Everything You Need to Know About the W-8BEN Form

Everything You Need to Know About the W-8BEN Form
Rohit4 January 2024

The W-8BEN form is filled out by non-US residents or business entities earning an income from the US. The major benefit of filling out a W-8BEN tax form is that you avail tax benefits and exemptions in the USA despite being a non-resident. In short, this is a tax-saving form and can help you reduce your taxes significantly, especially if your country has entered a tax treaty with the US. 

The complex nature of tax norms in the US makes compliance difficult. In this article, we will go through the basics of the W-8BEN tax form, why it is important, how it can benefit you, and the consequences of not filling it.

What is a W-8BEN- Form?

The W-8BEN form is issued by the Internal Revenue Service (IRS). The agency mandates that all non-US resident individuals and entities earning an income in the United States fill out this form to avail of tax exemptions. Without the W-8BEN tax form, an entity must pay tax according to the USA’s standard 30% tax rate.

The W-8BEN tax form establishes the foreign status of individuals, whereas businesses, corporations, partnerships, and other entities must use the W-8BENE form to avail their tax exemptions. 

When Is Form W-8BEN Required?

According to the IRS, individuals or businesses earning income in the following ways are also required to fill the W-8BEN form:

  • Interests, dividends, rents
  • Royalties, premiums, annuities
  • Compensations for services performed
  • Substitute payments in a securities lending transaction
  • Other fixed annual or periodical gains or incomes

This means non-US citizens or businesses that engage in investments, work with other businesses or partnerships in the US, own property in the US, etc., are generally the type of entities that fill this form. 

To know whether you fall under this category, you must ask yourself two simple questions:

  • Are you a non-US citizen?
  • Are you earning any type of income from the US?

If your answer to both is yes, chances are you will need to fill out the W-8BEN tax form. 

Failure to fill out the form can result in the US government withholding 30% of your income or any amount credited to you. 

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