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what is a W8-BEN? — Business Ready

what is a W8-BEN?

General & AdminWow, the IRS has been busy - or the folks in the United States are doing a little early spring cleaning.  Either way, a client of mine was requested to fill out a W8-BEN.

A W8-BEN form is a certificate of foreign status of beneficial owner for United States tax withholding.

Uhm, what?!?!  If you are a Canadian company, and you have customers in the United States, odds are those customers are going to request you fill out the W8-BEN form.  Why?  Because “foreign persons” (this is individuals or companies) are subject to a 30% withholding tax on income they receive from US sources.  However, there are exemptions so you need to fill out the W8-BEN form to atleast:

  • establish you are not a US person;
  • claim you are the ‘beneficial owner’ of the foreign income;
  • confirm you are a non-resident claiming exemption from the 30% (if you are eligible)

There are other reasons to fill out the W8-BEN but for most of you it is to make sure they don’t hold back 30% of your payment which, for a small company, is a big deal.

OK, I don’t want to have 30% deducted from my payment so how do I fill out the form?

The instructions and details to fill out the W8-BEN IRS form can be found here.  It is pretty straight forward but the one item that is going to throw you is Line 6: “US taxpayer identification number”.  Many of you are not going to have a US taxpayer ID number because you don’t have a physical presence in the US, are not filing taxes, etc.  In the ‘old days’ (sorry to get a little retro-grouchy here …) Canadian companies simply provided their Canadian federal business number (the ‘BN’ number) on Line 7 (Foreign tax identifying number) and put “not applicable” on Line 6.  However, US companies are taking the IRS guidance, you should have a taxpayer ID number, as meaning mandatory.  To be honest, anytime the IRS says “should” just do it because it will make your life that much easier.

How do I get one of these EIN US taxpayer identification numbers?

EIN stands for Employer Identification Number and is your permanent number and can be used for most of your business needs (e.g. applying for business licenses, filing taxes when applicable, etc).  You can apply by filling out the Form SS-4 but the easier, preferred way is online.

Once you get your EIN then you can fill out the W8-BEN for your customer and then get full payment.  When cash is king this is the best option.  Yeah!

63 comments ↓

#1
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Jim
on 03.18.09 at 10:02 am

Thanks this has been a thorn for the last 5 yrs of business, normally I just ignore the EIN line but now I have a customer who won’t accept that.

You know, I asked Export Development Canada a few years ago for help on this and they didn’t even know what a W8 was? They did try at least to find out….

Thing that’s getting me though, is the application for EIN (SS4) seems to imply that I will be filling in a tax return(!?)

#2
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Wendy Rose
on 03.19.09 at 7:44 am

Hey Jim! Yup, I think because the EIN is used for so many things they assume you will be filing taxes. Don’t worry, unless you have a physical presence in the United States, you don’t have to file taxes just because you got an EIN number. Cheers!

#3
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Randall
on 04.27.09 at 3:27 pm

It’s important to note that “Foreign” persons cannot apply for the EIN online. We have tried calling every number listed by the IRS and can’t get any information. Canada Revenue knows nothing about this.

In reading the instructions for the W8 BEN it still seems unclear as to whether we as a wholly owned Canadian company doing business in Canada need to fill this out. We do have US customers (lots of them) that we provide Internet services.

Does anyone have additional info they have found out or suggestions?

#4
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Asiak
on 05.13.09 at 5:28 am

Foreign persons and businesses cannot apply for an EIN online.

You must call a specialized (local) number and have your completed SS-4 form in front of you.

The number is (215) 516 6999 .

Also note that they will ask your ‘business start date’ - meaning your first time dealing with a US client. If this is too far off from the current date, this may cause problems with your request. (since they will wonder why you didn’t need an EIN before..)

#5
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Andrew
on 11.10.09 at 4:13 am

okay I have a Cdn Customer, I do the work here in Canada but they have a third party that pays there bills in the states. They want a W-8 Ben form filled out why? how do I get around that? They have since stopped paying us.
Where providing simple medical services were not selling products.

