I filed US tax returns for every year between 2003 and 2008 as a resident, because I was working there then.

I agree that as an (expired) US visa holder life is far simpler than for US citizens or green card holders but i am not entireley in the clear. I still have to file a US return in 2009 for US source income (stock options exercised after I left the US but viewed as "earnt" while resident in the US) and go through a series of tests to prove that I have not remained US tax resident. If I fail these tests I can be assessed by the IRS (once again) on my worldwide income.

The fact that my US visa expired is of little consequence (the IRS is happy to collect tax from anybody, including foreigners and/or illegals) and the tests include factors such as days in the country (in excess of 30 days in the US even as a visitor in the first year you claim to be non -resident is a killer) and various subjective tests (remaining ties, real estate, vehicles, bank accounts etc). Normally, temporary workers in the US satisfy these tests comfortably by proving that they have returned to their home country (and/or are protected by a double tax treaty). Unfortnuately while I am a UK ctizen I have not lived there for over a decade and moved to the US from Australia and moved from their to Chile (where i am now), so the tests are more difficult for me. In circumstances like mine the most effective way of establishing that I am US "non resident" in 2009 is to prove that I am "tax resident" in my new country.

Hence my question as to how I can qualify as Chilean tax resident and/or voluntarily file a Chilean tax return.

WorldCitizen

You might try filing a simple part year return with the IRS called a Sailing Permit. You can find the form number on the website http://www.irs.gov It's designed for non US citizens who are permanently leaving the country and want to end their relationship with the IRS.
If you give up your "Green Card" you can file as a non resident using 1040NR and only declare your USA source income.
See what works for your situation.

Zenth,
thanks - in fact I did not file a "sailing permit" because
(i) I wanted to file 2008 as a full year (you cannot file a joint return in a split year);
(ii) I was advised that it is essentialy only a discretionary notice (by me to the IRS) and does not count towards the US residency tests.
WorldCitizen

It seems from my rereading of your posts you were issued a VISA which allowed you to work but you never became a resident alien (Green Card holder). You were probably issued a Social Security card which states on the front "Only valid for work purposes with a VISA" or something to that effect. You considered yourself a USA person for income tax purposes by filing a 1040 and subjecting your world wide income, if any, to US income tax.
If your VISA expired I believe you no longer have any residency status. Your only obligation to Uncle Sam is to pay tax on your USA source income.
It's usually USA citizens that have to prove they were out of the country for 365 days in a row ( I believe that's the test) to obtain a foreign earned income exclusion. No too difficult for folks with a fixed work location. The ones who have it tough are airline personnel and cruise ship entertainers who may touch down or dock in the USA for a day or so every couple of months. Federal employees are not entitled to the exclusion.
If you do not wish to consider yourself a US person for income tax purposes, the evidence seems to point in the direction that you are not, especially if you now live in Chile.
File a 1040NR, declare the proper USA source income and enrich the copper clad coffers of your your new home with your Chilean income tax payments.

Zenith,
you have me summed me up pretty well, except that (my understanding of) ones US tax residency status is determined by how you answer the questions listed in IRS form 8840. This tests whether you can prove that you have a closer connection to one or two (but unfortunately not more than two) other countires. The challenge is that I have bits of my life all over the world (income from one country, property in a second, physically present in a third, vehicles and frequent vists to the US etc) so I have to try extra hard to prove that Chile is my primary place of residence for 2009. Hence my question as to how to (voluntarily) file a Chilean tax return?
WorldCitizen

I think, WC, that you've reached a point where the best answers will come from a Chilean lawyer. I know that there are bilingual lawyers in Santiago and Valparaíso, and I'd guess that any large city may have at least one lawyer who could answer the question in intelligible English (or, perhaps, you're competent in Spanish).