Understanding Form W8-BEN, W8-BEN-E, and W8-IMY: A Professional Guide to Compliance and Avoiding Common Pitfalls

The subsequent information you are should to put in is the permanent residence address that is present in an address proof. The W8 Ben is a compulsory tax form issued by an established Internal Revenue Service (IRS). It is used to acquire the right information about a Non-resident Alien (NRA) taxpayer.

Where to Send the W8BEN and W8BEN-E Forms?

Chapter 3 means chapter 3 of the Internal Revenue Code (Withholding of Tax on Nonresident Aliens and Foreign Corporations). Chapter 3 contains sections 1441 through 1464, excluding sections 1445 and 1446. For example, students and scholars should submit their W-8 form to their university or payroll department if they are receiving a stipend, scholarship, or wages.

How to file a W-8 form

• If opting for manual submission, retrieve the forms from the IRS portal, finish filling them out, and send them over email or upload them onto the payer’s platform.
• Conversely, if you’re a US-based company hiring foreign contractors, you’ll need to have them fill in a W-8.
• If you are a sponsored direct reporting NFFE you must enter the name of the sponsoring entity on line 42 and check the box to certify that you meet all of the requirements for this classification.
• If you are an excepted nonfinancial start-up company you must check the box to certify that you meet all of the requirements for this status.
• W-8BEN, W-8BEN-E, and W-8ECI forms are usually valid for three years or as long as the forms contain correct information.
• Stripe Tax automates global tax compliance from start to finish, so you can focus on scaling your business.

However, for purposes of section 1446(a), a U.S. grantor trust or disregarded entity shall not provide the withholding agent a Form W-9. Instead, the entity must provide an applicable Form W-8 or Form W-9 pertaining to each grantor or owner, as appropriate, and, in the case of a trust, a statement identifying the portion of the trust treated as owned by each such person. For purposes of section 1446(f), the grantor or owner must provide an applicable Form W-8 or Form W-9 to certify its status and the amount realized allocable to the grantor or owner, which, alternatively, can be provided by the U.S. grantor trust on behalf of a grantor or owner. Meanwhile, the W-8IMY is used by foreign intermediaries and flow-through entities, making it unique in its focus on the intermediary role in the payment of U.S. source income. This form requires detailed information about the entity’s structure and the allocation of income to beneficial owners, which is not a requirement for the other W-8 forms. The W-8IMY’s emphasis on intermediary status and income allocation highlights its specialized function in the tax reporting process.

In this article

Generally, this will be the person from whom you receive the payment, who credits your account, or a partnership that allocates income to you. An FFI may also request this form from you to document your account as other than a U.S. account. Give Form W-8BEN to the person requesting it before the payment is made to what is a w8 you, credited to your account, or allocated. If you do not provide this form, the withholding agent may have to withhold at the 30% rate (under chapters 3 and 4), backup withholding rate, or the rate applicable under section 1446. If you receive more than one type of income from a single withholding agent for which you claim different benefits, the withholding agent may, at its option, require you to submit a Form W-8BEN for each different type of income.

Typically, this is the person or group from whom you received payment, the withholding agent, or an FFI. The tax form should be completed before the first payment is made; otherwise, the withholding agent may have to withhold the full 30% that is normally withheld under U.S. tax https://www.bookstime.com/articles/zoho-books law. The Internal Revenue Service requires W-8BEN because foreign individuals are normally subject to a 30% tax withholding, but they may qualify for a reduced rate of taxation. W-8BEN helps to establish this eligibility, although other factors also play a role, such as type of income. Depending on the type of income you’ve earned, the means by which you’ve earned it, your country of citizenship, and a number of other factors, you’ll be required to fill out one or more tax forms that all fall under the umbrella of a W-8. If you’re a non-resident alien or foreign business who earned money in the US, read on to learn all about your W-8.

If you hold U.S. citizenship (with or without citizenship with another country), you should not fill out Form W-8BEN. If you need help filling out your W-8 form, our support team is here to assist. bookkeeping Once completed, receiving payments from the U.S. becomes straightforward and efficient with Skydo.