#6
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Cameron
on 11.16.09 at 3:21 pm

According to the “Instructions for Form W-8BEN”,
“the beneficial owner of income is generally the person who is required under U.S. tax principles to include the income in gross income on a tax return.” Does that mean that we, a Canadian company who does not pay tax to the US government, do not need to provide the W-8 form?

#7
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GL
on 12.13.09 at 8:21 pm

For a Canadian company without any establishment in US, is there any tax liability on receiving payment from a US company, i.e. filing for incoming tax and sales tax? With that many services going offshore from US, there should be a clear cut definition. I have no problem to file the SS-4 form with IRS if there is a textbook answer. Without one, any information reveal to IRS can possibly come back against you some time in the future.

#8
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Sue
on 03.03.10 at 2:24 pm

I just completed the SS-4 and W8BEN. Here’s what I learned for anyone faced with the same thing.

If you are physically doing work in the US and will be paid for it, you need an EIN (complete the SS-4). Easiest thing to do was call the IRS - the number I used is specific to companies not based in, or calling from, the US (215-516-6999). I completed the form first, then just walked through it with the IRS guy. He put me on hold for about 30 seconds and came back with our EIN. In 2 weeks, I should receive original in the mail from the IRS.

The W8BEN form allows us (Canadian corporation) to invoice US customers and no tax is withheld. Basically the W8BEN form allows us to access the US/Cda tax treaty. Hopefully (fingers crossed), there won’t be any tax filing requirements in the US for us. On the W8BEN, you need to include your EIN.

For the EIN, it stays current as long as you have 1 invoice to your US customer per year. If it becomes inactive, call the IRS back (number above) and request to have your EIN re-activated.

Sue

#9
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Raman
on 04.12.10 at 3:56 pm

Asiak, thanks for the IRS number to do the SS-4 EIN application over the phone.

The IRS was surprisingly efficient: I called them at 6:45 pm eastern time (not expecting anyone to pick up) and got through to an agent within a couple of minutes. The agent walked me through the form and activated an EIN number and provided it to me over the phone right away.

While in general both US and Canadian tax law is ridiculously complicated, this particular interaction with the IRS went much better than I had expected.

#10
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Sig Greibrok
on 05.22.10 at 8:55 pm

I uderstand that the are 3 situations in the Us where a Canadian doing busines US with a stock broker in the US, interest from a US bank account and winnings from the large 6′high slot machines. Fills out a W8 and does not have to pay US tax

#11
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chad
on 05.31.10 at 12:23 pm

Thank You for this informative post.
I have a godaddy parking account which is earning over 400$ per day and I didnt have a clue what i needed to do to get the money. Now I do.
I will try and get the EIN and complete the w8en form.

Thanks Again

#12
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Vish
on 07.28.10 at 7:32 pm

Can this also works for Individual Consultant sitting in India or is it only applicable for Canada.

#13
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Steve
on 12.06.10 at 6:41 pm

Hi, I am located in Canada (Cnd corporation) and I receive affiliate commissions from USA. The Affiliate network asked me to fill out a W-8BEN form to be able to receive my commissions ($). I did it but without entering a EIN. They say it was optional. To be legit with the IRS, do I also have to get a EIN (SS-4) or can I just leave it like that ?

Thank you!

Steve

NB: CHAD (#11), What is your secret for getting 400$/day with Godaddy.com parking services ?

#14
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Sharon
on 12.21.10 at 3:36 pm

Thanks for this very informative post and the equally informative comments besides! I was starting to sweat this one when I found you all. I’m a Canadian Sole Proprietor and a Service Provider and found (through these posts) that the US Tax Law Department is incredibly, massively, helpful and *gasp* even friendly to deal with. You can reach them at 267-941-1000 (hit option 2 and option 3 at time of this writing)

Rev Can… please take a page from their book!

Incidentally the number above for the SS4 application has been changed to 1-267-941-1099 and for me, the EIN was not needed to file the w8 because my work , though for a US client, was completed in Canada and thus is exempt for tax withholding. Therefor parts II and III did not apply to my work.

I just filled out the W8 parts I and IV and sent it off to my client.

Thank you all again for your generosity.

Sharon

#15
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Olga
on 01.15.11 at 11:51 am

Hello,
I live and work in the United States but i am not a citizen. What type of form should I fill out for my taxes? can I fill out a W8 form? Thanks for you help!

