W-8BEN Form Instructions for Canadians

Generally, only a nonresident alien individual can use the terms of a tax treaty to reduce or eliminate U.S. tax on certain types of income. However, most tax treaties contain a provision known as a “saving clause” which preserves or “saves” the right of each country to tax its own residents as if no tax treaty existed. Exceptions specified in the saving clause may permit an exemption from tax to continue for certain types of income even after the recipient has otherwise become a U.S. resident alien for tax purposes. Also see Nonresident alien student or researcher who becomes a resident alien, later, for an example.

Forms & Instructions

Under section 6050W, a PSE is generally required to report payments made in settlement of payment card transactions or third party network transactions. However, a PSE is not required to report payments made to a beneficial owner that is documented as foreign with an applicable Form W-8. This tax is imposed on the gross amount paid and is generally collected by withholding under section 1441 or 1442 on that amount. A payment is considered to have been made whether it is made directly to the beneficial owner https://www.azerilove.net/articles/245/1/Love-Sayings-and-Quotes or to another person, such as an intermediary, agent, or partnership, for the benefit of the beneficial owner. New line 9c, “FTIN not legally required,” has been added for account holders otherwise required to provide a foreign tax identification number (FTIN) on line 9b, to indicate that they are not legally required to obtain an FTIN from their jurisdiction of residence. All wages, salaries and tips you received for performing services as an employee of an employer must be included in your gross income.

Why Is a W-8BEN-E Required?

Foreign businesses are subject to the same tax rate (30%) that foreign individuals are subject to, and like individuals, they too may qualify for a reduced tax rate if their home country has a tax treaty with the U.S. The form is intended for intermediaries and should not be used by beneficial owners in a business. The form also helps you claim a reduction or an exemption from the U.S. tax withholding if you reside in a country with which the United States has an income tax treaty and the income you received is subject to that treaty. If you are an excepted nonfinancial start-up company you must check the box to certify that you meet all of the requirements for this status. You must also provide the date you were formed or your board passed a resolution (or equivalent measure) approving a new line of business (which cannot be that of a financial institution or passive NFFE).

Information Included on a W-2

Note that though the W 8 form is an IRS form related to taxes, it’s submitted to financial companies that request it from you, not to the IRS. Once submitted, the form will generally remain valid for three years. After that period, the financial entity that requested the form from you might request a new form.

Types of W-8 Forms

You may check the box in this line 6b if you are an account holder as described for purposes of line 6a and you are not legally required to obtain an FTIN from your jurisdiction of residence (including if the jurisdiction does not issue TINs). By checking this box, you will be treated as having provided an explanation for not providing an FTIN on line 6a. If you wish to provide a further (or other) explanation why you are not required to provide an FTIN on line 6a, you may do so in the margins of this form or on a separate statement attached to this form. Non-resident aliens are subject to a 30% income tax on the gross income they receive from a US-based employer. If a tax treaty exists between the US and the country of residence, a non-resident alien may be eligible for a reduced tax rate. A partner in a partnership conducting a trade or business in the United States will likely be allocated effectively connected taxable income.

However, if you use Form W-8BEN to claim treaty benefits, a move to the United States or outside the country where you have been claiming treaty benefits is a change in circumstances. In that case, you must notify the withholding agent, payer, or FFI within 30 days of the move. The form also allows these entities to claim eligibility for reduced or exempt US withholding, http://ansar.ru/online/onlajn-konferenciya-iskandera-ishakova-na-ansar-ru which is deducted from various income types paid to nonresidents. This is possible because of the tax treaties the US has with numerous countries, which aim to prevent double taxation for taxpayers abroad. By completing the W-8 form properly, foreign entities certify their non-US status and, if applicable, benefit from the tax treaty between their country and the US.

Who needs to file a W-8 form?

In short, filing a W8 Form allows individuals to benefit from tax treaties in place between the United States and their country of residence. Form W-8BEN must be signed and dated by the beneficial owner of the amount subject to withholding or the account holder of an FFI (or an agent with legal authority to act on the person’s behalf). The agent should also check the box indicating that the agent has capacity to sign for the beneficial owner. The agent, as well as the beneficial owner or account holder, may incur liability for the penalties provided for an erroneous, false, or fraudulent form. Article 20 of the United States-China income tax treaty allows an exemption from tax for scholarship income received by a Chinese student temporarily present in the United States. Under U.S. law, this student will become a resident alien for tax purposes if his or her stay in the United States exceeds 5 calendar years.

• If you are an entity maintaining an account with an FFI, the FFI may request that you provide this Form W-8BEN-E in order to document your chapter 4 status.
• Any such attached certification becomes an integral part of this Form W-8BEN-E and is subject to the penalty of perjury statement and other certifications made in Part XXX.
• In order to establish a claim of tax treaty benefits under the Internal Revenue Code, earners of eligible income need to fill out Form W-8BEN.
• The IRS prefers blue or black ink pens because they are easy to read and won’t fade or smudge.
• To the extent you have an account with an FFI, your account may be subject to reporting by the FFI under chapter 4.

That the individual in question is the beneficial owner of the income connected to Form W-8BEN. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

• New line 9c, “FTIN not legally required,” has been added for account holders otherwise required to provide a foreign tax identification number (FTIN) on line 9b, to indicate that they are not legally required to obtain an FTIN from their jurisdiction of residence.
• 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.
• They differ in their purpose, depending on who is filling the form, and for what reason.
• Non-citizens living outside the US are taxed differently than US citizens and permanent residents.
• All NRAs earning beneficial income in the US must establish their country of residence.

As mentioned earlier, whether the US has a tax treaty with the worker’s country of residence will determine the rate the worker is eligible to apply for. Form W-8BEN is used by foreign individuals who receive income from sources in the U.S. If your country of residence for tax purposes https://www.prorobot.ru/08/robot-mikrom.php has issued you a tax identifying number, enter it here. If you are an NFFE that is providing Form W-8BEN-E to an FFI treated as a reporting Model 1 FFI or reporting Model 2 FFI, you may also use Part XXIX to report controlling U.S. persons (as defined in an applicable IGA).