Filling out a W-8BEN -- how?

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pitz
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Filling out a W-8BEN -- how?

Post by pitz »

My broker (IB) has requested that I fill out and file with them IRS Form W-8BEN.

As a Canadian citizen, with no ties to the United States (aside from being a periodic visitor, and investor), what do I need to put on this form:

http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

In particular, Question #10 is of concern. I know Canada/USA have a tax treaty, but under what article is the withholding defined, and what explanation can I offer for eligibility under the treaty article?

Thanks. Hopefully someone else has dealt with this.
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Norbert Schlenker
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Post by Norbert Schlenker »

The treaty entitles you to withholding rates of

15% on dividends (Article X)
10% on interest (Article XI)
0% on capital gains (Article XIII)

You are entitled to those rates because, under the definitions made in Articles III and IV, you are a person resident in Canada.

NOTE: Your Canadian citizenship is irrelevant. Do not mention it.
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Bylo Selhi
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Post by Bylo Selhi »

FWIW, the only part of Part II I've ever filled out on a W-8BEN is 9(a) to indicate that I'm a Canadian resident. I've never had any problems with incorrect withholding tax rates.
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Post by FrostedGlass »

The official instructions are here.

My version, assuming an individual (Note IANAL and other disclosures to keep me out of jail and to keep the LSUC happy). If this is for a corporate entity or something more complimicated then consult your accountant and/or counsel.

Part I:
1. Name - fill it in
2. Skip for individual
3. Check as appropriate - likely "Individual"
4. Residence address - fill it in
5. Mailing address - skip unless different from residence
6. Skip
7. Skip
8. Skip

Part II:
9. As Bylo says check a. and put word "Canada" on the dotted line (I'm assuming you are resident in Canada for this). Don't check any others.
10. Skip

Part III:
11. Skip

Part IV:
Sign name and date, put word "Self" on the far right dotted line asking capacity.


Done. Send back to broker and keep copy for your files.
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W8 & C

Post by IdOp »

Part I:
...
7. Skip
...
Field 7 is the "Foreign tax identifying number, if any (optional)". (Although the instructions, to their ambiguity, don't say optional.)

Are there any reasons not to put the Canadian S.I.N. in there?
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Re: W8 & C

Post by AltaRed »

IdOp wrote:Are there any reasons not to put the Canadian S.I.N. in there?
I never have in all the W-8BENs I have every filled out over the years and IRS really has no need for it. The less info they have, the better.
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Re: W8 & C

Post by Norbert Schlenker »

AltaRed wrote:The less info they have, the better.
:lol: True, but if you think the IRS doesn't know your SIN (or CRA your SSN) already, you should read the Mutual Assistance clauses in the tax treaty.
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Re: W8 & C

Post by AltaRed »

Norbert Schlenker wrote:
AltaRed wrote:The less info they have, the better.
:lol: True, but if you think the IRS doesn't know your SIN (or CRA your SSN) already, you should read the Mutual Assistance clauses in the tax treaty.
Oh, I know that... but they have to make the effort to find out. I am not going to help.
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US Stock held by underage son - W-8BEN ?? how?

Post by Rickdl »

Recently I purchased a small amount of stock for my son (who's not even a year old). I realize (or at least think) I'll still be taxed on any dividends that stock has until he's 18 (I think?). I don't really care about that, I.e. being taxed on his income, but would still like more direction on how that works if someone can fill me in on that.

But my main question is I recently received a W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding form for the stock. More commonly referred as a "W-8BEN".

What do I do with it in terms of filling it out? It has a section for "Signature of Beneficial owner or authorized signatory" and also "Capacity in which acting". The stock is registered to my son's name not mine (as I wanted). Can I sign it? If so, what do I put under Capacity in which acting. Hoping I don't have to get a power of attorney or other complicated paper work just to buy shares for him.

