The substitute Form W-8EXP must contain all of the information required in Part I, lines 1 through 5, line 7 (if a U.S. TIN is required), and line 8. The substitute Form W-8EXP must also contain all of the statements and certifications contained in Parts II and III, as applicable, with respect to the purpose for which the form is provided, but a specific statement or certification needs to be included (in its entirety) only if it is relevant to the type of entity providing the form. In short, if you are a foreign individual or company that earns income from sources in the US, you need to complete and file a W8 form with your payers or withholding agents. There are different types of W8 forms that apply in different circumstances to different entities. You should always be aware of any possible tax treaties your resident country has with the US in order to apply for exemptions or rate reductions from your tax withholdings.
- If you are filling out a W-8 BEN form and get stuck, the best thing to do is seek counsel from a tax professional with expertise in US tax laws and regulations.
- In most cases, you must have engaged in trade or business activities in the United States sometime during the tax year to be able to categorize income as ECI.
- In short, if you are a foreign individual or company that earns income from sources in the US, you need to complete and file a W8 form with your payers or withholding agents.
- Also see Nonresident alien student or researcher who becomes a resident alien, later, for an example.
How to Complete IRS Form W-8BEN?
Without this form, the organization paying you may withhold a portion of your income in order to pay taxes, assuming you’re a U.S. citizen or resident of the United States. This can be problematic as it often leads to long and drawn-out processes in order to claim back these withheld funds. Foreign persons and entities, such as foreign corporations, trusts and estates must complete the W-8 tax form. This form is used to report income earned by a non-resident alien for work done in the United States or for income received from U.S. sources. In situations where a foreign person or entity is receiving payments from a U.S. source, they must provide a valid W-8 tax form to ensure they are not taxed on their income by the IRS. While W8 relates to tax treaty benefits and withholding for foreign non-resident aliens, W9 is used for collecting the taxpayer identification number for individuals and entities.
Sources
- When a US business makes a payment to a foreign individual or entity, such as service fees, royalties, or dividends, they are generally required to withhold US tax on this payment at a standard rate of 30%.
- They are only for foreign people and/or entities without citizenship or residency—a US resident or resident alien will never be required to fill out a W-8 tax form.
- Complete line 10 by stating that you derive business profits or gains (other than from real property) not attributable to a permanent establishment.
- If not filed, the entities in question will be required to pay the standard 30% tax withholding rate on certain incomes.
- Form W-8BEN is used by foreign individuals who receive income from sources in the U.S.
- Stripe offers a variety of tools designed to streamline and simplify the financial operations of businesses.
You may rely on the entity’s claim on line 14b unless you have actual knowledge that the claim is incorrect. The W-8BEN-E form is similar to the W-8BEN, but it is designed for entities such as corporations, trusts and partnerships rather than individuals. This form requires more detailed information including registered name, address, contact information, entity type (corporation or trust), business activities conducted by the entity in the U.S. or outside of it, percentage ownership held by each owner of the entity (if applicable) and list of beneficial owners of the entity (if applicable). It also requires information about any other withholding agreements or treaties that might apply to the entity regarding U.S. taxes. The W8-BEN-E form is the “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting” that applies to foreign businesses that receive QuickBooks income originating in the US.
Forms & Instructions
- To claim certain treaty benefits, you must complete line 5 by submitting an SSN or ITIN, or line 6 by providing a foreign tax identification number (foreign TIN).
- Line 6b (new), FTIN not legally required, has been added for account holders otherwise required to provide a foreign taxpayer identification number (FTIN) on line 6 (redesignated as line 6a) to indicate that they are not legally required to obtain an FTIN from their jurisdiction of residence.
- However, a QI is not required to check line 15i of Part III of the form until it provides a withholding statement identifying an intermediary or flow-through entity that receives a payment allocated to a chapter 4 withholding rate pool of U.S. payees.
- Ensure that you choose the correct form to represent your status, because it can impact the amount of tax that is withheld, or even result in exemptions.
- Your permanent residence address is the address in the country where you claim to be a resident for purposes of that country’s income tax.
Depending on your home country’s tax treaty with the US, you might be able what is a w8 to be exempt from US taxes because your income is already taxed in your country of residence. The form must be provided to the withholding agent (such as a bank or investment firm), not to the IRS. A transferor is any person, foreign or domestic, that transfers a partnership interest. In the case of a trust, to the extent all or a portion of the income of the trust is treated as owned by the grantor or another person under sections 671 through 679 (such trust, a grantor trust), the term transferor means the grantor or other person.
A payment to a U.S. partnership, U.S. trust, or U.S. estate is treated as a payment to a U.S. payee. A U.S. partnership, trust, or estate Insurance Accounting should provide the withholding agent with a Form W-9 pertaining to itself. However, for purposes of section 1446(a), a U.S. grantor trust or disregarded entity shall not provide the withholding agent a Form W-9. Instead, the entity must provide a Form W-8 or Form W-9 pertaining to each grantor or owner, as appropriate, and, in the case of a trust, a statement identifying the portion of the trust treated as owned by each such person.