Canada Tax 101: What Is a W-8BEN Form?

An FFI may also request this form from you to document your account as other than a U.S. account. Give Form W-8BEN to the person requesting it before the payment is made to you, credited to your account, or allocated. If you do not provide this form, the withholding agent may have to withhold at the 30% rate , backup withholding rate, or the rate applicable under section 1446. If you receive more than one type of income from a single withholding agent for which you claim different benefits, the withholding agent may, at its option, require you to submit a Form W-8BEN for each different type of income.

If you are the single owner of a disregarded entity, you are considered the beneficial owner of income received by the disregarded entity. Submit Form W-8BEN when requested by the withholding agent, payer, or FFI whether or not you are claiming a reduced rate of, or exemption from, withholding. 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.

W-8BEN forms by type

The W-8BEN is an IRS mandated form to collect correct Nonresident Alien taxpayer information for individuals for reporting purposes and to document … The specific W-8 form used by the supplier depends on the status of the foreign entity itself. UMass cannot advise the supplier on which form to complete, nor how they fill it out. We highly recommend that the supplier review this page that may answer some of their questions.

W-8 forms are filled out by foreign individuals or entities that lack U.S. citizenship or residency, but have worked in the U.S. or earned income in the U.S. This usually applies to foreign-domiciled businesses and non-resident aliens. A W-8BEN document is a tax form that needs to be filled by non-US residents. It is issued by the Internal Revenue Service to individuals whose nationality and country of residence are not the United States.

Independent Contractor Hiring Checklist

Organization status refers to whether the business is a foreign government, publicly traded company, nonprofit company or otherwise. The IRS also issues a Form W-8 BEN-E which is a different variation used when contracting with a foreign entity rather than a foreign individual. Payment mechanisms need to account for the location and wishes of the contractor. Some payment methods are country-specific, while others may add to the cost of doing business, due to currency exchange fees. If using independent contractors, it is crucial to apply different rules than those applied to employees on the payroll.

Add any special rates and conditions, if applicable to your case. If you are claiming the provisions, state the article and paragraph of the treaty identified on the lines above to claim a % rate of withholding and specify the type of income. Explain the additional conditions you meet to be eligible for the rate of withholding. Any business in the United States should collect Form W-8BEN from any non-US persons or businesses engaged in a contractual agreement.

What are W-8 forms and what is a W-8 form used for?

If the information on the W-8BEN becomes incorrect (for example, you’ve changed your name, moved to the US, or to a country that doesn’t have a tax treaty), you need to provide a new W-8BEN or another appropriate form within 30 days. IRS Form W-8BEN is used to certify that a contracted person is a foreign individual is a non-US resident and performs work what is a w8 outside of the United States. The W-8BEN is filed with the withholding agent, so there is no need to mail a copy to the IRS. Generally, your W-8BEN will remain in effect for three years, unless a change in circumstances makes any information on the form incorrect. Your client is required by the United States to ascertain your status as a non-U.S.

• The first piece of advice Dyke Yaxley provides those doing business in the US from the UK, is that filling out the W-8BEN-E form can be intimidating but don’t panic.
• For non-US individuals – You need to fill out the W-8BEN form.
• Payments made as compensation for a provided service are the most common, but interest, dividends, rents, royalties, premiums, and annuities are all subject to tax withholding.
• You may be a U.S. resident for tax purposes depending on the number of days you are physically present in the United States over a 3-year period.
• 3) It is also used to take advantage of a reduced rate of withholding tax by virtue of being a resident of a country that has a tax treaty with the United States.

The W-8 BEN-E form is for business entities like corporations and partnerships and is much longer and honestly feels quite intimidating because it’s 8 pages long there are many scenarios when completing the W-8BEN-E form. I previously showed you how to complete the W-8 BEN form which is for individuals and sole proprietorships. Once again, make sure you provide accurate information on your W-8BEN Form.

Part II: Disregarded Entity or Branch Receiving Payment

Even so, it can be challenging to understand what you need to fill out on the form exactly. Don’t shy away from the task if you are a remote IT professional dealing with W-8 forms complexity. Instead, begin your journey to a solution by reading our previous article about the importance of form submission. After, simplify your filling process by reading the detailed instructions below. Next, you can skip all of these parts of the W-8 BEN-E form and then go straight down to part XXV which is active NFFE and check the box on line 39. I’m going to cover one of the most common scenarios that are applicable when a corporation is requested to complete form W-8BEN-E.