Btw the stock also has a DRIP, which just has a signature box, date and daytime phone #. Could I also sign that? My signature's fairly sloppy so I doubt they'll know it wasn't my son that signed it, but obviously i don't want to do anything illegal or something that's going to cause problems in the future.
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Post by SoninlawofGus »

Not exactly definitive, but see the last line: http://www.rbs-sharedealing.co.uk/forms ... _notes.cfm

I believe this form never goes to the IRS but rather stays with your bank.
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Post by Rickdl »

Thanks, last line on that url has
Designated Accounts
For designated accounts, one form must be completed by the named account holder, and another form is to be completed on behalf of the minor and signed by their parent/guardian
but not sure if that means if there should be 2 copies, and if it does, who's the named account holder? And do I put in "Parent" under Capacity in which acting then?
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Post by Bylo Selhi »

SoninlawofGus wrote:Not exactly definitive
From the horse's mouth: Instructions for Form W-8BEN although I couldn't find anything on point. However this, from a discussion of a draft revision, may be useful, "Parents and guardians of minor children may sign for them, and should indicate their status on the capacity line in the signature block." That's what I would do.
I believe this form never goes to the IRS but rather stays with your bank.
Or in the case of a DRIP, the transfer agent who is located in the US.
Rickdl wrote:the stock also has a DRIP, which just has a signature box, date and daytime phone #. Could I also sign that? My signature's fairly sloppy so I doubt they'll know it wasn't my son that signed it, but obviously i don't want to do anything illegal or something that's going to cause problems in the future.
What concerns me is that transfer agents insist on Medallion Signature Guarantees. I have no idea what problems that may create in the future should you or your son wants to sell/transfer the stock. You may want to ask the transfer agent or look at their website.
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Post by paper prophet »

For an indiviually held professional corporation, should 9c also be checked on the W-8BEN? 9c states:

"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"
.

I read this as "the corporation is not an individual, but wants to be eligible for preferential tax treatment as set out in the US-Canada tax treaty" (and I admit a could easily be reading this incorrectly. I find this language complicated and unclear).
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Post by Operabob »

Are there any reasons not to put the Canadian S.I.N. in there?
Yes, it's called identity theft.

As a Canadian only give your SIN to institutions legally entitled to it, essentially:

a) medical
b) financial institutions reporting for income tax purposes

As foreign Corps aren't reporting to the CCRA don't give it.

If you have something like $500,000 (???) in US investments (stock, real estate) then you'd have to apply for a US taxpayer number and you'd give that.

OB
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Post by Doug »

I have an account with Vanguard from the time that I worked in the USA. Vanguard states "If completing the form for an IRA or qualified plan account, you must have a U.S. taxpayer identification number to be eligible for treaty benefits in Part ll of the form...If you have an IRA or a qualified plan account, you must check this box (that refers to 9b)...The IRA requires that you submit evidence supporting foreign residency when any of the following conditions apply:
Your Vanguard account registration indicates a residence address or mailing address in the United States
The country you named on Form W-8BEN in Part l, line 4, differs from the country named in Part l, line 5.
You provide a U.S. permanent address in Part l, line 4 of Form W-8BEN
You provide a U.S. mailing address in Part l, line 5 of Form W-8BEN.
You provide a mailing address at a financial institution in Part l, line 5 of Form W-8BEN
You provide an "in care of" address in Part l, line 5 of form W-8BEN.
You provide a post office (P.O.) box number in Part l, line 5 of Form W-8BEN

I write this to point out that filling out form W-8BEN may not be as straightforward as one thinks. :cry:
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Post by jay »

I just got my investment account transferred to RBCDI last month (lured by the 1% cashback bonus) and I hold US securities in it.

RBCDI just placed a restriction on the ENTIRE account because they did not receive my signed W-8BEN form (related to US tax withholding). I can sell CAD and US stocks, but I cannot buy ANYTHING.

Do other brokers do this and does it make any sense? I don't understand why the ENTIRE account is not restricted, i.e. I cannot buy Canadian stocks.

Thanks
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Post by twa2w »

Yes all brokers do it as far as I am aware. There is an alternate to providing the W8Ben form that would allow you to trade, having to do with what ID you provide, but it doesn't give you the the tax benefit on witholding tax

Cheers
J
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Post by Bylo Selhi »

jay wrote:RBCDI just placed a restriction on the ENTIRE account because they did not receive my signed W-8BEN form (related to US tax withholding). I can sell CAD and US stocks, but I cannot buy ANYTHING
twa2w wrote:Yes all brokers do it as far as I am aware. There is an alternate to providing the W8Ben form that would allow you to trade, having to do with what ID you provide, but it doesn't give you the the tax benefit on witholding tax
Something doesn't add up here.

