W-8 Form

Definition

The W-8 Form is a tax document used by foreign individuals and businesses to certify their foreign status and claim a reduced rate of withholding tax, or exemption from tax withholding, on income earned in the United States. 

What is a W-8 Form?

A W-8 Form is required by the Internal Revenue Service (IRS) to comply with U.S. tax laws and regulations regarding the taxation of income paid to foreign persons. There are several types of W-8 Forms, each designed for different types of foreign businesses or individuals. 

When completing a W-8 Form, the foreign business or individual provides personal and/or organizational information, including their name, address, country of residence, and taxpayer identification number (TIN) . Additionally, they certify their foreign status and may claim a reduced rate of withholding tax under an applicable tax treaty between their home country and the United States, if eligible.

Failure to provide a valid W-8 Form or the necessary documentation may result in the application of backup withholding tax at a higher rate on certain types of U.S. source income, such as interest, dividends, rents, and royalties, paid to foreign persons.

Example of a W-8 Form

If a Canadian corporation, ABC Inc., receives rental income from its property in the United States, it would fill out a W-8 Form. On this form, ABC Inc. provides its business information, including legal name, address, country of organization, and taxpayer identification number in Canada. Additionally, ABC Inc. certifies its foreign status and claims any applicable tax treaty benefits between Canada and the United States to reduce withholding tax on its rental income.