In order to receive a reduction or an exemption from tax withholding, the entity must be eligible under IRS code 115(2), 501(c), 892, 895, or 1443(b). Should none of those exemptions apply, the entity must file a W-8BEN or W-8ECI (if it received “effectively connected income”). For example, a nonresident foreigner who earns interest or dividends from U.S.-issued securities would likely file a W-8BEN, while a foreign nonprofit with operations in the U.S. might need to file form W-8ECI. Former U.S. residents who earn retirement income, or who occasionally perform freelance work for U.S. clients, might also have to submit the form to reduce their tax withholdings. A U.S. citizen or resident alien will never have to complete a W-8 form.
What is the difference between a W-8 and a W-8 BEN?
You probably don’t have to worry about the W 8 form — unless you’re a non-resident alien. If you’re concerned about how to do taxes by yourself, the good news is that the W8 form instructions are fairly straightforward. However, others might be harder to complete and https://www.alfa-kniga.ru/html/5_0_2_2.htm to establish eligibility for. It’s not much more complicated to file than the W8-BEN and can easily be done with the help of some of the tax software for businesses around today. This of course needs to be one of the countries with which the U.S. has a tax treaty.
- In certain cases, a GIIN may be required based on the chapter 4 status claimed on the form.
- 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.
- Complete Part II for a disregarded entity that has its own GIIN and is receiving a withholdable payment, or for a branch (including a branch that is a disregarded entity that does not have a GIIN) operating in a jurisdiction other than the country of residence identified on line 2.
- You should request Form W-8BEN from any foreign individual for any of the purposes described previously in these instructions.
- Let’s say that a resident of another country purchases stock in a U.S. publicly-traded company, which pays dividends to the nonresident.
- If, however, inconsistent claims are made for the same portion of a payment, you may either reject both claims and request consistent claims for that portion of the payment, or you may choose which reduction in rate to apply.
What is the difference between W-8 and W9 forms?
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If you are a hybrid entity making a claim for treaty benefits as a resident on your own behalf, you may do so as permitted under an applicable tax treaty. You should complete this Form W-8BEN-E to claim treaty benefits in the manner described in the instructions for Part III and complete Part I to the extent indicated below. Note that you should not complete line 5 indicating your chapter 4 status unless you are a disregarded entity that is treated as the payee for chapter 4 purposes. If you are a trustee of a trustee-documented https://amvnews.ru/index.php?go=Files&in=view&id=166 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.
Example of IRS Form W-8
See the Instructions for Form 8833 for more information on the filing requirements. If a withholding agent fails to collect Form W-8 from an individual or entity and doesn’t withhold taxes, the withholding agent may be subject to a penalty of up to 30% of payments they made to a payee outside the U.S. 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.