When I transferred taxable and RRSP accounts to RBCDI I indicated that I didn't need US trading. I included a photocopy of my driver's license but no W8-BEN. (I have no other business with RBC so they don't have any other ID or similar documentation on file.)

My taxable account has two sub-accounts, one CA and the other US. I haven't tried to trade on the US side. I have both bought and sold stocks and mutual funds on the CA side with no hassles whatsoever.

A couple of weeks ago, when I enquired about the status of my wife's transfers (also no US trading, photocopy of DL, no W8-BEN, no other business with RBC) the agent said they were still vetting her application. I asked if they'd received the transfer forms, copy of DL, etc. that were included with the main application. He said yes. Then he added that the DL was superfluous because we aren't trading in the US (!?)

Granted that all of our experiences with RBCDI are anecdotal but they're also very inconsistent. (And in our case they're also in violation of FINTRAC, but that Gord Nixon's problem, not mine.)
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Re: Filling out a W-8BEN -- how?

Post by Raul »

Have held a few US stocks/ETFs for several years. However, didn't submit W-8BEN form intially, thus a 30% withholding tax was applied to dividend distributions over a 2+ year period.

Question: Is it possible to re-coup the taxes? Thanks
Regards;
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Re: Filling out a W-8BEN -- how?

Post by Norbert Schlenker »

If the withholding was inside an RRSP, probably not.

If in a taxable account, you can file a 1040NR and request a refund of the amount above the 15% specified in the treaty. That may require updating any foreign tax credit you claimed on your T1.
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Re: Filling out a W-8BEN -- how?

Post by Raul »

....you can file a 1040NR and request a refund of the amount above the 15% specified in the treaty
Thanks!
Regards;
Raul
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Re: Filling out a W-8BEN -- how?

Post by Doug »

The following may be useful to others. I was filling out the IB Brokers application form on line. I filled out 9; then I filled out 10 with the information that Norbert generously provided. It didn't work. I phoned IB up. I was told that the problem was that I was filling out 10. If one fills out 9, you don't have to fill out 10.
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Re: Filling out a W-8BEN -- how?

Post by AltaRed »

An old thread but relevant. Thousands, if not tens of thousands, of Canadians, including myself, have a US SSN as a result of ex-pat work assignments in the USA. I have run into difficulties with 2 discount brokerages over the past few years when I have inserted my SSN in the ITIN/SSN box on the W-8BEN form. Under NO circumstances should one do that. The tax departments of at least a few of the discount brokerages will assume (and insist) that you are a US Person* because of the existance of a SSN and insist you fill out a W-9 instead. That, of course, is wrong if you are NOT a US Person.

That can stall you dead in your tracks until and unless you can provide a letter from a US tax consultant or from the IRS documenting that you are not a US Person. The alternative is to remain 'undocumented' and subject to standard 30% withholding tax which may, or may not, be fully recoverable via FTC on a Canadian T1 General. Canadian institutions seem to have gotten a lot more paranoid recently about the long arm of the IRS because this has never been a prior issue for me for the 20 years previous.

The best thing to do is to leave that box blank.

* US Citizen, green card holder, meeting the substantial presence test, etc.
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Re: Filling out a W-8BEN -- how?

Post by bowtie »

AltaRed wrote:An old thread but relevant. Thousands, if not tens of thousands, of Canadians, including myself, have a US SSN as a result of ex-pat work assignments in the USA. I have run into difficulties with 2 discount brokerages over the past few years when I have inserted my SSN in the ITIN/SSN box on the W-8BEN form. Under NO circumstances should one do that...
Yes indeed. If only I'd known this when I opened an account with Questrade earlier this year. I've been wrangling with them over this issue for a long time now and it may finally be fixed but maybe not in time to spare me from taxes on year end distributions...
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Re: Filling out a W-8BEN -- how?

Post by AltaRed »

I eventually had to get a senior US tax consultant to write a letter to the brokerage saying why I was not a US Person to solve the problem.
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