# W8-BEN vs. W9



## ZeroEcho

I am a British Citizen that moved out to USA 2 years ago for an international assignment. I was granted some RSUs in the years before the move and also am in the company discount share purchase scheme (ESPP?) 

I had to declare W8-BEN as without it E*TRADE tried to take something like 40% tax from me when selling shares.

When I moved to USA, I updated my contact details to my USA phone number and address and had to change to W9 status. I was then gifted more RSUs.

I moved back 5 months ago and am massively confused :confused2: as to what status I need to declare myself as now, W8-BEN or W9? My 2015 US tax return wasn't submitted by Deloitte in time and they told me they applied an extension to October but haven't given me an indication when it will actually be submitted, so I don't feel like I'm "settled up" yet, tax wise.

I have both UK and US accounts and am not sure whether if I sell my shares if they should go into my USA or UK account (the shares are $ based and I think it works out better if I transfer to my USA account and then use something like Transferwise to move money across my UK account rather than doing it directly from E*TRADE to my UK account). 

Do I need to fill anything out for my US bank (Chase)? 

I'd like to keep the account open so I can draw out cash when I visit instead of going to forex bureaus each visit. 

I tried asking Deloitte who are supposed to be helping me with dual tax forms but the USA office is just ignoring my emails. I tried E*TRADE who just said "speak to a tax advisor".

The UK Deloitte office basically explained capital gains but aren't answering about my tax status (W9 vs. W8-BEN). 

If I just sell whilst under W9 status and transfer the money back to the UK, will this all just get evened out next year when I do both a UK and USA tax return via deloitte or am I in danger of breaking some IRS rules if I do that?

I actually tried to change my status to W8-BEN but E*TRADE told me I couldn't (they changed my fiancees account without any issues) because I still have (an active via VOIP) USA business phone number on my account and even after taking it off, they want me to send another bunch form via airmail to change it again  

One of the forms they have mentioned is I-407 https://www.uscis.gov/i-407 if I fill that in I am concerned it will have impacts because of my RSUs I believe I have to pay tax wherever I was when they were given to me (I was a resident alien within USA at the time) and they will continue to vest for 3 years, does that mean I need to submit US tax until they finish vesting?

Sorry for so many questions, I just can't seem to find a source able to explain all these complex rules and the professionals supposedly paid to help me aren't helping either 

Thanks for reading and in advance for anyone able to help me work my way out of this tax quagmire.


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## Bevdeforges

Not sure I can answer all your questions, but just be aware that the W-9 and W8-BEN forms are NOT forms that go to the IRS. These are forms that are for the use (and convenience) of your various banks and financial companies. If and when they need to know your status, they will ask you for one or the other.

There is no tax status that corresponds to the W-9 or W8-BEN forms. They are only "certifications" on your part that you have a US tax identification number (W-9) and what that number is. The W8-BEN is to certify that you are a "foreign person" and not entitled to exemption from the standard 30% withholding on income paid to a "foreign person" within the definition of the tax law or that you are subject to some tax treaty provision that allows the financial institute to withhold less than 30%.

As long as you keep your banks and financial accounts up to date with your residential address, it's actually their responsibility to see to it that you are being properly withheld for taxes on any transactions you do through them. If you change your address and phone back to your UK address, there's a reasonable chance they may ask you to give them either a W-9 or a W8-BEN, but they may simply not bother if they believe they have sufficient information to make the decision themselves. 

If you moved back to the UK during 2016, then for tax purposes you'll be a dual-status alien for that tax year. That's probably the more relevant issue when deciding whether and when to make those trades: https://www.irs.gov/individuals/international-taxpayers/taxation-of-dual-status-aliens
Cheers,
Bev


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## JustLurking

First things first. Do you have a green card? Did you surrender it yet using form I-407?

From your posting it appears that the answers to these are 'yes' and 'no'. _If this is the case_ then your correct "status" remains W9, and you are as much a 'US taxable person' as you were when you lived in the US, just with a boatload of additional complexity thrown in because you don't actually live there.

If the answers to the two questions above are not 'yes' and 'no', please correct me and we'll go from there. Otherwise we can start to talk about the best way for you to extricate yourself fully from the tentacles of US tax and smooth over the fallout.


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## ZeroEcho

Thanks for the replies, I did not have a green card, I had an L1 visa. I have not submitted anything to anybody since I left.

I referred to tax status because that's what it shows as on E*TRADE's website, they quoted IRS at me so assumed it was an IRS terminology, thanks for clearing up that it isn't.

I have changed my details for a few banks but not all, it sounds like not doing that could cause me problems. I was concerned with changing address on a few credit cards as they were such a pain to open when I first moved across and I've paid for membership for a year so am concerned if I tell them I've moved, they will(/want to) close the account and I'll lose the perks of the card when I travel.

I have a SSN as I was being paid in US, does that mean I should be considered W9 forever for all institutions? Or am I supposed to lose my SSN now that I've left?

Thanks again for your help!


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## Bevdeforges

As far as I understand it, you will keep your US SSN forever (will need it when you wish to claim benefits - or even to claim the time worked in the US against your UK pension). But your "US person" vs. "foreign person" status can change based on whether you need to file a regular tax return or an NR return in a given year.

Some US credit cards will allow you to retain your card even if you change your address. (Or you can always get a US address - via a friend or a mailbox service - to maintain the card without hassle.) Banks and investment firms vary all over the map about whether they'll allow you to continue from "offshore" or not. If you have a US address you can use, there's no real need to notify them of any change in status. That's between you and the IRS (and Deloitte, as long as they are doing your returns).
Cheers,
Bev


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## JustLurking

ZeroEcho said:


> Thanks for the replies, I did not have a green card, I had an L1 visa. I have not submitted anything to anybody since I left.


