W-8BEN: Legal Assistance in Completing Tax Form

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Tax Form W-8BEN

When making investments in the United States of America or obtaining dividends from companies, you are required to report to U.S. Internal Revenue Service (IRS). There are several types of tax forms for it. The choice of tax form depends on whether the taxpayer is a U.S. resident, owns a company and pays taxes in the United States or is a foreign agent, and whether the taxpayer is the individual or legal entity.

W-8BEN tax form is one of the types of documents that can be filed with IRS. The individuals, who are not U.S. tax residents, must file this document. This is a reporting form, which allows declaring your shareholding income. However, this form must be filled out correctly or you may be faced with serious problems. The specialists of Law & Trust will tell you in detail what W-8BEN form is required for and how you may properly fill out and file it.

More on Form W-8BEN

Why you need W-8BEN

In accordance with U.S. requirements, if an individual or legal entity receives any income, it is obliged to report to the tax agents, to whom and for what it pays. This rule applies to everyone who receives any income without signing the employment contract. For example, if a person owns shares, is a participant of the affiliate program, or works at U.S. freelance exchanges, uses virtual electronic wallets (for example, PayPal), etc. In this case, it is required to fill out certain tax forms. All individuals who earn income in the United States must complete these documents.

The United States has the double taxation avoidance treaties with over 100 countries around the world. However, it is necessary to confirm the fact of receipt of income, so that the tax is not deducted from the counterparty twice. W-8BEN is filed with the company from which you received the income and then it files with IRS. Thus, it is confirmed that the person who received the money is not U.S. resident, and only the company will pay tax for it.

If these documents are not filed, the company, which is the source of your income, will not be able to cooperate with you. Meanwhile, filling out W-8BEN does not obligate you to pay taxes. This form is reporting and is needed directly by your counterparty or company. The organizations file these consolidated statements, IRS reconciles these statements, and then they pay taxes.

Many organizations cooperating with foreign individuals are trying to automate the form to make it easier for the counterparty to cope with reporting. However, in some cases, the form has to be filled out in hard copy and sent by mail.

Where I may find W-8BEN

W-8BEN is posted on IRS’ official website. In addition, the website also provides the instruction with explanations. However, even people who have a good command of English have problems when filling out these documents. The problem is that there are a lot of legal terms in the document and in those explanations. Therefore, if you need to fill out the respective forms, you would better trust the professionals. Law & Trust specialists will be able to correctly fill out the required fields for you and explain the meanings of all terms in the form.

For which payments W-8BEN is filed?

You must file W-8BEN when you obtain the following types of income in the United States:

interest;
investment dividends;
royalties;
obtaining income at freelance exchanges, etc.

If a person earns income in the United States, but has no employment contract (for example, investor or freelancer), the tax is withheld at the rate of 30% from the organization paying the income. This rule applies to all states with which the United States has signed a double taxation avoidance treaty. This also applies to the post-Soviet countries - Ukraine, Russia, Kazakhstan and Georgia. The document is filed if the amount of income received from U.S. resident exceeds 600 USD.

Who W-8BEN is filed to and how long it is valid?

Another important question – who W-8BEN is filed to. The documents are filed with the company that provides your income. For example, if you own shares, you need to file a document with a broker, if you are a freelancer, then, accordingly, – freelance exchange, etc. After the organization receives the document, it files it with the Internal Revenue Service (IRS).

It should noted that W-8BEN has a limited validity period, so the counterparty must periodically file the document again. In particular, the period is 3 years. You also need to file a new W-8BEN if the taxpayer’s status or any other data that need to be indicated in the form have been updated.

What if there are several counterparties?

If you have several counterparties with whom you cooperate, for example, you have shares purchased from several brokers, you will have to fill out a form for each counterparty. Each company files statements separately, so the document will have to be prepared for all organizations.

Specifics of filling out W-8BEN

W-8BEN has several peculiar features to be aware of before starting to fill it out. When filling out the document, you only identify yourself. In fact, you only sign the document confirming that you are a citizen and tax result of Ukraine or any other country with which U.S. has signed the double taxation treaty.

Please note that the document does not need to indicate the amount of money that was transferred to you. You do not need to indicate the interest you receive either. You don't even need information about the counterparty with whom you cooperated. When filling out the documents, some fields should be left blank. At the same time, there is no need to put any dashes or any other symbols here. You need to fill out the document exclusively in English.

Law & Trust offers its clients the services of filing U.S. reporting forms, including W-8BEN. The specialists of our company will tell you in detail about the rules of filling out, help to fill out the document for you and send it to the counterparty.