Everyone is required to pay taxes, whether it is a permanent resident or entity, a foreign person or an entity. However, the terms, rates and standards of taxation are different for all. In order to enlighten the foreigners of the complete procedure, the International Revenue Service (IRS) has introduced a variety of forms, called W-8 forms. However, learning how to fill out IRS Form W-8Ben is a bit of a drag and a complicated procedure. Hence, we are breaking the procedure down to make it easier to tackle. Let’s learn everything there is to know about the W-8BEN form.

If you need any help doing IRS form W-8BEN please call us at 407-502-2400, or email us at [email protected].

What is a W-8BEN Form?

Who would like to have their taxes exempted or reduced? Everyone, obviously. Fortunately, the IRS has provided the exact same opportunity to foreigners earning and making money in the US, and IRS Form W-8BEN is their key to this. Before learning how to fill an IRS Form W-8BEN, we must carefully learn the purpose behind it.

According to the financial laws of the US, the foreigners must pay a flat 30% tax on some specific incomes which they have been making using sources in the US. However, US also has many Income Tax treaties with other countries and if the individual or the entity in question belongs to one of these countries, then they might just be able to get a considerate reduction to their tax amount figure. Who wouldn’t love that? Therefore, in order to take full advantage of such an offer, non-US resident individuals and entities must fill an IRS W-8BEN Form and enjoy the benefits – given the fact that they fill it correctly.

Who Should Utilize the Benefits of Filling a W-8BEN Form?

IRS Form W-8BEN is to be utilized by all those non-resident aliens living in the US and the foreign businesses which are earning their income or making cash using US sources. Filling out this form and submitting it will give them identification and a certification that will indicate that these individuals and businesses are not subject to taxes in the same established manner as the other native individuals and businesses are. No permanent resident or business entity of America can utilize the IRS Form W-8BEN.

Kinds of Incomes of Non-US Residents that are Subject to Tax Withholding:

As explained earlier, a non-US entity or a person is subject to 30% withholding tax on certain income made from US sources. These incomes include:

  • Interests (not all of them but certain kinds)
  • Premiums
  • Rents
  • Royalties
  • Annuities
  • Dividends
  • Or any other fixed income earned through compensations, services, substituent payments and other fixed profits made on US land.

Kinds of Incomes of Non-US Residents that are Not Subject to Tax Withholding:

Not all sorts of incomes made on US land by foreigners are subject to tax withholding. These incomes include:

  • Interest on bank deposits
  • Interests, dividends, royalties and rents earned from foreign sources and not from US sources
  • Broker proceeds, such as sales of US stocks and securities
  • Short-term Original Issued Discounts (OID)
  • Any kind of wager won by the foreigners

However, in some cases, the foreigners would still need to fill the IRS Form W-8BEN to be exempted from these incomes.

Filling Out the Form:

Complicated as it is, to learn how to fill out an IRS form W-8BEN is not entirely impossible. In fact, with proper guidance and instructions, it may seem like a no big deal at all. So, allow us to be that guide and walk you through the procedure of filling out IRS Form W-8BEN with precision and accuracy. Here it goes:

  1. Understanding the Structure:

First-off, you need to see and read every part of an IRS Form W-8BEN carefully to know what it is really asking for. Only once you have skimmed through all its parts and requirements will you be able to properly learn how to fill out an IRS form W-8BEN from scratch. To pour a little bit more into it, the form consists of three parts, each one asking the applicants to fill out information and tick boxes. Once you are done with filling it, go through it once more to ensure that it is complete and accurate because in case of either discrepancy, the IRS is subjected to issuing penalties.

  1. Conforming to the Rules:

Once you have thoroughly gone through the entire structure of the form, you need to go back to the first portion of the form and ensure that you are not barred from filling the form. Go through each requisite and make sure none of it is applicable on you. You need to pay attention or else, all your time and effort will go down the drain if the form was never meant for you in the first place. Once you are certain that you are permitted to fill this form, move towards Part I.

  1. Completing Part I:

The first Part, Identification of Beneficial Owner, consists of 8 questions, each of which is to be answered with precision and accuracy. Following are the correct ways to answer each question:

  1. The name of the beneficial owner of the legal entity should be penned down exactly as it has been named in the formation document, verbatim et literatim. Abbreviations and acronyms shouldn’t be used at all and should only be used if it is also in the documents and is in the official name of an individual. If the application is for the company accounts, then the company’s name should be written.
  2. The second query requires the country of origin and the tax residency of the entity where the legal entity has been organized, managed, operated or governed.
  • Type in the permanent residential address of the entity without any abbreviations or P.O box numbers. Writing down the in-car address is also prohibited.
  1. If the mailing address is any different from the permanent one, then write that down. Again, abbreviations shouldn’t be used for the city and country.
  2. The US Taxpayer Identification Number should be mentioned in this line of the form. The TIN consists of 9 digits and is issued to individuals by the International Revenue Service (IRS) to process the incomes of individuals who have been earning their revenue on US soil.
  3. If a foreign tax identifying number has been assigned or the country has a 10-digit TIN number, then make sure you write it down in this portion.
  • A reference number can be any account number or any other sources for reference.
  • The last part asks for the date of birth.
  1. Completing Part II:

This second part, Claim of Tax Treaty Benefits, is not to be filled by everyone. Instead, it should only be filled by those individuals who are the residents of a country which has a tax treaty signed with the US government. If the treaty exists, then it allows the individual to be exempted or to be taxed on reduced rates. Therefore, the W-8BEN form should contain the foreign status of the individual along with the terms of the treaty and your reason of claim. The last line must be filled if you have to convince the IRS with some proof or sound reason that you meet all the conditions of a certain treaty – especially if chances of confusion are there.

