Instructions for Form W-8BEN 10 2021 Internal Revenue Service

Employees who don’t fill out Form W-4 carefully can get hit with a nasty tax bill out of the blue or essentially end up lending the IRS money free of charge. But the IRS revamped and simplified the W-4 form and how taxpayers should determine their withholding. Now, withholding amounts relate to whether an individual has multiple jobs or a spouse who works, what credits they can claim, and other adjustments. This exemption from withholding is tied to the personal exemption, a federal tax break that was available to all taxpayers, regardless of their expenses, through 2017. A summary of the specific changes to each withholding certificate is provided in the grid below. If you receive a Form W-8BEN-E or Form W-8IMY from a nonreporting IGA FFI that is a trustee-documented trust that indicates its trustee is foreign, you must obtain a GIIN of the trustee on the form.

• You may check the box in this line 9c if you are an account holder as described for purposes of line 9b and you are not legally required to obtain an FTIN from your jurisdiction of residence (including if the jurisdiction does not issue FTINs).
• A W-8 form is a document that the Internal Revenue Service (IRS) requires foreign entities—individuals and corporations—to fill out if they have financial dealings within the US.
• The payee needs to file the Form W-8BEN before the first payment to prevent withholding of the full 30% of U.S. income tax.
• An entity providing such a certification will still be required, however, to provide its chapter 4 status (that is, the type of NFFE) in Part I, line 5, as determined under the regulations if you are a withholding agent other than an FFI documenting an account holder under Annex I of an applicable IGA.
• All versions of Form W-8 are available on the IRS website, including interactive ones.

If the Country B branch receiving the payment is a disregarded entity you may be required to provide its legal name on line 3. Such organizations should use Form W-8BEN-E only if they are claiming a reduced rate of withholding under an income tax treaty or a Code exception other than section 501(c) or if they are using this form solely for purposes of documenting themselves as an account holder with an FFI. However, if you are a private foundation you should check “Private Foundation” instead of « Tax-exempt organization. » .

Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)

Organizations operating in the United States need to have accurate tax ID information in order to report income that is paid to their suppliers. This process of data collection applies to companies based in both the US and abroad, if they have operations in the US. Additionally, what is a w8 tax ID information, such as US Taxpayer Identification Numbers (TIN) and EU Value Added Tax (VAT) numbers also have to be validated.This article will explore W-8 forms and W-9 forms, EU VAT and US TIN, their purpose, differences and how to know when to use which one.

A Model 1 IGA means an agreement between the United States or the Treasury Department and a foreign government or one or more agencies to implement FATCA through reporting by FFIs to such foreign government or agency, followed by automatic exchange of the reported information with the IRS. An FFI in a Model 1 IGA jurisdiction that performs account reporting to the jurisdiction’s government is referred to as a reporting Model 1 FFI. The payee is generally required to supply a valid U.S. taxpayer identification number on Form W-8. The withholding agent is required to confirm the number with IRS databases. Withholding can also be required from « fixed or determinable annual or periodic » (FDAP) income, which can include interest, dividends, royalties, rent payments, fellowships, or even scholarships. The payee (employee), not the type of income, dictates whether a W-8 form must be withheld by the payer (employer).

Tax Savings Are Available to Those Who Persevere

See section 884 for the definition of interest paid by a U.S. trade or business of a foreign corporation (« branch interest ») and other applicable rules. 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. See, however, Substitute Forms W-8 for Payments of Reportable Amounts and Withholdable Payments, earlier, for when you may omit a chapter 4 certification on a substitute Form W-8.

Submitting Form W-8 could eliminate all withholding, or it could reduce the amount required to be withheld. You, as the payee, must take the additional step of claiming an exemption on the applicable Form W-8 if you want to reduce or eliminate withholding. Payments should not be made until the withholding agent has your Form W-8 on file. Let’s say that a resident of another country purchases stock in a U.S. publicly-traded company, which pays dividends to the nonresident. A tax treaty exists between the U.S., and the nonresident’s country of origin, which states the income is not subject to withholding. A resident of another country might have income earned in the United States, but a tax treaty between the U.S. and the nonresident’s country of origin might be in place, stipulating that this income is not subject to withholding.

What Happens if You Don’t Submit a w8 Form?

If you are completing Form W-8BEN to claim a reduced rate of withholding under an income tax treaty, you must determine your residency in the manner required by the treaty. Do not show the address of a financial institution, a post office box, or an address used solely for mailing purposes. If you do not have a tax residence in any country, your permanent residence is where you normally reside. If you are a foreign individual who is the single owner of a disregarded entity that is not claiming treaty benefits as a hybrid entity, with respect to a payment, you should complete this form with your name and information.

You should also use this space to set out the requirements you meet under the identified treaty article. If you are a trustee of a trustee-documented trust and you are a foreign person, you should provide the GIIN that you received when you registered as a participating FFI or reporting Model 1 FFI. If your branch is receiving the payment and is required to be identified in Part II, you are not required to provide a GIIN on line 9a. For purposes of providing a withholding agent with documentation for both chapter 3 and chapter 4 purposes, however, such an insurance company is permitted to use Form W-9 to certify its status as a U.S. person. Likewise, a foreign branch of a U.S. financial institution (other than a branch that operates as a qualified intermediary) that is treated as an FFI under an applicable IGA is permitted to use Form W-9 to certify its status as a U.S. person for chapter 3 and chapter 4 purposes..

W-8BEN: When to Use It and Other Types of W-8 Tax Forms

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. Each form requires the filer to provide specific information and serves a distinct purpose in the context of US tax laws and regulations. The IRS website offers more detailed explanations of each form and provides guidance on when to use them. If you are a non-resident alien with income sources in the United States, then these tax forms are the correct forms for you. Non-resident aliens are taxed by U.S. companies at 30 percent on earned income unless a fully completed W-8 form is submitted.

If a change in circumstances makes any information on the Form W-8BEN you have submitted incorrect, you must notify the withholding agent, payer, or FFI with which you hold an account within 30 days of the change in circumstances and you must file a new Form W-8BEN or other appropriate form. Generally, a Form W-8BEN will remain in effect for purposes of establishing foreign status for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2015, remains valid through December 31, 2018. The owner of a disregarded entity (including an individual), rather than the disregarded entity itself, must submit the appropriate Form W-8BEN for purposes of section 1446(a) or (f), or for chapter 3 or 4 purposes. These instructions have been updated to reference the use of this form by a foreign individual who is the seller of a life insurance contract or interest therein or who is a recipient of a reportable death benefit for purposes of reporting under section 6050Y. Choosing the correct one depends on who the payee is, who the withholding agent is, and why they’re claiming an exemption from withholding.