What is a W-8 Form?

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If you’re a US citizen wondering why you’ve never heard of form W-8, it’s really no wonder at all. Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity’s status as non-resident alien or foreign national who works outside of the United States. The benefit is that these individuals receive a certain tax treaty status that affords them certain right, such as lower withholdings from dividends paid by US corporations.

There are many different types of W-8 forms.  These forms are typically requested by withholding agents, usually firms or brokers and not the IRS.  For example, brokers typically request Form W-8BEN, the form used to lower withholdings from dividends, from foreign nationals. Form W-8ECI is used by foreign entities to certify that all income on the form is associated with trade or business within the United States. (This is slightly different from Form W-8BEN, which certifies allocated funds, such as dividends from stocks and mutual funds.) Form W-8EXP is filled out by foreign governments, international organizations, banks of issue, tax-exempt organizations, private foundations, and governments of US possessions.  In other words, nothing the typical tax-payer needs be concerned about. Form W-8IMY is filled out by foreign financial intermediaries. Again, nothing Joe TaxPayer needs to worry about.

A withholding agent will typically request a Form W-8BEN of any foreign client.  If you are a foreign investor, filling out this form may significantly lower your tax withholdings. A withholding agent must generally withhold 30% of the income distributed to a foreign national, unless the national can be associated with tax treaty status via a Form W-8.

The form requires some pretty typical information: name, taxpayer identification, country of origin, etc. You’ll also need to provide a statement describing the national principal contracts to which the income is associated. Writing and updating this statement can get complicated. When in doubt, discuss any questions with a certified tax professional.

Form W-8ECI is another form that will help you lower your withholding if you a foreign national in a partnership that conducts trade or business within the United States.  Like Form W-8BEN, this form will require typical identification information, along with a rather in depth description of nature of the expected income.

The last W-8 a typical, non-corporate taxpayer might need to know about is Form W-8CE. This form is 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 differed 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.

One thing is certain: W-8 forms are not the sort simple tax form the average payer can easily navigate. If you’re one of the few taxpayers required by the IRS to fill out Forms W-8, you would be well-served to consult a professional.  If you need help filing your taxes this year, you may want to consider both Turbo Tax and H&R Block.  Their free online tax software can make your tax nightmares disappear.

Published or Updated: February 16, 2013
About Rob Berger

Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Comments

  1. Dwight Mcdonald says:

    Hello i’m a new engineer/producer from Jamaica, i would like to register myself and my Artiste with Ascap

  2. Edmundo Ochoa says:

    Somebody knows , Every when need fill de W-8BEN form?

  3. Big M says:

    It should be noted by the authors that for federal taxation purposes, as defined in the IRC, “United States” means DC, territories and insular possessions, such as military bases and forts. When a private-sector employee, who is domiciled in the 50 states, fills out a W-8, they are stating that they are a nonresident alien with respect to DC (refer to the Brushaber case), and are outside of federal jurisdiction. This means that they are not subject to federal income tax.

    Additionally, as defined by the IRC, such a person is NOT an “employee,” and they CANNOT earn “wages” subject to taxation under Subtitle C of the IRC. It’s also interesting to note that Federal Reserve Notes are NOT money as defined in Black’s Law Dictionary, but that they are obligations of the United States (remember that term?) government, and that obligations of the United States government are NOT taxable.

    • BW says:

      Do you know of anyone, that has filed this form with their employer? What were the results? Did the employer willing accept the form or did they refuse employment? Having read the assocaited court cases and constiutional law on the subject I agree with your statements, however, Ive never seen it applied.
      Thank you for posting.

  4. LC says:

    We are hiring someone who is on Optional Practical Training after finishing a graduate degree for a contract project. For citizens, they would fill out a W-9 since they are 1099. The W-9 says foreigners should not fill out a W-9 and should fill out a W-8 instead?

  5. Chex says:

    If I file an IRS form W-8 (Certificate of Foreign Status) this creates the status of ‘foreign exempt’, and then my income is not taxable.

    The W-8 form, like the W-4 form, is an IRS form. ALL IRS forms are for ‘taxpayers’. This form merely places you in the category of ‘exempt’ taxpayer. You do not want to be in ANY taxpayer category! Sovereigns do not file ANY IRS forms. A W-8 form can be used to show your non-taxable status to an employer or to a bank, but it is not filed with the IRS. This form is for American Citizens, not for U.S. citizens.

  6. It’s going to be finish of mine day, but before finish I am reading this impressive post to increase my know-how.

  7. slowery says:

    what is the purpose of a W-8Ben and when is it required. will a 1042-S form be required to sent out to IRS also?

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