#16
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Olga
on 01.15.11 at 11:53 am

I forgot to say that I dont own any bussiness, I am just an employee. Thanks.

#17
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sofie
on 07.06.11 at 6:10 am

Friend this is very good, now i’m learning

#18
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Miguel
on 08.10.11 at 10:27 am

Great stuff ! Also may thanks to Sharon above -that solved quite a few items.

#19
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Sherwood
on 08.15.11 at 1:45 pm

Guys should talk to accountant. The above comments are not correct 100%. First, people involved in the situation not paying tax has nothing to do with Canadian nationality.

First only “US source income” earned by aliens are taxable by IRS. The taxablility depends on a number of factors. For service, the location of the service determines if the income is taxable. If you perform service in the US, you are required to pay tax.

After determining that you are required to pay US tax, you fill W8 forms to exempt you from tax withholding. Some types of income are taxable regardless where you live, such as dividend and interest. You file non-residence tax return afterwards.

#20
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F.S.Taylor
on 09.14.11 at 1:25 am

Guys, please can you help.
I am a Brit with a UK tax identifying number, but currently resident in Dubai, UAE. For UK nationals this is a tax free jurisdiction, so I have no local Dubai tax ID. Do I need to get a US tax payer identification number? or will the UK one on its own be OK?, if so which address do I use as I live in Dubai but tax ID is from UK? I worked for 4 days only in Aug 2011 and may not have any more work in US for years.

#21
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Heather
on 09.27.11 at 2:59 pm

We are a Canadian corporation selling goods and limited US based contractor services in the US. We have completed the W8-BEN to avoid the 30% US withholding tax without problems in the past. We did this by checking boxes 9a and 9c. Now we are being asked to complete line 10 and provide information on applicable articles of the Canada-US tax treaty, the applicable tax rate, the type of income and why we meet the terms of the treaty article. Where is this information available and is it really required??

#22
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tom
on 12.06.11 at 6:14 pm

I am a Canadian & want to open a US account in Canada & do futures trading with a US futures broker . What forms should I have to fill because I pay taxes to Revenue Canada? Or must I pay taxes in the US & Canada? Please help.

#23
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Adriana
on 02.29.12 at 9:20 am

Hi

So, I am a US company with lots of customers in Canada.
Do I have to request the Canadian customers to fill out the W-8 BEN form or not?

Many thanks

#24
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Grace
on 03.06.12 at 1:38 pm

I have a client in a similar situation than Heather’s company(posting #21): A Canadian corporation selling software and providing consulting services in the US. They have also completed the W8-BEN to avoid the 30% US withholding tax. However, some of their customers are now asking them to complete line 10 and provide information on applicable articles of the Canada-US tax treaty, tax rate % and explain why they might meet the terms of the treaty article. Where could I find this information? Thanks.

#25
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Sum Guy
on 03.07.12 at 1:13 pm

We are a Canadian company that has no physical or operational presence in the US but we have been selling equipment to US customers (and other countries) since about 1994. We have noticed that for maybe the past 5 or 6 years that new and existing US customers have been asking for our EIN number. Some of them know enough to e-mail or fax us a w8-BEN form, and for others we have to tell them to send us that form for us to fill out, and at least 50% of the time there is still some uncertainly or push-back on their part when we send back the form without an EIN number (but this push-back is ultimately never a deterrent to us getting paid in full).

Even if it’s possible for us to get an EIN number to stop this hassle, we do not intend to ever apply for an EIN number because of the future potential hassles that could very easily result if the US passes new laws, etc. It’s never a good thing to get mixed up with the IRS, so we will steer well clear of them and stay under their radar. As some of the other comments have mentioned, now that they have their EIN number they are experiencing additional hassles with this line-10 stuff.

But I’m still very surprised that the Canadian Chamber of Commerce and other Canadian business organizations really have no knowledge, experience or advice for how to help Canadian companies deal with this EIN issue. It’s sad that we have to learn about this from each other.

#26
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Laura
on 04.11.12 at 8:24 am

So, the Company is in Italy and provides a Training module in Italy to a American Resident, should this Italian Company fill out a W8Ben? It sounds wrong but my Company Procurement folks are asking me to ask the Company to do so. TX

#27
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Sum Guy
on 04.20.12 at 10:17 am

So let me get this straight.

