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FAQ

As a sole proprietorship owner, to get paid from a US company, do I fill the W-8BEN-E or W-8BEN?
Assuming you otherwise qualify to file the W8 form, you should file W8BEN.  The BEN-E version is just for entities for example corporations.
What is the difference between W-8ECI and W-8BEN forms?
A U.S. payor / withholding agent will ask for W-8 forms in the case of payment to a foreign income recipient.W-8ECI applies if the income is effectively connected income (ECI) and the foreign recipient will file U.S. tax return to report such income.  W-8BEN form applies if the income is not ECI, in which case a separate withholding tax should be deducted by the withholding agent.Example 1: If a Korean individual performs independent personal service to a U.S. company in the U.S., most likely this is ECI, and the Korean individual would submit W-8ECI to the U.S. company.  U.S. company should not withhold any tax.  Korean individual should report this income on his U.S. tax return and pay tax in the U.S.Example 2:  If a Korean individual made loan to a U.S. company, most likely this would not be ECI.  The Korean individual should submit W-8BEN prior to payment of interest.  The U.S. company would make final withholding on the interest payment.  The withholding tax is 30%, but can be reduced to 12% under the Korea/U.S. tax treaty, or 0% if it is portfolio interest.
What is the purpose of W8-BEN certification?
US Income Tax WithholdingNon-US persons (whether individuals or entities, such as foreign corporations) are subject to US. tax at a flat 30% rate on certain kinds of income they receive from US sources. Sometimes an Income Tax Treaty negotiated with the US and another country can be used to reduce this tax rate.The tax is withheld at source by the payor of the income. This payor, also known as a “withholding agent”, has responsibility for withholding the required tax and paying it over to the US Internal Revenue Service (IRS). In the event withholding is required and the withholding agent fails in its duties, the agent can be held personally liable for the tax. For this reason, payors are usually very careful to ensure they have undertaken all the necessary actions, part of which is to obtain a certification from the payee as to whether the payee is a US person or a foreign person.The 30% (or lower Treaty rate) withholding tax is required only for payments made to foreign payees, it is not required when the payee is a US person. Foreign persons complete one of the forms in the Form W-8 series (e.g., Form W-8 BEN). US persons do not complete a form in the W-8 series. Instead, they use Form W-9.When the payor of the income has the W-8BEN on file, the payor will be apprised that the payee is a non-US person and will undertake its withholding duties. If the payee is a US person with a completed Form W-9, the payor will know it does not have to withhold this 30% tax.US Source Income Subject to Withholding TaxListed below are some types of income that are subject to withholding when paid to non-US persons, if the payments are from US sources: Certain kinds of Interest (including certain original issue discount / OID); Dividends; Rents; Royalties; Premiums; Annuities; Compensation for, or in expectation of, services performed; Substitute payments in a securities lending transaction; or Other fixed or determinable annual or periodical gains, profits, or income.Certain types of US source income are not subject to foreign-person withholding. Some examples of such income are:‡ Broker proceeds (e.g., sales of US stocks / securities)‡ Short-term OID (183 days or less)‡ Bank deposit interest‡ Foreign source interest, dividends, rents, or royalties‡ Proceeds from a wager placed by a nonresident alien individual in the games of blackjack, baccarat, craps, roulette, or big-6 wheel (a later blog post will cover US tax issues on gambling winnings of foreign persons)However, you may still be required to submit Form W-8BEN to claim an exception from US information reporting and so-called “backup withholding” for these types of US source income.Form W-8BENIf a non-US person (whether an individual or a foreign entity) will receive any of these certain types of income, he must provide the Form W-8BEN directly to the payor of the income (do not submit the Form to the IRS) to establish that he is not a US person and to claim that he is the beneficial owner of the income. Form W-8BEN must be signed and dated by the beneficial owner of the income, or, by an authorized representative as evidenced by a duly completed Power of Attorney (The IRS Form 2848, Power of Attorney, may be used for this purpose).How Long is the Form W-8BEN Valid?The Form W-8 BEN must be kept up-to-date. If it is not, the foreign person may find that the agent has wrongfully withheld tax on the income. It is quite time-consuming, costly and cumbersome to get wrongfully withheld amounts refunded from the IRS.Generally, a Form W-8BEN provided without a US “Taxpayer Identification Number” (TIN) will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2021. remains valid through December 31, 2021. A Form W-8BEN with a US TIN will remain in effect until a change of circumstances makes any information on the form incorrect, provided that the withholding agent reports on Form 1042-S at least one payment annually to the beneficial owner.
