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Duration: 3:20

Contributor: Interactive Brokers

Level: Beginner

The W-8BEN form for individuals is the “driver” or determining document for all non-US persons. It gives the US holder the necessary information to determine your tax status for US taxes.

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Study Notes:

The W-8BEN form for individuals is the “driver” or determining document for all non-US persons. It
gives the US holder the necessary information to determine your tax status for US taxes.

What information is there?

• The form contains the obvious information name, permanent and mailing addresses, country of
citizenship. The need for all of these is fairly obvious and is what is required in almost every
country for an account to be opened for documentation for a revenue stream.
• There are a couple of more unusual things required on the form:
o Date of birth
o Foreign tax identifying number or Social number.

Why would these be needed for US tax purposes?

• In 2010 the US Congress enacted the Foreign Account Tax Compliance Act commonly referred to
as FATCA.
o The primary purpose was to “capture” income of US persons earned overseas and from
assets and accounts held overseas to collect the tax due to the US government.
o A secondary offshoot of FATCA was information sharing with other countries. In order
to capture earnings in other countries the US needed to share information about
income of non-US persons here.
• FATCA requires that the US share information with most other countries and they with the US
concerning accounts held by their residents.
• This information sharing is what prompted the addition of DOB and the local tax (or social)
number to the W-8BEN.
• The final piece of information on the W-8BEN is tax treaty eligibility.
• The US has tax treaties with approximately 70 countries.
• Your country of primary residence (tax residence) determines tax treaty eligibility.
• If you reside in a country with a tax treaty with the US then you are eligible for the benefits –
i.e. lower US withholding rates.
• Your permanent address must match your treaty country on form W-8BEN.

If you move, update your W-8BEN form – why?

• Your new country of residence may have lower withholding rates than your previous residency
country. Information sharing – if you do not update your information will continue to go to the
country of your old address and not the new – the old residency country might then look for tax
payments.
• W-8BENs expire.
• They are good until December 31 of the third year after they are signed. Renew them before
they expire as if they lapse, US withholding will be applied to all income.
• If this information is not provided then additional income, such as proceeds from the sale of
investments is subject to withholding.

Disclosure: Tax-Related Circular 230 Notice

The information in this presentation is provided for informational purposes only, and does not constitute tax advice and cannot be used by the recipient or any other taxpayer to avoid penalties under any federal, state, local or other tax statutes or regulations, or to resolve any tax issue.

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