A company in Italy provides (sells?) a product (software?) to a US “resident”. Is the resident a commercial entity (ie - a company, institution or organization?)? Or is the resident just a private citizen (retail customer?).

Did the sale take place on-line? Perhaps transacted via credit card? Or was the buyer presented with an invoice and paid for the item by check, draft, EFT, etc?

I’d tell your procurement people to stop being so anal and just forget about it. You’re not going to be audited by the IRS looking for a W8 or W9 form that can back up your justification for not withholding 30% of the payment to the Italian company.

If you haven’t paid the Italian company yet for the item, stop screwing around with them and cut them a check already. Why cause them (and yourselves) further grief over this?

#28
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lynne
on 07.28.12 at 11:42 am

I am in the same situation as Heather and Grace and am trying to find a place where I would find the information regarding line 10 and provide information on applicable articles of the Canada-US tax treaty, the applicable tax rate, the type of income and why we meet the terms of the treaty article. Anyone able to help us ?

#29
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Harley
on 09.15.12 at 11:44 pm

Trеmendous thіngs here. I аm veгy
satіsfied to ѕee yοuг post. Thаnk you ѕо much and
Ӏ’m looking forward to contact you. Will you please drop me a mail?

#30
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Bhavna
on 09.17.12 at 10:49 am

hi everyone,

I need help!I am from India.. I have a client in US but to get the payment they asked me to fill w8ben form. I have filled and sent it back to them. So now is it necessary to have American Bank account or I can receive payments through cheque ? or if there is any other source please let me know.

#31
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Mohammed
on 09.29.12 at 1:18 pm

Bhavna
this has nothing to do with how you get your money
A customer can hold withholding tax (which is 30% in usa) from the payment to you and he pays it to his gov.
form w-8 is a way of getting rid of that option

#32
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Angus
on 10.19.12 at 6:23 am

Great advise here. I rang this number that I found above (1-267-941-1099), chose the wrong option but they put me through to the correct one (took about 10 mins) and had the EIN number in about 5 mins (filled in the form before hand).

Btw, all this advise applies to any country not just Canada.

Thanks all

#33
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ONTARIO_SUNSET
on 10.20.12 at 12:08 am

Hello all:-

I am hoping someone can give me a good advice on the following scenario….

I have a Canadian corporation registered in Windsor, Ontario, Canada
– I am an employee of my corporation
– I pay myself every year a salary
– I am the only shareholder of the corporation

Little bit about the role
– I will be getting a TN visa at the border
– I will NOT be residing in Michigan (permanently or temporarily)
– I will be staying at a hotel Monday to Thursday night
– I will be coming back to Windsor, Ontario, Canada on the weekends

I want to do some IT related consulting for a consulting firm in Michigan
– they suggest I do Corp to Corp with them
– they had me fill in the W8-BEN form and I put my Canadian Business Number under line 7
– they won’t be holding any taxes in Michigan against my Canadian corporation
– they won’t be holding any taxes in Michigan against myself (individual)
– they said I would have to pay my taxes (corporate and personal) in Canada
– they will be wiring the cheque against my Canadian corporation every month

Here are some questions and confusions I have
– do I have to pay any personal taxes in Michigan, USA?
– does my Canadian corporation have to pay any corporate taxes in Michigan, USA?
– do I have to collect 13% HST for a client out in Michigan, USA?
– when I file my Canadian Corporation T2 do I need to declare income from Michigan, USA?

Thanks in advance!

#34
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Kriss
on 11.16.12 at 1:33 pm

Hi - thanks for interesting comments. My question:
I am a freelancer working for a EU-based company. They have an W-8Ben/EIN and provide research services for a US institution. Most of the work is done in the EU but I occasionally travel to the US to go to some libraries etc. as part of the overall work. Should the EU company account for my time in the US when they invoice the US client (e.g. 10 out of 100 days is taxable US source income)?
thanks so much for your thoughts!

#35
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Glenn
on 12.03.12 at 5:17 pm

Ontario_Sunset: If your corporation is doing business with the corportation in Michigan, then personal income is unrelated so the answers to your questions are no, no, no and yes.

