In this blog, we go over the following:
The W-8 BEN is an IRS administered form to gather correct Nonresident Alien (NRA) taxpayer information for individuals for reporting purposes and to document their status for tax reporting purposes. Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding is used by a foreign person to establish both foreign status and beneficial ownership and to claim income tax treaty benefits with respect to income other than compensation for personal services.
Who Needs to Complete a W-8 BEN Form?
The recipient of the US source income
A Foreign National who wants to claim Treaty Benefit
US Citizens must not complete
Who Receives This Form?
Those individuals that receive this will submit this form to the withholding agent (such as the banks) or payer if you are a foreign person that’s the beneficiary owner to the amount subject to withholding. A withholding agent is the U.S. or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. This form does not go to the IRS.
Why Complete W-8 BEN
The ultimate purpose of filling out the W-8 BEN form is to establish that someone is a foreign person. Due to tax regulations, we are required to report certain information about the foreign person in connection with any reward received. It’s important to provide a Form W-8 BEN because the punishment for it may lead to withholding at a 30% rate (foreign-person withholding) or other restrictions. In other words, the bank/withholding agent will withhold 30% of the income and give it to the IRS.
Here's a video on how to complete a W-8 Form.
For more information, please visit the IRS website or check out our other blogs/tutorials.