Form W8-BEN, Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding, is used by a foreign person to establish both foreign status and beneficial ownership, and to claim income tax treaty benefits with respect to income other than compensation for personal services.
The purpose of the W8-BEN is to:
- Establish that someone is a foreign person (certificate of foreign status). It is used at audit time to support a 30% tax rate.
- Claim that an NRA is the beneficial owner of the income for which Form W-8BEN is being provided.
- Claim a reduced rate of, or exemption from withholding as a resident of a foreign country with which the United States has an income tax treaty.
Use the W8-BEN:
- When NRA is not eligible for treaty benefits for compensation income.
- To claim a treaty exemption when a foreign artist is paid royalties.
- When NRA is given a prize or award.
Do not use the W8-BEN:
- To claim exemption from withholding on personal services performed in the United States. (Use Form 8233.)
- To receive a nonqualified scholarship when not granted treaty benefits, the form is not technically required.
The W8-BEN is the certificate of foreign status for all types of income except for individuals with income from independent personal services--that is Form 8233.
The W8-BEN form, after being signed by an NRA, should be kept on file in the Office of International Taxation. This is the NRA's certificate of foreign status.
Length of validity of the W8-BEN
With a TIN, it is effective indefinitely or until the facts change provided that it is used at least annually for Form 1042-S reporting. Without a TIN it is good for three taxable years from the date of the form.
If a foreign student works for UR outside of the U.S., obtain a W-8BEN with the foreign address. Also, the withholding and Form W-2 reporting should be stopped.
Federal law states that a foreign student who is an NRA should file Form W-8BEN with his U.S. bank, U.S. savings and loan association, U.S. credit union (including both federal and state chartered credit unions), or U.S. insurance company.