Withholding Tax Service for Non-U.S. Persons and U.S. Payers
Why withholding tax forms matter. U.S. law requires payers (“withholding agents”) to collect documentation and, where applicable, withhold and remit tax on certain U.S.-source payments to non-U.S. persons. The right form—completed accurately and on time—determines the correct rate (e.g., 30% default, reduced treaty rate, or no Chapter 3 withholding for ECI) and avoids misreporting, penalties, or refund delays.
What we do. We analyze the payment type, payee status, treaty eligibility, and FATCA classification; then we prepare the correct package for recipients and payers, align it with year-end reporting, and—if needed—reconcile it on U.S. returns to recover over-withholding.
Forms we prepare – matched to real-world scenarios
- Form W-8BEN (individuals): claim foreign status and any treaty rate on FDAP items (dividends, royalties, certain interest; some service fees if applicable).
- Form W-8BEN-E (entities): foreign status + FATCA status (Chapter 4); claim treaty benefits by income type (LOB, rate, article).
- Form W-8ECI: certify income is effectively connected with a U.S. trade or business (ECI) so gross-basis 30% withholding does not apply (net-basis taxation via return filing).
- Form W-8EXP: for foreign governments, central banks, international orgs, foreign tax-exempt entities to claim statutory exemptions.
- Form W-8IMY (intermediaries / flow-throughs): QI/NQI, partnerships, trusts. We prepare the withholding statement and collect owner documentation (W-8/W-9 look-through).
- Form 8233 (individuals): treaty exemption for personal services performed in the U.S. (and certain scholarships/fellowships). We liaise with payroll/AP to implement.
- FIRPTA real estate: Forms 8288/8288-A for buyers; Form 8288-B requests to reduce/suspend withholding when the computed tax will be lower.
- Partnership ECI (§1446): Forms 8804/8805/8813 for U.S. partnerships; ensure correct rates, classifications, and credit statements to foreign partners.
- Annual withholding reporting (for payers): Form 1042 (Chapter 3/4 tax return), Forms 1042-S to recipients, and Form 1042-T transmittal; Form 945 for non-payroll backup withholding where relevant.
- Recipient tax returns (to reconcile): Form 1040-NR (individuals) and Form 1120-F (foreign corporations) to claim credits/refunds matching 1042-S/8805/8288-A.
Deliverables you can expect. Correct form selection, pre-filled PDFs (or e-collection links), a checklist of required data (TIN/ITIN, treaty article/LOB, GIIN where applicable), payer implementation notes, and a year-end mapping to 1042-S/8805/8288-A so credits reconcile cleanly.
Withholding Tax Forms – Frequently Asked Questions
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Before paying U.S.-source income to a non-U.S. person, the payer (withholding agent) must collect a W-8 (or Form 8233 for services) from the recipient. The form is given to the payer, not filed with the IRS, and guides the payer’s withholding and year-end reporting.
Use W-8BEN if you’re an individual; use W-8BEN-E if you’re an entity. W-8BEN-E also certifies FATCA status and may require a GIIN or entity classification details.
Legal name, country of citizenship/organization, permanent address, mailing address, U.S. TIN/ITIN (often required for treaty claims), foreign TIN (if any), beneficial owner capacity, payment type, and treaty article/rate with Limitation on Benefits certification. Entities also state FATCA status (and GIIN where applicable).
Often yes. Many treaty claims require a U.S. TIN/ITIN on the W-8 or 8233. We can coordinate an ITIN application if needed so your treaty rate can be applied at source.
Generally through the end of the third calendar year after signing, unless a change in circumstances occurs (e.g., residency, entity status, ownership). In that case, provide an updated form within 30 days.
Use W-8ECI when the payment is effectively connected with a U.S. trade or business (ECI). The payer then does not apply the 30% FDAP withholding; you must file a U.S. return to report ECI on a net basis.
Intermediaries/flow-throughs certify their role (QI/NQI, partnership, trust) and attach a withholding statement mapping each payment portion to the beneficial owners, with the owners’ W-8/W-9 and applicable treaty/Chapter 4 statuses.
Foreign governments, central banks, international organizations, and certain foreign tax-exempt entities use W-8EXP to claim exemptions provided in U.S. law.
Individuals performing services in the U.S. (employees/independent contractors) use Form 8233 to claim a treaty exemption on compensation (and some scholarships/fellowships). It is provided to the payer and renewed annually.
FDAP: passive or one-off income taxed on a gross basis with possible treaty reductions. ECI: business-connected income taxed on a net basis via U.S. return (no 30% FDAP withholding when certified on W-8ECI).
1042-S for FDAP/treaty items; 8805 for partner withholding on ECI; 8288-A for FIRPTA withholding. Keep them to claim credits/refunds on your U.S. return.
Payers deposit withheld tax, furnish 1042-S to recipients, file the annual Form 1042 return, and transmit forms with 1042-T. We prepare the year-end pack and e-files where applicable.
Backup withholding (generally 24%) applies mainly to U.S. payees lacking a valid TIN or subject to certain notices. It is reported on Form 945 and is separate from Chapter 3/4 withholding on foreigners.
§1446(a) requires U.S. partnerships to withhold on ECI allocable to foreign partners (8804/8805/8813). §1446(f) requires withholding on transfers of partnership interests by foreign persons unless exceptions/certifications apply.
The buyer (transferee) typically withholds and files 8288/8288-A. The foreign seller may request a reduced rate or non-withholding certificate via 8288-B when the actual tax will be lower.
Yes—file a U.S. tax return (1040-NR or 1120-F) and claim credits using your 1042-S/8805/8288-A. We prepare the return and attach the statements so refunds process smoothly.
Wrong W-8 type; missing ITIN on treaty claims; not updating after ownership/residency changes; ignoring §1446(f) on interest transfers; using W-9 for a foreign person; incomplete W-8IMY look-through packages.
Yes, if the system meets IRS e-signature and record-retention standards. The payer (withholding agent) must retain documentation and make it available upon request.
Do not sign a W-9 if you are not a U.S. person. Provide the correct W-8 (or 8233) to document foreign status and claim any treaty/ECI treatment.
Pricing depends on the forms and complexity (single W-8 vs. W-8IMY with owner look-through; 8233 coordination; 1042/1042-S year-end pack; FIRPTA or §1446 work). See our pricing page for current tiers.
Need help choosing and completing the right withholding forms—or reconciling 1042-S/8805/8288-A on your return? Work with our team • See pricing • Contact us