# W-8BEN Form. What is it?



## PrairieDawn

Hi. First post on the forum, but I've been reading since September.

I was trying to sell some shares today and was notified that my account had been locked (Royal Bank Investing). It turns out I need to fill out this form before they'll activate my trading account. I was about to quickly fill it out when I realized it had to do with US citizenship, and I was suddenly worried that I was about to do something I'd regret.

I am a dual citizen through my American father, but have never lived in the US or had a SSN ever. I just finished getting quotes for filing my taxes from specialists in my area, but they are a bit out of my price range, so I'll be filing on my own *hopefully* in the near future.

So anyways, is this W-8BEN form anything I should be concerned about? I won't be dishonest on it, but I'm wondering if I should postpone filling it out until my taxes are up to date? I have no clue what it's for, but don't want to do anything that would bring me to the tax man's attention.

Also, do you think they are sending me this form because I've indicated that I'm a US citizen at some point in the past in my paperwork? I honestly can't remember if I ever did.

Thanks for reading, and sorry for such a dry first post.


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## Guest

PrairieDawn said:


> Hi. First post on the forum, but I've been reading since September.
> 
> I was trying to sell some shares today and was notified that my account had been locked (Royal Bank Investing). It turns out I need to fill out this form before they'll activate my trading account. I was about to quickly fill it out when I realized it had to do with US citizenship, and I was suddenly worried that I was about to do something I'd regret.
> 
> I am a dual citizen through my American father, but have never lived in the US or had a SSN ever. I just finished getting quotes for filing my taxes from specialists in my area, but they are a bit out of my price range, so I'll be filing on my own *hopefully* in the near future.
> 
> So anyways, is this W-8BEN form anything I should be concerned about? I won't be dishonest on it, but I'm wondering if I should postpone filling it out until my taxes are up to date? I have no clue what it's for, but don't want to do anything that would bring me to the tax man's attention.
> 
> Also, do you think they are sending me this form because I've indicated that I'm a US citizen at some point in the past in my paperwork? I honestly can't remember if I ever did.
> 
> Thanks for reading, and sorry for such a dry first post.


Hi Prairie Dawn,

Not dry at all, we are all in this mess together. 

A W8BEN is a form for non US citizens to use to indicate that the IRS should not automatically withhold 30% tax because as an "alien", you are unlikely to owe tax. it is usually kept by the institution, employer, et al, to show that due diligence has been followed. I don't think they are actually sent to the IRS but kept on file in case it is necessary to show why the 30% was not withheld.

When my father passed away and an IRA of his was split between the four kids, I received a W9 and a W8EBN. I had to choose the W9 because I am a USC. 

The _new_ due diligence procedure is to give the W8EBN to determine citizenship; the idea being, you would notice it is intended for "aliens" and when you mention (if you do) that you are actually a USC, they will give you a W9 and then presumably note that in your file, in preparation for FATCA.

When I received a 1099 for a distribution from this IRA, I was concerned I would be on the IRS radar as I had yet to decide how to react to the current mess we are all in. My sister is a CPA and indicated they would look for a matching 1040 but when one was not found, they would probably do nothing. It is unlikely they are aware of you and you can probably go ahead and fill it out, especially if you are planning to file in the future, IMHO.

Hope this is helpful and welcome to the forum!


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## PrairieDawn

Hi Nobledreamer,

Thank you so much for your response. I was getting confused over the terms "beneficial owner" and the idea of tax withholding. Couldn't quite figure out what it was for!

Your explanation was very helpful. Thanks.


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## PrairieDawn

I'm back.  With more questions...

So, I've been doing some thinking, and I'm leaning toward getting rid of my US citizenship altogether. Not right away though. I want to wait and see what happens over the next year.

The thing is, for the time being, I'd like to remain off the radar. So far, my only connection to my citizenship is through the passport I applied for a few years ago. I have no SSN. Have never lived or worked in the US. 

I worry that by filling out W-8BEN form, I'm increasing the chances of being contacted about filing taxes while I wait this out. 

So, my question is - Do all Canadian banks require their customers to fill out the W-8BEN form? Do credit unions ask for this form as well?

I could just ignore the form for now, and hold off on filing until I get more info, but I have money trapped in my trading account that I'd like to access, and I can't until I fill out that darn form. 

Any advice?


