An Introduction to Filling the W-8BEN Form

As firms search overseas for growth opportunities, it is no surprise that foreign investment in the U.S. increased by around $7.5 million in just 2021. As a foreigner working or conducting business dealings in the U.S., you must familiarize yourself with the W-8BEN form for tax filing of your U.S.-based income. By proceeding to the following link on how to fill out a W-8BEN form, you can find detailed instructions on completing this document. 

The W-8BEN form aims to reduce the tax rate applicable to your earnings or investments. For this reason, it is essential to fill it out correctly. Read on to get an overview of the different sections of the form.

What Is a W-8BEN Form?

A W-8BEN document is a tax form that needs to be filled by non-US residents. It is issued by the Internal Revenue Service (IRS) to individuals whose nationality and country of residence are not the United States. The form verifies that the person filing the form is eligible for either a tax exemption or a lower tax rate due to the income tax agreement their country has with the United States.

Commonly, non-US citizens have a 30% tax rate imposed on the payments they obtain from US citizens, which can include interest, royalty, salary, rent, and dividends. The form should be submitted to withholding agents or payers, who then forward it to the IRS,  reducing the tax rate on dividends or interest.

Filling Out the W-8BEN

You can download the W-8BEN form from the IRS website. Here is what different sections of it include:

1. The Beneficial Owner’s Identification

In this section, you will be asked to specify the name and birth date of the beneficial owner, followed by the name of the country of which you are a legal citizen. The catch is that this should be the country where you retain a permanent residence, even if you hold dual citizenship.

You should note that if you hold dual citizenship where one of the countries is the United States, you don’t need to fill out the W-8BEN form. Then, you are expected to provide details regarding your permanent residence address, mailing address, US taxpayer or foreign taxpayer identification number, and reference number. In the last line, you should enter your birth date details.

2. Claiming Tax Treaty Benefits

This section asks for information regarding the country whose tax laws you abide by and if they hold a tax treaty with the U.S. There is a Special Rates and Conditions part in this portion as well, where you can detail why you are eligible for special withholding tax rates by looking at the IRS website instructions for guidance.

3. Certification

In this section, a disclaimer is provided about filing incorrect or incomplete information in the form and how signing it can lead to punishment under the perjury penalty. There is also a part where the beneficial owner must sign and check a box that certifies their eligibility.

Endnote

There are many ways to prepare for the tax season, and knowing how to fill out the W-8BEN form as a non-U.S. resident is certainly one of them. Filling out the W-8BEN form can seem intimidating, but it is a simple process that must be redone every three years. With the proper guidance in filling out forms such as the W-8BEN, you can seize the opportunity to reduce the rate of certain taxes that apply to you.