  1. Completing Part III:

We must also complete the third and the last part if we are to learn how to fill out an IRS form W-8BEN in the right manner. This part is labeled as Certification. This part requires a declaration and confirmation from the applicant. Once the applicant has thoroughly gone through each bullet in the list, they certify it by putting their signatures in the very end along with the date and the capacity of the signee. The capacity refers to the position of the applicant, whether he is an officer or another individual who has the authority to sign the form. Other capacities include beneficial owner, trustee, executor, power of attorney, parent, guardian, director and treasurer.

Check and re-check again before you put in your signatures. Your signatures and certification attests to the fact that the form is filled correctly and accurately with no false or incorrect information present.

  1. Completion:

It is imperative to keep in mind those securities in possession of the applicant that may distribute US sourced income. Even a dual-listed security in the Canadian Securities Exchange and in the US Stock Exchange has to be considered when filling the form. Once you have learned the details about how to fill out an IRS form W-8BEN, you can fill it at that moment or at a later date but once you have signed it, the form will remain valid for the next 3 years. Correction fluids, overwriting or any other sort of correctors are not to be used on the form. In case of their usage, the form might end up getting rejected.

  1. If the Information is Incorrect:

If, somehow, the information on the W-8BEN form ended up being incorrect, then the applicant will have to fill and submit another W-8BEN form within the next 30 days.

  1. Stationary to be Used:

The applicants can fill out the form using only black or blue ink. Use of correction fluid or any other form of correctors will get the form rejected at once.

  1. Submission of the Form:

The applicant must give this form to the withholding agents or to the payer. The form must be submitted once the withholding agent asks for it to be submitted. While this form is officially issued by the IRS, it has to be submitted only to the financial companies who request it.

  1. Penalties:

In case the form has been requested by a financial institution and the entity or an individual fails to comply, they’ll be subjected to 30% tax on income and will also be penalized in various different manners.

If you need any help doing IRS form W-8BEN please call us at 407-502-2400, or email us at [email protected].

IRS Form W-8BEN-Terms to Know:

It is not enough for a non-US person who is earning revenue there to just learn how to fill IRS Form W-8BEN. Since they are not familiar with all the laws and procedures, various terminologies and expressions might also be very new to them. In order to help them gain an expertise on everything related to IRS Form W-8BEN, we have created a list of frequently used stipulations during the process and explain them in the most straightforward manner. Read on and gain a clear understanding of this financial requisite:

  1. Foreign Person;

Let’s begin with the most basic one; foreign person. Who do you think is a foreign person in the eyes of the US government? According to the law, a foreign person could either be a corporation, partnership, trust or an estate which is running under the ownership of a person who is not a US resident. And then of course a non-US person is also referred as a Foreign Person. Also a foreign office or a foreign branch of a US financial institution is called a foreign person.

  1. Withholding Agent

A withholding agent is a person, who possesses the custody, receipts, disposal, influence or payment of any product that has been the reason of a foreign person’s income, one that could be subject to withholding tax. This agent could either be an individual person (Foreign), organization, associations, company, partnership, entity or a corporation. Even a US branch of foreign banks, partnership or a foreign intermediary can be called a withholding agent.

  1. Disregarded Entity:

Any business organization that is registered under the name of a single owner is a disregarded entity which indicates that the organization is considered a separate entity from its owner. As per the regulations, the entity is not required to submit the W-8BEN form to a withholding agent. But if teh owner is a foreign entity then they have to submit the form.

  1. Account Holder:

An account holder, as the name so obviously indicates is the one who hold ownership of a financial account. This financial account could either be in the name of the partnership of an entity or an individual person.

  1. Beneficial owner:

A Beneficial Owner is a person who might not own the title of a property in his name but still enjoys the position of an ownership. A Beneficial owner might also be a person who has the power to make his decisions count when it comes to transactions of an organization in regards to its shares and security.


Who Should Not Use IRS Form W-8BEN?

Not everyone can fill the IRS Form W-8BEN for tax exemptions. While the first portion of form itself indicates who cannot use the form, let’s have a look at a more elaborative list because you certainly don’t want to waste all your time, effort and hope for nothing:

  • A U.S resident who is an individual or owns an entity cannot fill this form. It is only for foreigners to use
  • Those foreigners who own an insurance company but have long since applied to the law under the section 953(d), to be treated as an American resident, cannot fill this form for tax reductions and exemptions

Different Variations in the W8 forms:

IRS Form W-8BEN is not the only W8 form under the financial regulations of the United States of America; in fact, there are many variations in the W8 form. Let’s see what they are:

  • W-8BEN:

This W8 form is one of the most popular ones. It is used by the foreigners working in the United States of America and earning revenues from US sources. In case they don’t use it, they’ll be subjected to tax on their incomes from dividends, rents, annuities and interests. These foreigners can be an entity, individuals, partnership or anything, as long as they are earning on US soil and are making an income, they are subject to taxation and can be gifted to exemption or reduction upon filling this form.

  • W-8ECI:

An individual person who is not in ownership of any entity and is plainly earning income in the United States of America, as a foreigner, must fill this form in order to be exempted from the mandatory 30% taxation on his income.

In order to be more professional with your tax procedures, you must hire a tax expert so that you do not have to pay any tax that you shouldn’t

IRS Form W-8BEN is something that people run away from by the fear of complications involved in it. However, the truth is actually far from it. If you are a foreign person and are earning your income on US soil and are paying income taxes in just the traditional ways, then it’s about time you give a thought to filling the IRS Form W-8BEN. You can be exempted from 30% tax withholdings. Imagine how great it could be for you to make more investments in the US and earn more incomes now that you have learned how to fill IRS Form W-8BEN.

If you need any help doing IRS form W-8BEN please call us at 407-502-2400, or email us at [email protected].

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