how to file w 8 forms
there are five w 8 forms these forms are requested by the payers or withholding agents and kept on file with them not filed with the irs the version of the form used is determined by both whether or not the filer is an individual or a business and the nature of the income the filer received the forms are effective for the year in which they are signed and three calendar years afterward therefore a w 8ben signed on jan 25 2024 would be valid through dec 31 2027 2the w 8 series of forms are fairly complex though they require basic information such as name country of origin and taxpayer identification number tin they also ask for the contacts from which the filer is receiving the reported income a professional is often consulted to assist in completing them w 9 forms are also irs forms used to provide or confirm a person s name address and taxpayer identification number tin the w 9 forms are only required for u s citizens or resident aliens or u s entities 3types of w 8 formsthe following are the five types of w 8 forms and the circumstances where they should be used form w 8ben certificate of foreign status of beneficial owner for united states tax withholding and reporting must be submitted by foreign persons who receive certain types of income in the united states the form sometimes referred to as a certificate of foreign status establishes that the individual is both a foreign person and the owner of the business in question 4foreign individuals are ordinarily subject to a tax rate of 30 on specific types of income and capital gains they receive from u s payers including 2the form also helps you claim a reduction or an exemption from the u s tax withholding if you reside in a country with which the united states has an income tax treaty and the income you received is subject to that treaty foreign persons must provide form w 8ben to the withholding agent or payer if they are the beneficial owner of the income subject to the tax withholding you must submit the form regardless of whether you are claiming a reduced withholding 5individuals must submit the form to the payer or withholding agent prior to receiving income or credits from them failure to submit a form w 8ben could result in paying either the full 30 rate or the backup withholding rate under section 3406 5form w 8ben is used by foreign individuals who receive nonbusiness income in the u s whereas w 8ben e is used by foreign entities who receive this type of income 6form w 8ben e is also titled certificate of foreign status of beneficial owner for united states tax withholding and reporting but it is filed by foreign entities not individuals 7as with foreign persons who receive certain types of income the money generated by foreign businesses is typically withheld at a 30 rate by the payer or withholding agent in the united states however the form allows the foreign business to claim a reduction in taxes if its country of residence has a tax treaty with the united states 8non u s businesses must provide the form w 8ben e for the same sources of income that would require an individual to file a form w 8ben foreign entities that do not provide an accurate w 8ben e when required to do so will typically have to pay the full 30 tax rate 8form w 8eci is the certificate of foreign person s claim for exemption that income is effectively connected with the conduct of a trade or business in the united states it is filed by foreign individuals who engage in a trade or business in the united states and receive income from u s sources 9these proceeds are generally considered effectively connected income eci whether or not there is a connection between the income and the trade or business being conducted in the united states in a particular year 10crucially eci is not subject to the same 30 withholding that applies to interest rents and other nonbusiness income instead after subtracting applicable deductions it is taxed at the graduated rate that u s citizens and resident aliens pay if your work is covered by a u s treaty it would be taxed at the lowest rate under that treaty 11in most cases you must have engaged in trade or business activities in the united states sometime during the tax year to be able to categorize income as eci that would be the case if for example a foreign individual performed personal services in the united states during the year in addition money made by a foreigner through investments in a partnership that conducts trade or business in the u s would also be treated as eci however foreigners whose sole u s income is based on the trading of securities or commodities through a u s based broker are not considered to be engaged in a trade or business with the united states therefore they would not be subject to eci tax treatment 10form w 8exp is the certificate of foreign government or other foreign organization for united states tax withholding and reporting and is used by certain payees in order to claim a reduction of or exclusion from tax withholding these include foreign governments foundations and tax exempt organizations as well as governments of a u s possession or foreign central banks of issue 1213in order to receive a reduction or an exemption from tax withholding the entity must be eligible under irs code 115 2 501 c 892 895 or 1443 b should none of those exemptions apply the entity must file a w 8ben or w 8eci if it received effectively connected income 12as with other w 8 forms form w 8exp must be sent to the payer or withholding agent before income is paid to you not doing so could lead to a tax withholding at the 30 rate a backup withholding rate or the eci tax rate 12form w 8imy is the certificate of foreign intermediary foreign flow through entity or certain u s branches for united states tax withholding and reporting the purpose of the form is to certify that a person or business received withholdable payments on behalf of a foreigner or as a flow through entity the form is intended for intermediaries and should not be used by beneficial owners in a business 1415examples of entities who must file a w 8imy include 14a 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 with the form when it s submitted 14