Filling out a W-8BEN -- how?

Income tax policy, rules, problems, strategy and software. Property and consumption taxes too.
jzlztz
Newcomer
Newcomer
Posts: 9
Joined: 22 Oct 2013 08:49

Re: Filling out a W-8BEN -- how?

Post by jzlztz »

Hi there,

I know this is an old thread but I just got dinged by Vanguard when I changed my address to reflect my move back to Canada.

I have an IRA and a Roth IRA account with them. Do you have to do anything special with the W8-BEN for the IRA/Roth IRA accounts?

My understanding is that the tax treaty between the US and Canada recognizes these type of retirement accounts across the border and, therefore, I will not be taxed while the money grows inside of these accounts. I am still young so I won't be withdrawing money from these accounts anytime soon.

So do I need to do anything special in the W8-BEN form for these accounts? The info I got from Vanguard seems to imply that I need to fill Part II/line #10 but I think they meant I need that if I were withdrawing money from these accounts.

Thanks
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Filling out a W-8BEN -- how?

Post by ig17 »

I need to file W-8BEN for a joint taxable account held at TD Direct Investing.

Should I fill out one W-8BEN form with two names? Or two forms with one name per form?

Thanks.
ig17
Veteran Contributor
Veteran Contributor
Posts: 3418
Joined: 21 Feb 2005 20:54

Re: Filling out a W-8BEN -- how?

Post by ig17 »

I think I found the answer.

W-8BEN instructions
http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

Page 2:
Note. If you own the income or account jointly with one or more other persons, the income or account will be treated by the withholding agent as owned by a foreign person if Forms W-8BEN are provided by all of the owners.
The way I read it, each person should file a separate form.
Anduru
Newcomer
Newcomer
Posts: 1
Joined: 29 Mar 2017 13:53

Re: Filling out a W-8BEN -- how?

Post by Anduru »

It seems that something has changed in the past couple of years and it's now required that I fill out Line 10 of my W-8BEN.
Fair warning: I am inexperienced with financial matters and trying to figure this out so that I can collect full payment from a website that I sell ready-made product on. :oops:

So far I've filled out everything except Line 10. I figured out the article and paragraph and the rate % but I don't know what to list for "type of income" or "Explain the additional conditions [...] to be eligible for the rate of withholding".

Can anyone help with this?

Thanks
rakhaa
Newcomer
Newcomer
Posts: 2
Joined: 30 Mar 2018 19:15

Re: Filling out a W-8BEN -- how?

Post by rakhaa »

Kind of puzzled as well! I'm a Canadian citizen with no financial presence at all in the US, no capital holdings, revenue, tax history, or stocks. I will attend a conference in the US and will receive a one-time payment of a relatively small amount (less than 2000 U.S.) which will constitute the only revenue I make in the US this fiscal year. I don't know what to enter in line 6 of part 1, I don't think it's the Canadian social insurance number (SIN). I will write 'Canada' on line 9 of part 2, but have no idea what to put in the following line (10). Am I right to assume that these line infos can be skipped if the one-time amount in question is below a certain threshold?

Any help would be appreciated!
Eclectic12
Veteran Contributor
Veteran Contributor
Posts: 2571
Joined: 21 Feb 2018 18:03

Re:

Post by Eclectic12 »

Doug wrote: 02 Oct 2008 09:07 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...

I write this to point out that filling out form W-8BEN may not be as straightforward as one thinks. :cry:
I stayed a Canadian tax resident while working in the US so if you have confirmation it is that complicated, then yes it likely is. :mrgreen:

The key question that occurs to me is whether this is an out of the box template based on the assumption one is a US person where by moving back to Canada and severing ties, you are no longer bound by these requirements.

For example, do you really still have a US address attached to this account?

Just my two questions and cents ....


Cheers
User avatar
Pitzeco
Contributor
Contributor
Posts: 322
Joined: 20 Feb 2019 17:54

Re: Filling out a W-8BEN -- how?

Post by Pitzeco »

AltaRed wrote: 14 Dec 2011 15:51 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.
Yes, I do realize I'm quoting from 2011 :)

I need to send a W-8BEN to a private US corporation that is liquidating and I have common stock of. The liquidation will happen over three years. My current understanding is I will get a dividend in the first two years and then I assume (need to figure this out) that the common stock will cease to exist and the business closed in year 3. It is only then I get a capital gain/loss based on the ACB of my common stock. As such the first few payments will be dividends and believe I'll get dinged withholding tax (ideally 15%) as a Canadian resident (also citizen).

