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Form W-8 vs W-9: The Difference Between W8 and W9

Form W-8 vs W-9: The Difference Between W8 and W9
Ines Zemelman, EA
12 December 2021
 

Often, expats encounter a request for a TIN when their bank or online marketplace asks to furnish Forms W-9/W-8 and provide their US tax ID. 

If you are a U.S. person, you are required to fill out Form W-9

W-9 Form is a confirmation of the American tax residency status. All foreign banks participating in FATCA (80 countries and counting) are required to obtain a written statement from their clients confirming whether they are American citizens (If there is any indication that the account holder is either directly or indirectly connected to the United States). W-9 tax forms are a way for the IRS to estimate what taxes will be owed by independent contractors or freelancers who provide labor or services to a business. This form also exempts businesses from having to withhold and pay taxes on behalf of these independent contractors. You may also see these forms called a “Request for Taxpayer Identification Number (TIN) and certification.

This is not a request for proof of compliance from you. The bank will use your completed form W-9 as the proof of their own compliance for FATCA. Please fill out the form, sign it, and send it to the bank.

However, you should also be ready for the next step of the process: you’ll receive a letter from the bank asking for the proof of your compliance with the U.S. tax code.

If you are already in the process of preparing a tax return in order to apply for the Streamlined Procedure, then we’ll draft a letter to your bank confirming your compliance with the U.S. tax code once your Streamlined Procedure application package is complete.

If you are currently delinquent, the time to catch up is now. We can help you to get on top of filing your taxes and will guide you through every step of the process.

Who is required to fill out W-9

Employers who work with independent contractors must provide them with a W-9 form to fill out before starting work. There are specific criteria for who is classified as an “independent contractor” and will need to fill out a W-9 form. You will need to fill out a W-9 form if you:

  1. Classify yourself as an independent contractor or “freelancer.”
  2. Are not full-time employees of the business.
  3. Will be paid more than $600 for work provided to the business.

If you are not a U.S. person, you are required to fill out Form W-8 (W-8 Series)

The W-8 form confirms your status as a non-U.S. person to the withholding agent. If you are a resident of a country that has a tax treaty with the U.S., you may be able to claim a reduced tax withholding rate on Form W-8 based on the conditions of the tax treaty.

If you are a resident of a country that does not have a tax treaty with the U.S. by filing Form W-8 you will eliminate tax withholding on certain types of income from U.S. sources (i.e. bank interest or capital gains from the disposition of U.S. stocks).

W-8BEN: The W-8BEN is used to confirm that a vendor is a foreign entity/person and must be provided even if the vendor is not claiming a tax treaty reduction or exemption from withholding. Therefore, all foreign vendors must provide a W-8BEN even if no ITIN or Social Security Number exists, unless another W-8 series form is provided. 

W-8BEN-E: The W-8BEN-E is used to confirm that a vendor is a foreign entity and must be provided even if the vendor is not claiming a tax treaty reduction or exemption from withholding. Therefore, all foreign vendors must provide a W-8BEN-E even if no EIN, ITIN or SSN exists, unless another W-8 series form is provided. 

W-8ECI: You must give Form W-8ECI to the withholding agent or payer if you are a foreign person and you are the beneficial owner of U.S. source income that is (or is

deemed to be) effectively connected with the conduct of a trade or business within the United States or are an entity (including a foreign partnership or foreign trust) engaged in a U.S. trade or business submitting this form on behalf of your owners, partners, or beneficiaries. 

W-8IMY: Except as otherwise provided, you should provide Form W-8IMY when receiving a reportable amount or withholdable payment on behalf of another person or as a flow-through entity or when acting as a QDD or QSL. When receiving a withholdable payment, your chapter 4 status is generally required to be included on the form unless otherwise provided in accordance with these instructions. In some cases you should provide Form W-8IMY for an amount realized or a PTP distribution. 

W-8EXP: You must give Form W-8EXP to the withholding agent or payer if you are a foreign government, International organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U.S. possession receiving a withholdable payment or receiving a payment subject to chapter 3 withholding, or are such an entity maintaining an account with an FFI requesting this form. 

Ines Zemelman, EA
Founder of TFX