United States taxpayers have an obligation to demonstrate to authorities they are correctly meeting their mandate. For non-U.S. citizens, the W-8BEN form is required to certify their legal and tax status. Besides filling the form as part of meeting the law obligations, the W-8BEN also allows the certification of the payers’ qualification for reduced tax rates as stipulated under tax treaties.
The W-8BEN or Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting document is submitted to the Internal Revenue Service (IRS) by foreign citizens. The non-U.S. citizens usually fill out the form for receiving certain types of income within the United States. It establishes that the individual is both a foreign person and the owner of the income-generating business at hand.
The W-8BEN form is supposed to be sent by the company making payments to the filling individual. Notably, the form should be returned to the company that sent the W-8BEN form but not the IRS. It’s also not supposed to be filed with a tax return.
According to the United States tax laws, foreign individuals are subjected to 30% tax on US-sourced income. The sources include:
Filling the W-8BEN form comes with specific instructions as highlighted below:
Line 1: Name
Indicate your legal name
Line 2: Citizenship
Enter the name of the country of which you are a citizen and not the U.S.
Line 3: Permanent Residence Address
Enter your permanent residence address, which is the address in the country where you claim to be a resident for income tax purposes. Do not enter the P.O. BOX.
Line 4: Mailing Address
Provide your mailing address if it differs from your permanent residence.
Line 5: U.S. Taxpayer Identification Number
You can enter the U.S. Taxpayer Identification Number (social security number or an individual taxpayer identification number (ITIN)).
Line 6: Foreign Tax Identifying Number
Provide the FTIN issued by your country of citizenship. If you do not have one, you need to indicate why. Do not leave it blank or fill in “N.A.”.
Line 7: Reference Number
Payers may leave this line blank.
Line 8: Date of Birth
Enter your correct date of birth.
Line 9: Treaty Claim
If you are filling out the form to claim treaty benefits, identify the country where you claim to be a resident in order to fulfill the income tax treaty.
Line 10: Special Rates and Conditions
Under this section, if you are requesting special withholding rates, you need to refer to IRS guidelines.
Line 11: Certification
The form should be signed alongside a date by the beneficial owner of the account’s income.
When the form is filled, it should be submitted to the right entity, the employer, and not the IRS. Since the form contains sensitive information, the employer needs to assure the employee that all data will be protected. Make efforts to safeguard the data and send it securely to the IRS.
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