The form should be returned to the company or entity that sent the form W-8BEN, not to the IRS. A complete list of persons or entities required to file the form is in the IRS Instructions for Form W-8IMY. Copies of withholding statements and other documentary evidence should be included unearned revenue with the form when it’s submitted.

What are W-8 forms?

US businesses must collect W-8 forms to avoid paying excessive withholding taxes and comply with IRS regulations. The W-8ECI is used by persons who claim that the income is connected with a trade or business within the United States. This means that although the person who receives the money is foreign, the business itself is not. Often this form is used in connection with U.S. branches of foreign companies. The purpose of a W-8 Form is to gather information from nonresident taxpayers and allow nonresidents to claim any benefits from tax treaties their home countries have with the US.

Filing Your US Tax Return: 5 Things You Should Know

Yes — as part of your RBC Direct Investing account documentation and to meet the IRS requirement, you must update and complete the W-8BEN form every three years, even if there is no change in your Retail Accounting personal information. Without an up-to-date W-8BEN, account restrictions could prevent you from trading. There are several types of W-8 forms, each designed for a specific purpose or situation. A Form W-8 generally remains valid for three calendar years from the date of signing.

Who Can File W-8 Forms?

Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. Working with tax professionals during this process can help ensure all corrections are handled properly and prevent similar issues in the future. They can also assist in developing strategies to recover any excess withholding through appropriate tax filings. Beyond immediate financial implications, non-compliance can damage your business relationships with U.S. partners. Payment delays, additional documentation requests, and extended verification periods can strain these relationships and create operational disruptions. Many U.S. companies have strict compliance requirements and may hesitate to continue business relationships with partners who have documentation issues.

• Although the W-8 forms are issued by the IRS, they are submitted only to payers or withholding agents, not to the IRS.
• This includes foreign individuals or entities who conduct business in the U.S. or have a U.S. presence, such as a branch office or subsidiary, and earn income that is attributable to that business or trade.
• The W-8BEN, or Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), is primarily used by non-U.S.
• The W-8BEN-E is similar to the W-8BEN but instead of individuals, it is used by entities, such as businesses, to claim tax treaty benefits.
• International tax documentation often involves complex scenarios that require careful attention.
• Join millions of self-starters in getting business resources, tips, and inspiring stories in your inbox.
• Form W-8BEN is the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding.

How Different Types of Form W-8 Serve Various Business Needs

• Often this form is used in connection with U.S. branches of foreign companies.
• This can be problematic as it often leads to long and drawn-out processes in order to claim back these withheld funds.
• To be considered valid, a W-8 form must be completed accurately with all required information, signed under penalties of perjury, and submitted to the appropriate withholding agent before any payments are made.
• Double-checking all entries for accuracy and completeness before submission can mitigate these risks.
• In situations where a foreign person or entity is receiving payments from a U.S. source, they must provide a valid W-8 tax form to ensure they are not taxed on their income by the IRS.
• This includes changes in business structure, ownership, or tax treaty eligibility.
• Form W-8 is a tax document issued by the Internal Revenue Service (IRS) that foreign persons and entities use to certify their non-U.S.

This form serves as a declaration to the IRS that the individual or entity is a nonresident taxpayer and is therefore subject to different tax rules compared to US residents. This is used to file for income that is effectively connected with a trade or business in the US. Without a completed W-8 form, nonresidents are subject to the full 30% tax rate, even if they qualify for a lower rate through a treaty. The information provided in this article is for general purposes only and does not constitute personal financial advice. Please consult with your own professional advisor to discuss your specific financial and tax needs.

Types of W-8 Forms

The -E version what does w8 mean is more detailed as it must also capture the entity’s type and structure for US tax purposes. In some cases, even U.S. citizens and residents may be required to fill out the W-8 tax form if they are receiving income from a foreign source. However, when taxes are paid on earnings outside of the U.S., it may be difficult for the IRS to track this information without verification of payment. W-8 forms are Internal Revenue Service (IRS) forms that foreign individuals and businesses must file to verify their country of residence for tax purposes, certifying that they qualify for a lower rate of tax withholding.