IRS W-8 BEN form

From finiki, the Canadian financial wiki

The IRS W-8 BEN form is an United States Internal Revenue Service (IRS) reporting form that Canadian investors often are required to provide to their discount brokerage. The full designation W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals).[1]

This article is intended to provide an overview of the IRS' W-8 BEN form. The specific details of filling out this form are beyond the scope of this article and you should consult the IRS' website for complete details.

Advantages to filing

It is a tax document used to certify that your country of residence for tax purposes is outside of the United States. It is required because of an intergovernmental agreement between Canada and the U.S. which obligates Canadian Financial Institutions to provide this information.[2] It allows Canadian investors to claim a reduced withholding tax rate on US investment income of a Canada/U.S. income tax treaty.[3] It's a material benefit because the withholding tax is normally 30 per cent. With a current W-8 BEN in place, you may qualify for the reduced rate of 15 per cent tax on dividends, or zero tax on interest.

How long it is valid?

Generally, a Form W-8 BEN will remain valid for three calendar years.[4] However, under certain conditions a Form W-8 BEN will remain in effect indefinitely absent a change of circumstances.[4] There is some evidence that Canadian financial institutions have converted to an online "tick the box" format instead of filling out the full form and only require you to tick the box every three years.[5]

See also

Reference

  1. ^ "About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)". IRS. Retrieved March 4, 2021.
  2. ^ "What is a W-8BEN Form and Why Does It Matter?". Royal Bank of Canada. Retrieved March 4, 2021.
  3. ^ "Canada - Tax Treaty Documents". IRS. Retrieved March 4, 2021.
  4. ^ a b "Instructions for Form W-8BEN-E (07/2017)". Internal Revenue Service. September 14, 2018. Retrieved March 14, 2021.
  5. ^ Financial Wisdom Forum post: "[Wiki] Two new articles about commonly used tax forms", Eclectic12. March 7, 2021

Further reading

External links