#36
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Adam
on 12.06.12 at 10:37 pm

Glad I found this. I had a hell of a time trying to find an easy answer. Finally was able to fine tune my google search and found this. Unfortunately because it took me so long its now.. 9:36pm pac and the online application system closed for the day at 12:30 eas.. oh well

Thanks

#37
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Glenn
on 12.07.12 at 9:04 am

I own a small corp and just went through the same process as many of the above people to get an EIN to fill out a W-8BEN. Unlike some others, I would certainly not like CRA to “take a page” from the IRS. I found the IRS forms quite difficult to understand being written in semi-legalize (e.g. “A reverse hybrid entity is any person (other than an individual) that is not fiscally transparent..”) where each definition leads to another definition whereas the CRA forms are much easier. The queue on the phone to the CRA is usually quite short but for the IRS was initially 30 min for me but later I could not even get into the queue. Once I got in, the person did not sound nearly as professional as those I’ve talked to at the CRA and most importantly, some entries in the SS-4 were required by him which the instructions for the forms very specifically said were not needed or had a meaning that did not apply to me (like business start date) but were required because the IRS computer program is now newer than the forms which haven’t been updated yet. I asked him what to do since the instructions were clear and he told me to pick a date.

#38
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Carol
on 01.16.13 at 8:46 am

I am with a company in the US who does business with a Canadian Company. i have their W-8BEN form, do i send them a 1099, if not what is the form.

#39
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Greg
on 01.25.13 at 2:33 pm

Re: W-8 BEN form - does this form exempt a Cdn Corp selling into the US from owing individual state taxes or is this form strictly for Withholding tax (i.e. 30%)

#40
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Tony
on 01.27.13 at 3:13 pm

Hi All,
I am a freelancer working for US based company and providing services from Canada
Iam a temporary employee for the US based company. I was told to fill out W-8 Form

Now, my question is how do I pay taxes in canada? and I am a temporary worker in canada.

It would be great help if some help me on this.

Thank You

#41
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club promotion
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#42
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#43
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David_KT_YU
on 04.05.13 at 12:01 pm

I have a reverse situation:
* I have incorporated a Canadian company to conduct my independent consulting services.
* A US agency sourced a contract for me and the work is in Canada; i.e. for a Canadian client.
* The contract is between myself; i.e. a Canadian company and the US Company doing work in Canada.
* I will be paid in Canadian funds.
* I will submit an invoice monthly + HST (Canadian sales taxes) to the US Company and they will direct deposit to my business account.
* I will remit the HST to the Canadian Revenue Agency (CRA).

My questions are:
* Do I need to fill up a W8BEN for this contract? My view is not but how do I fill up the W8BEN?
* How much (%) will be withheld from my payment?
* How do I get those witholding tax back since it is part of my Canadian Corporate revenue and I need to corporate tax return to CRA.

Appreciate your input.

#44
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credit cards no balance transfer fees
on 05.02.13 at 10:37 pm

Nice post. I learn something new and challenging on sites I stumbleupon every day.
It will always be useful to read through content from other authors and use something from other sites.

#45
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Denis
on 06.27.13 at 9:19 am

Hi, I’m a Green Card holder recently (2 months ago) arrived to US. I wanted to transfer some money from my Bank oversees, to my bank in US, but the foreign bank asked to fill W8-BEN or W9. The only income i have abroad is interest from my bank account and mutual funds (~tens of $/month).
1. What I should fill in my case?
2. Is self money transfer from oversees subject for taxation in US in case i filled W9?
actually I’m not sure about my status as I don’t know for haw long I’ll be in US.
Thank you in advance

#46
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#47
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I want to pursue a global career in Finance & Accounting.
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Is there any other professional degree that can be pursued from any country?
Where can i find relevant information about it?
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#48
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on 07.20.13 at 3:20 pm

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#49
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on 08.07.13 at 6:01 pm

Do you need a business license if you have a business degree?