I've filled out W-8BENs for Canadian (and US) brokers in the past but it has been awhile, as I'm not on the three year plan and still get the 15% FWT. I know AR's decade old post is about Canadian brokers but does the W-8BEN require an SSN, if one has one? Instructions here https://www.irs.gov/pub/irs-pdf/iw8ben.pdf are not clear. In the Line 5 section it says: "If you have a social security number (SSN), enter
it here."
but then it goes on to say "To claim certain treaty benefits, you must complete line 5 by submitting an SSN or ITIN, or line 6 by providing a foreign tax identification number (foreign TIN).". It would appear I should enter at least one number, if not both. I lean toward the FTIN (ie. entering my SIN in Line 6a).

Does anyone know which tax numbers, SSN and/or SIN, or if any, need to be entered in the situation I describe?
Found a somewhat similar question here viewtopic.php?t=120080 but no definitive answer.

Thanks
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Filling out a W-8BEN -- how?

Post by AltaRed »

The form does not require both numbers, so if you reside in Canada and want to 'identify' with the Canada-US treaty and avail yourself of the 15% withholding tax provision, it is my view to use an ITIN, i.e. SIN number. That is a rank, amateur opinion on my part. It may be worth your while to run this scenario past a cross-border tax accountant to be sure, particularly if there is a lot of money at stake and you don't want to leave more than a 15% withholding tax behind with Uncle Sam.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
formerpatriot
Veteran Contributor
Veteran Contributor
Posts: 1005
Joined: 08 Sep 2018 14:37

Re: Filling out a W-8BEN -- how?

Post by formerpatriot »

I recently filled a W-8BEN for TIAA (where I have a 401(a) and a 403(b)).
I am a Canadian living in Canada.
A lifetime ago, I worked for a few years in the USA with a now-renounced Green Card.

Here's how I filled the W-8BEN:

Line 1: I wrote down my name.
Line 2: I wrote "Canada".
Line 3: I wrote down my complete street address in Canada.
Line 4: I left this field blank.
Line 5: I wrote down my USA Social Security Number.
Line 6: I wrote "Not legally required" as per instruction.
Line 7: I wrote "none".
Line 8: I wrote down my date of birth.
Line 9: I wrote "Canada".
Line 10:
- First field: I wrote "XVIII, 2(b)".
- Second field: I wrote "15%".
- Third field: I wrote "Annuity income".
- Fourth field: I left this field blank.

For help in filling the form I used these sources (presented here in order of importance):
- The official 7-page IRS "Instructions for Form W-8BEN";
- A phone conversation with someone at TIAA;
- The Serbinski forum;
- The FW forum;
- Google searches.
Eclectic12
Veteran Contributor
Veteran Contributor
Posts: 2571
Joined: 21 Feb 2018 18:03

Re: Filling out a W-8BEN -- how?

Post by Eclectic12 »

AltaRed wrote: 27 Oct 2021 11:52 The form does not require both numbers, so if you reside in Canada and want to 'identify' with the Canada-US treaty and avail yourself of the 15% withholding tax provision, it is my view to use an ITIN, i.e. SIN number. That is a rank, amateur opinion on my part ...
I have a SSN from working in the US as a Canadian tax resident.

I'm not sure what the official view is but for the W8-BEN, have only given the ITIN (i.e. SIN number).


Edit:
Though I don't have any retirement accounts in the US ... just a former employer stock plan.


Cheers
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Filling out a W-8BEN -- how?

Post by AltaRed »

A Canadian having and using a SSN in Canada can result in a lot of unnecessary grief as my post in 2011 said.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
tony767p
Contributor
Contributor
Posts: 59
Joined: 12 Mar 2014 17:57

Re: Filling out a W-8BEN -- how?

Post by tony767p »

Apologies in advance, just in case,

With no intent to hijack the thread, has anyone filled in the form W-8BEN-E?
My deceased F-I-L (subject of another thread) held IBM shares and filled in the W-8BEN yearly, and it was straightforward.
With his passing I believe we now need to switch to using the W-8BEN-E form, most recently updated in October 2021.
There is guidance available via Google, but none that I can see pertinent to Canadian residents, for the new version.
Anyone here 'been there, done that?

Many thanks, as always,

Tony
User avatar
AltaRed
Veteran Contributor
Veteran Contributor
Posts: 33398
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Filling out a W-8BEN -- how?

Post by AltaRed »

There should not have been a need to fill out the form yearly. Traditionally, some financial institutions have requested a renewal every 3 years and others have been known to not ask for renewals at all. The E form version is something I've never heard of before. Perhaps ask the brokerage?
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom
Post Reply