W-8 Forms for Foreign Aliens and Entities

by  posted on:May 13, 2013 ,updated on:May 13, 2013 | views:1732 //Code for only logged in users

A W-8 form for all foreign aliens/entities is needed for all payments. The IRS requires a mailed original ink signed and dated form to be obtained. A faxed copy or emailed copy is not acceptable. There are four types of W-8 forms. The foreign alien/entity will need to determine the type of form that applies to them. If you complete Form W-8 you will not receive Form 1099. However, you may receive Form 1042-S which reports compensation, interest payments, dividends, and substitute payments in lieu and applicable US tax withholding.

W-8BEN

Used primarily by entities and individuals to claim foreign status or treaty benefits. It is also used by individuals to claim treaty benefits for royalty/passive income.

  • A U.S. tax identification number is required for exemption from tax withholding.
  • All fields in line 10 must be completed to claim exemption on royalty payments.
  • Entities or individuals not eligible for the other W8 forms should use the W-8BEN.

W-8ECI

Used primarily by the payee or beneficial owner indicating that all the income that is listed on the form is effectively connected with the conduct of a trade or business within the United States.

  •  The type of income must be identified on Line 9 of the form to qualify for exemption. If it is not listed we are required to obtain from the entity a different type of W8 form.
  • A U.S. tax identification number is required for exemption from tax withholding

W-8EXP

Used by the following entities to claim exemption from tax withholding, foreign governments, foreign tax exempt organization, foreign
private foundation, govt. of a U.S. possession, or foreign central bank of issue.

  • The entity must be claiming exemption under IRS code 115(2), 501 (c), 892, 895 or 1443(b). Otherwise they need to file a W-8BEN or W-8ECI.

W-8IMY

Used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow through entity.

  • Copies of appropriate withholding certificates, documentary evidence, and withholding statements must be attached to the W-8IMY as well.

Form W-8CE

used to certify that a taxpayer is a “covered expatriate,” and subject to special tax rules. If you are a recently expatriated citizen waiting on tax deferred compensation after your date of expatriation, you’ll want to fill out Form W-8CE within 30 days after you expatriate.

  • The form must be filed for each tax-deferred account, item of deferred compensation, or interest in a non-grantor trust.