Right. Now I think you can use the 'substantial presence' and 'closer connection' tests to determine if you are still a US taxpayer, or if you have successfully exited. On my reading you're fully out, but you need to check that.



ZeroEcho said:


> I have changed my details for a few banks but not all, it sounds like not doing that could cause me problems. I was concerned with changing address on a few credit cards as they were such a pain to open when I first moved across and I've paid for membership for a year so am concerned if I tell them I've moved, they will(/want to) close the account and I'll lose the perks of the card when I travel.


Swings and some roundabouts, very likely. Some US banks won't like non-resident alien customers and will be freaked out by a W-8BEN, others will be fine. And conversely, some UK banks won't want US tax resident customers or anyone who might have a whiff of W9-ness, and again others will be fine.



ZeroEcho said:


> I have a SSN as I was being paid in US, does that mean I should be considered W9 forever for all institutions? Or am I supposed to lose my SSN now that I've left?


You never lose your SSN, but having one doesn't brand you as a US taxpayer for life. Assuming you don't meet the 'substantial presence' test, get through the 'closer connection' test, or whatever and so are no longer classed as a US resident for tax purposes, you can act to all intents and purposes just like every other non-residnt alien. Including filing a W-8BEN (and if E*Trade won't take it then they are not acting correctly).

As for RSUs, the general rule under the US/UK tax treaty is that when you exercise them the income is pro-rated based on the number of work days between grant and exercise spent in each country. This means you could well end up with some US W2 income, and federal and perhaps state income tax withholding, when you sell.

You then have the "pleasure" of filling out US federal and state tax returns, and a UK tax return, and juggling the numbers on each so that all the RSU proceeds fall into the right place. Normally your company's payroll would sort out the withholding, but you still have to run the numbers for yourself because the withholding will never be the right amount. Either that or you pay someone (I'd suggest maybe not Deloitte!) to do that for you.


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## ZeroEcho

Wow I know I keep saying it but thank you guys, making this much easier to comprehend.

The form E*TRADE want me to send in basically says I declare I don't pass the substantial presence anymore (4 months in USA this year, 5 months in UK), pretty sure I am not a US tax payer anymore.

Bev, funnily enough that's what I've done with the card since I moved out of my place, set it up to my old work address and my colleague has been kind enough to send any card stuff onto me every few months. 

I guess I'm still a bit confused - is it OK to be W9 for some institutions (that have my US based address) and W8-BEN for others (that know I've moved) ? I think the difference is to do with witholding rates, as a UK resident does it make any difference in terms of money saved which status I am?

It's sounding like I should sit on all of my shares until I've finished being dual status to make my life easier then even the ones that were granted when I was US based will just follow foreign status rules, right? 

I think there's some US resident rules around 40% tax if you sell them within 12 months of getting them and only 20% tax if you sell them after 12 months. Does that go away if I'm doing UK only taxes?


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## JustLurking

ZeroEcho said:


> The form E*TRADE want me to send in basically says I declare I don't pass the substantial presence anymore (4 months in USA this year, 5 months in UK), pretty sure I am not a US tax payer anymore.


Being picky, you may well meet the substantial presence test for 2016, since the way you compute it is to add 1/6 of the days spent in the US in 2014, 1/3 of them in 2015, and all of them in 2016. If you were in the US for all of 2014 and 2015 that's 1/6 + 2/6 of a year, so practically any days you spent in the US in 2016 means you pass for 2016. But... the closer connection exception means you can claim dual year status for 2016, and that your last day in the US before you moved back to the UK was in fact your last day as a US taxpayer (hooray!).

I don't know what the E*Trade form really requires, but from all you've said you are now a non-resident alien, and you want to override any W9s you've sent to anyone up to now with a W-8BEN.



ZeroEcho said:


> I guess I'm still a bit confused - is it OK to be W9 for some institutions (that have my US based address) and W8-BEN for others (that know I've moved) ? I think the difference is to do with witholding rates, as a UK resident does it make any difference in terms of money saved which status I am?


It's not illegal, but not really recommended. You'll end up with a complete mix of withholding and other IRS reporting that doesn't really apply to you (for example, US citizens get a 1099 whereas non-resident aliens get a 1042S from banks/brokerages at year end). On W9 you certify "under penalty of perjury" (sigh!) that you are a 'US person', and once you leave the US you aren't.



ZeroEcho said:


> I think there's some US resident rules around 40% tax if you sell them within 12 months of getting them and only 20% tax if you sell them after 12 months. Does that go away if I'm doing UK only taxes?


It sounds like this is the difference between capital gains and income tax.

Are these stocks you _already own_ but now wish to sell, or _stock options_ (ISOs or non-quals?) that you have yet to exercise? If the former, you get normal NRA treatment here, which would be no US capital gains tax but CGT in the UK only (potentially zero if under the annual UK capital gains allowance) and you should ignore what I wrote earlier about pro-rating, since that only applies to options. When you wrote RSUs in your original post I read that as stock options, but that might not be you. Sorry, I was in a rush when I replied.

It takes some unpicking to get to the bottom of all this, doesn't it?


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## JustLurking

ZeroEcho said:


> Thanks for the replies, I did not have a green card, I had an L1 visa. I have not submitted anything to anybody since I left.


Oh, and just in case it wasn't clear from my previous responses, whoever mentioned the I-407 form to you (E*Trade?) was talking complete nonsense.

This is specifically -- and _only_ -- for surrendering a green card, and so totally irrelevant to you if you don't have one and never have had.


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