#50
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Gwen Betthel
on 08.23.13 at 9:46 pm

First, this is very interesting, but as a person who is Canadian and has to fill out the W-8BEN, it is very confusing. For example is there any place that can give step by step directions and explanations for half the stuff on here. Some of the wording is very obtuse especially for those of us who have no idea about treaties between countries.
Part ll says: Claim of Treaty Benefits (if applicable)
I certify that (check all that apply):.
a. The beneficial owner is a resident of within the meaning of the income tax treaty between the United States and that country..
b. If required, the U.S. taxpayer identification number is stated on line 6 (see instructions).
c. The beneficial owner is not an individual, derives the item (or items) of income for which the treaty benefits are claimed, and, if applicable, meets the requirements of the treaty provision dealing with limitation on benefits (see instructions).
d.The beneficial owner is not an individual, is claiming treaty benefits for dividends received from a foreign corporation or interest from a U.S. trade or business of a foreign corporation, and meets qualified resident status (see instructions).
d. The beneficial owner is related to the person obligated to pay the income within the meaning of section 267(b) or 707(b), and will file Form 8833 if the amount subject to withholding received during a calendar year exceeds, in the aggregate, $500,000..
Special rates and conditions (if applicable—see instructions): The beneficial owner is claiming the provisions of Articleof the treaty identified on line 9a above to claim a % rate of withholding on (specify type of income):Explain the reasons the beneficial owner meets the terms of the treaty article: .
Just what exactly does all this mean and how am supposed to answer those questions?

#51
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Greg
on 08.29.13 at 8:13 am

This is a very helpful site, but I have a very odd circumstance. I am Canadian and published a book through a US publisher. The full profits are going to a charity. If the book is sold through the charity, their web site, and other Canadian sites, is a W-8BEN required, or is it only required if we take it to the next level and also sell on the US publisher’s site?

#52
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Harold Schulz
on 09.18.13 at 6:18 am

We are a Canadian corporation selling goods and limited US based contractor services in the US. We have completed the W8-BEN to avoid the 30% US withholding tax without problems in the past. We did this by checking boxes 9a and 9c. Now we are being asked to complete line 10 and provide information on applicable articles of the Canada-US tax treaty, the applicable tax rate, the type of income and why we meet the terms of the treaty article. Where is this information available and is it really required??

#53
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helen
on 02.27.14 at 8:53 am

FWIW

I was trying to fill in the W8-BEN as a sole shareholder for a Canadian Corporation and found that the language was very confusing on the form. I wasn’t sure if I should enter as an individual or as a corporation.

So I just called IRS (per Sharon’s incredibly helpful post above) and they were an absolute delight. Helped me answer the question, told me what to put in the form and advised me which sections to fill in and which to leave blank. I HIGHLY RECOMMEND CALLING THEM :) 267 941 1000 - I just randomly pressed a choice and got a helpful guy.

The answer I received was that “you’re doing business with XXX company as a corporation, so that’s how you should fill in the form” which made sense.

Good luck, all!

#54
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on 05.31.14 at 7:18 pm

Vraiment captivant : je pense que ce post intéresserait mon pote

#55
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Townsville Queensland
on 07.10.14 at 2:53 am

Thanks for every other informative web site.
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#56
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Naresh
on 08.01.14 at 11:01 pm

Good Morning

I have a question. We recently started a back office company and signed up with a client. Now at the time of the executing the contract, the client wanted us to submit the W9 form. Our company is located in India and all service is being offered from India.

Now do I need to obtain an EIN or is it enough to submit a Form W8-BEN. Please advise

Being in India can I still obtain an EIN for my company.

Naresh

#57
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servere de vanzare
on 08.03.14 at 12:46 am

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#58
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#59
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https://www.youtube.com
on 09.23.14 at 5:41 pm

Hello there! Do you know if they make any plugins to assist
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If you know of any please share. Thanks!

#60
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#61
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carlos amoranto
on 10.13.14 at 9:09 pm

contact me at 416-720-5684.
We offer both an onboarding solution to help people fill out their IRS W-8BEN or W-8BEN-E forms online via a software vendor solution. We are also an advisory firm and can assist in understanding your FATCA obligations.

#62
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anne
on 11.11.14 at 11:32 am

Great article. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out a “IRS W8 BEN form”,I found a blank form here: http://goo.gl/J8kpvI. This site also has some tutorials on how to fill it out and a few related Tax documents.

#63
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