What is the correct IRS form for a resident of non-tax treaty country for a trader to fill to trade US financial instruments, Form W-7 or W-8BEN?
W-7 is the form for a non-citizen to get a US Tax ID number.W-8BEN is the certificate of foreign status and the form to claim treaty benefits.To have a US bank hold your stocks and receive dividends for you they are going to need the W-8BEN.If you need to file a US tax return. (For Example 1040-NR) you will need to file the W-7 to get a tax ID number.FYI: If all you are doing in the US is trading stocks as a non-resident, you should not need to file a US tax return.
Singapore: How can I avoid double taxation between Singapore and United States?
There are no withholdings for App Store apps because they are sales, not royalties. So just enter zeroes into the tax ID number box on the W8 and then enter 0% for sales/commission in the box at the bottom. The form is attempting to trick you into volunteering something you do not owe. Don't tick any of those checkboxes at the bottom. I have done this and it works.That's it. Actually you can fill the form in any way you wish as a foreigner since the US has no authority over you. Just like you don't need to follow their laws on drinking or have a US driving license to drive in your own country. The US corporation that is paying you is liable, not you.
Is it possible to have a stock trading account without a Social Security number?
“To trade stocks, you need to open an account with a broker. Most big brokerages now allow you to trade online, but require an application before they will set up the account. A brokerage may also restrict access: E*Trade, for example, does not allow non-U.S. citizens to open accounts online, but will allow a non-citizen to apply through the mail. A broker will also ask for a Social Security number, a taxpayer identification number, or a W-8BEN if your residence is outside of the U.S.”Note I copied this off of zack’s.I’ve dealt personally with non-US residents trading stocks. My work around was creating an LLC to act as their investment vehicle and using the EIN in place of the SSN. If you have any other questions please don’t hestiatate to ask.
Am I required to pay tax to IRS if I'm a Canadian citizen and have a US bank account?
If you are Canadian citizen, don’t have a US permanent resident status, live in Canada (or anywhere else outside of the USA), and don’t spend much time in the USA year (say, less than 4 months in any given year), then you are normally considered as a non-resident alien by the US tax law. The USA tax law classify income of non-resident aliens into several types:(1) Income not from US sources. It is not taxed in the US, and even if you file a US tax return (Form 1040-NR), it should not be declared on this form. I understand that income from self-employment is normally associated with the location where you physically are when you perform the work, so if you work on the Canadian soil for a US client (rather than work in the USA), this income is considered to be “from a Canadian source”, even though the money is paid by a US client. Capital gains from sale of US stocks etc are usually in the same category as well.(2) Income from US sources, not effectively connected with your US trade of business, and not taxed in the US. This includes for example bank interest paid by a US bank. (See: Nonresident Aliens - Exclusions From Income). As Kelly Kinkade has said, you are supposed to inform the bank of your status by giving them an appropriate type of Form W-8 (W-8BEN, I think).(3) Income from US sources, not effectively connected with your US trade of business, and taxed in the US. This includes certain types of US investment income, such as dividends. If you have such income (e.g. because hold some US stocks via a US broker, or a US mutual fund from a US distributor), it will be taxed at a flat rate (30%, or a lower, 10–15% rate reduced by a tax treaty with Canada. Again, a W-8BEN must be filed with the payor.(4) Income effectively connected with your US trade of business. This comes from e.g. actual work on the US soil, and is taxed on regular (graduated) rates, with a personal exemption and itemized deductions, as applicable. A non-resident tax return, form 1040-NR, is normally required to be filed (See: Effectively Connected Income (ECI) )If all your income is from the first 2 categories, then no tax is due, and no tax return needs to be filed. If there is also income from the 3rd category, the tax liability is normally satisfied by tax withholding at source (assuming the proper W-8BEN is on file), and no tax return is needed either.If a US client wants to issue a form 1099-MISC, reporting your earnings to you and to the IRS, I am not sure how this should be reconciled. Maybe you need to file some kind of form W-8 with the payor, so that they will acknowledge your non-resident status and issue no 1099-MISC, or issue a 1042-S instead? I have no idea on this detail.
