What is the W-8BEN(E) Form?
The W-8BEN(E) form is the international equivalent of the domestic W-9 form; it is collected by us for our records and is liability protection for the company. The W-8BEN is for foreign individuals while the W-8BEN-E is for foreign entities. The W-8BEN is a form that certifies that your international contractor is not a U.S. Citizen and not subject to U.S.Withholding Tax. The W-8BEN-E is a form that certifies the foreign status of the company for income tax, tax treaty benefits, and FACTA purposes. These forms are valid for 3 years.
Failing to collect a W-8BEN(E)?
For qualifying vendors outside of the U.S., if we do not have a foreign vendor’s assertion of treaty benefits through the W-8BEN(E) form, the company is generally required to withhold 30% of all payments made to him/her for “backup withholding”(for vendors inside the US who refuse to provide an SSN with a W-9, the rate is 28% in 2017, but reduced to 24% in 2018). The company is legally required to submit these backup withholding amounts to the IRS (even if they failed to withhold from the contractor). This backup withholding would be submitted on payroll tax Form 945.
Use https://www.avalara.com/us/en/products/1099.html to collect W-9s and W-8BEN(E) quickly and securely :)
Vanessa Kruze, a seasoned CPA, has an impressive track record prior to establishing Kruze Consulting. Her experience includes pivotal roles at Deloitte Tax and as a controller for a substantial startup with over 120 employees and $20 million in revenue. Under her leadership, Kruze Consulting has emerged as a distinguished CPA firm, recognized on the Inc 5000 list for five consecutive years, illustrating rapid growth and success in the competitive accounting landscape. Vanessa's unique approach, combining deep industry knowledge with advanced automation and software solutions, has positioned her firm as a leader in providing comprehensive accounting services to startups across the United States.
