US W8-BEN - Must You File One?

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Hyperborea
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US W8-BEN - Must You File One?

Post by Hyperborea » Fri Feb 08, 2019 5:53 am

So, is it required to file a W8-BEN form? I have a few US bank accounts and am soon to become a US NRA. Do I need to file a W8-BEN with those banks? Bank account and CD interest is not subject to US taxes for a NRA. Is there any downside to not filing a W8-BEN? The upside to not filing is that I'm worried that they may close the bank account if I file.
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Maple
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Re: US W8-BEN - Must You File One?

Post by Maple » Sat Feb 09, 2019 11:03 am

Hyperborea wrote:
Fri Feb 08, 2019 5:53 am
So, is it required to file a W8-BEN form? I have a few US bank accounts and am soon to become a US NRA. Do I need to file a W8-BEN with those banks? Bank account and CD interest is not subject to US taxes for a NRA. Is there any downside to not filing a W8-BEN? The upside to not filing is that I'm worried that they may close the bank account if I file.
Correct, bank account and CD interest is not subject to US taxes for a NRA. But, if you do not file a W8-BEN, you will get 1099 tax slips indicating taxable income and the IRS will expect to receive payment. If you file the W8-BEN, you will receive the correct 1042-S slips for NRAs instead.

shcnno
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Re: US W8-BEN - Must You File One?

Post by shcnno » Mon Feb 11, 2019 9:23 am

My banks withhold taxes even after filing w8-ben. Are they not supposed to for interest? Even without a tax treaty?

TedSwippet
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Re: US W8-BEN - Must You File One?

Post by TedSwippet » Mon Feb 11, 2019 10:41 am

shcnno wrote:
Mon Feb 11, 2019 9:23 am
My banks withhold taxes even after filing w8-ben. Are they not supposed to for interest? Even without a tax treaty?
Assuming you hold ordinary deposit accounts with the bank, then according to IRS publication 515 -- the (voluminous!) instructions for 'withholding agents' -- there should be no withholding:
Interest on deposits (Income Code 29).
Foreign persons are not subject to chapter 3 withholding on interest that is not connected with a U.S. trade or business if it is from:

Deposits with persons carrying on the banking business;
Deposits or withdrawable accounts with savings institutions chartered and supervised under federal or state law as savings and loan or similar associations, such as credit unions, if the interest is or would be deductible by the institutions; or
Amounts left with an insurance company under an agreement to pay interest on them.
Deposits include certificates of deposit, open account time deposits, Eurodollar certificates of deposit, and other deposit arrangements.

You may have to file Form 1042-S to report certain payments of interest on deposits. See Deposit interest paid to certain nonresident alien individuals under Returns Required , later. You may also have to file Form 1042-S when the deposit interest is a withholdable payment to which withholding applies (or was applied) chapter 4.

shcnno
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Re: US W8-BEN - Must You File One?

Post by shcnno » Mon Feb 11, 2019 11:28 am

Hmm, both Schwab and Tdbank withhold tax on the (tiny amount of) interest I receive.

TedSwippet
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Re: US W8-BEN - Must You File One?

Post by TedSwippet » Mon Feb 11, 2019 11:44 am

shcnno wrote:
Mon Feb 11, 2019 11:28 am
Hmm, both Schwab and Tdbank withhold tax on the (tiny amount of) interest I receive.
Do they send you a 1040-S? If yes, you could try filing a 1040NR return with the IRS to reclaim this withholding. Unless you have a US social security number this will mean applying for a US TIN, something that is (of course) a non-trivial and slow process.

I am in the UK and see no withholding on the (tiny amount of) interest I receive from Vanguard. The UK is a treaty country though, so that does not really tell you much about how this might work in non-treaty ones.

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