Do you need SSN to open a bank account in the U.S? How about just a passport?
Banks in the United States are required to comply with 31 C.F.R. § 103.121, which mandates that all banks have a written Customer Identification Program ("CIP") including documentation required for customer identification, risk-based procedures for verification of customer identity, and a process for comparison of customer names against government lists, among other things.  [1] All banks must obtain a name, an address, a date of birth, and an ID number, either a social security number for US persons (or an application for one), or tax ID, although some banks will require a passport number or similar documentation for non-US persons in addition to requiring that non-US persons file a W-8BEN [2]  (W-8BEN -E for individuals; W-8BEN-EY for entities - "Certificate of Foreign Status of Beneficial Owner for US Tax Withholding and Reporting." )[3]  Remember, banks are not, in any way, required or compelled to open an account for you.  Bank account opening procedures may vary.   Banks are subject to scrutiny and penalties for non-compliance with the law and with their CIP programs; and some may choose to not open accounts for certain categories of  "persons", including individuals and entities who impose greater research/verification burdens on the banks than others.[4]  In other words, some banks might consider it too expensive (extra research burden) to open accounts for certain categories of persons; if you are a foreign student, for example, some banks in your community may be very interested in your business, while others might not. Each bank operates under a different business model and strategy. That said, most banks will allow you to open an account so long as you can provide the four basic elements of information mentioned above, and support the verification (or that you are who you say you are) of your identity.  They may allow you to open the account for a brief period of time, restrict or monitor your account activity until your ID is verified and close the account after a short period of time if requested verification information is not provided or applied for - usually within 30 days or less.    Remember: they are required to comply with the law, and banks are subject to fines and penalties for non-compliance.  The best way to find out for sure what's required is to go into a bank or credit union branch and ask what you need to open an account, and apply.  The banker will take you through the steps and provide you with the information you need to understand which account is right for you and what kind of information you need to provide to them.  There's no harm in asking. Footnotes[1] 31 CFR 1020.220 - Customer identification programs for banks, savings associations, credit unions, and certain non-Federally regulated banks.[2] Page on irs.gov[3] Page on irs.gov[4] Online Manual - BSA InfoBase - FFIEC
Do I need a Form 1099 as a remote independent contractor and a non-US citizen?
A2A.The US company is supposed to request documentation from you that you are a foreign person who is not performing services for compensation in the US. You typically provide that information on Form W-8BEN-E when the company requests it, and you should attach a statement to that form confirming that you are not performing any services in the US. The company has to be able to document both of those conditions if the IRS questions whether the payments to you are taxable in the US.If the company knows that you are not a US person, and also knows that you are not performing services in the US, you will not get any sort of US tax form. If the company knows that you are not a US person but does not know that you are not performing services in the US, the company is required to withhold 30% of any payment made to you and file Form 1042-S to report the payments and withholding. If the company does not know that you are not a US person - for example, if you gave them a tax ID number for a US LLC - then you may get a Form 1099-MISC, depending on the information they have about you (the company is not required to provide it to a corporate entity but is required to provide it to an LLC that is not treated as a corporate entity).Note that the company can be penalized severely for not complying with IRS regulations on withholding on non-US persons. When in doubt, the company is supposed to withhold. So if you do get a US tax form, you should not assume that it's correct, and you should talk to a professional about your situation.
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