What is the W-8BEN and what is its purpose?
The W-8BEN is an Internal Revenue Service (IRS) mandated form to collect correct Nonresident Alien (NRA) taxpayer information for individuals for reporting purposes and to document their status for tax reporting purposes. (The form for entities is the W-8BEN-E.)
In addition, the W-8BEN is a required document when making Non-U.S. Source Income payments to a Nonresident Alien (NRA); these are payments when the services performed are (1) performed by a NRA, and (2) are performed outside the United States. For details on Non-U.S. Source Income payments, please refer to Non-U.S. Source Income (Payments to Non-Resident Aliens for work performed Outside the U.S.)
Nonresident Aliens are subject to U.S. tax at a 30% rate on income they receive from U.S. sources that consists of:
- Interest (including certain original issue discount (OID))
- Compensation for, or in expectation of, services performed
- Substitute payments in a securities lending transaction
- Other fixed or determinable annual or periodical gains, profits, or income
This tax is imposed on the gross amount paid and is generally collected by withholding under section 1441. A payment is considered to have been made whether it is made directly to the beneficial owner or to another person–such as an intermediary, agent, or partnership–for the benefit of the beneficial owner.
A withholding agent or payer of the income may rely on a properly completed W-8BEN to treat a payment associated with the W-8BEN as a payment to a foreign person who beneficially owns the amounts paid. If applicable, the withholding agent may rely on the W-8BEN to apply a reduced rate of, or exemption from, withholding at source also known as a tax treaty benefit. See applicable tax treaties at Tax Treaties for Independent Contractors and Scholarships.
How is the W-8BEN used?
Effective January 1, 2010 the Form W-8BEN has two uses at the UW:
- A completed and signed W-8BEN is required for all tax reportable transactions made to a Nonresident Alien (NRA) of the United States. This includes all payment mechanisms used at the UW. The W-8BEN is the equivalent of the W-9 for used for U.S. Persons. Tax reportable payment and associated Account Codes are posted at 1099-MISC and 1042-S Tax Reportable Payments (PDF).
- Use Form W-8BEN for Scholarship/Fellowship Grants if a tax treaty exemption applies. The treaty must include a provision for Scholarship/Fellowship Grants. To determine if the tax treaty applies refer to Tax Treaties for Independent Contractors and Scholarships.
Who can sign a W-8BEN?
The person who signs a W-8BEN must be a Nonresident Alien (NRA).
Is a digital or electronic signature acceptable on a W-8BEN?
See Financial Managers Meeting (FMM) 2/8/22 presentation slides (PDF) pages 43-44.
How often does the W-8BEN need to be obtained?
UW policy states a new W-8BEN must be obtained for all Nonresident Alien (NRA) payments made by the UW. Prior year W-8BEN forms cannot be used in subsequent years because Nonresident Alien (NRA) statuses may change from year-to-year, and even during a calendar year.
What versions of W-8BEN will the UW accept?
The UW will only accept current versions of any Internal Revenue Service (IRS) or Wisconsin Department of Revenue forms. These can be found at the IRS Forms webpage and the Wisconsin Department of Revenue Forms webpage.
Use of a non-current form will delay payment processing because the non-current form has to be returned to the preparer. The current form must be completed before the payment can be processed so the university can be in compliance with IRS and WI DOR regulations and forms.