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## greyowl

I think any Canadian citizen would be required to complete the W-8BEN form if they are selling US stocks so this would not create a problem for you.


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## Ladyhawk

greyowl said:


> I think any Canadian citizen would be required to complete the W-8BEN form if they are selling US stocks so this would not create a problem for you.


This brings up a question I have been pondering. I am wondering what to do if my bank asks me to fill in one of those forms, because I am not at all sure what the banks are going to decide to do about identifying their USC customers. I have no investments through my bank but I do have a US$ account. I want to transfer money from a US account I have in the US up here to my US$ account, and I am wondering whether my Cdn bank will present me with this W8BEN form.

Here is what the pamphlet recently put out by the Canadian Bankers Association says about this:

"If you are opening a new account or have an existing account, and there is an indication that you may be a U.S. person, your financial institution may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person.

*If you choose not to provide this additional documentation upon request*, at a minimum, your financial institution will be required to withhold a tax of 30% on U.S. source payments that you receive *and send this money to the IRS*.

_I am a U.S. person. What does FATCA mean for me?_

If you are a U.S. person, you may be asked to complete IRS Form W-9 (Request for Taxpayer Identification Number and Certification) which will be kept on file at your financial institution. *You may also be required to provide consent to your financial institution to provide the IRS with personal and account information.*
*
If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, *your financial institution may refuse to open an account or may be required to close existing accounts. Otherwise, your financial institution will be required to withhold a tax of 30% on any U.S. source payments that you receive *and send this money to the IRS*."

I find this alarming. FATCA will not take effect until 2014 but the banks may already be starting to present us with this dilemma. Canadian privacy laws prevent them from supplying the IRS with additional personal information about our accounts, so the banks are asking us to waive our privacy rights. If banks are already beginning this procedure, well before FATCA even takes effect, then we will be pushed into compliance with FATCA while we are still lobbying our government to counter this legislation, at the very least by pressing the IRS to make exemptions for ordinary Canadians who owe no taxes and clearly are not tax cheats.

Nobledreamer, is this W8BEN/W9 form a routine procedure, or is this the thin end of the FATCA wedge?


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## Guest

Ladyhawk said:


> This brings up a question I have been pondering. I am wondering what to do if my bank asks me to fill in one of those forms, because I am not at all sure what the banks are going to decide to do about identifying their USC customers. I have no investments through my bank but I do have a US$ account. I want to transfer money from a US account I have in the US up here to my US$ account, and I am wondering whether my Cdn bank will present me with this W8BEN form.
> 
> Here is what the pamphlet recently put out by the Canadian Bankers Association says about this:
> 
> "If you are opening a new account or have an existing account, and there is an indication that you may be a U.S. person, your financial institution may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person.
> 
> *If you choose not to provide this additional documentation upon request*, at a minimum, your financial institution will be required to withhold a tax of 30% on U.S. source payments that you receive *and send this money to the IRS*.
> 
> _I am a U.S. person. What does FATCA mean for me?_
> 
> If you are a U.S. person, you may be asked to complete IRS Form W-9 (Request for Taxpayer Identification Number and Certification) which will be kept on file at your financial institution. *You may also be required to provide consent to your financial institution to provide the IRS with personal and account information.*
> *
> If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, *your financial institution may refuse to open an account or may be required to close existing accounts. Otherwise, your financial institution will be required to withhold a tax of 30% on any U.S. source payments that you receive *and send this money to the IRS*."
> 
> I find this alarming. FATCA will not take effect until 2014 but the banks may already be starting to present us with this dilemma. Canadian privacy laws prevent them from supplying the IRS with additional personal information about our accounts, so the banks are asking us to waive our privacy rights. If banks are already beginning this procedure, well before FATCA even takes effect, then we will be pushed into compliance with FATCA while we are still lobbying our government to counter this legislation, at the very least by pressing the IRS to make exemptions for ordinary Canadians who owe no taxes and clearly are not tax cheats.
> 
> Nobledreamer, is this W8BEN/W9 form a routine procedure, or is this the thin end of the FATCA wedge?


It is the thin end of the FATCA wedge, in terms of it being used here, to the best of my knowledge. I was presented the W8BEN (which is for non-US persons)and the W9 (which is for US persons)when the US bank (in Ohio) that held my Dad's IRA was changing it over to me. The forms indicate whether or not the IRS is to withhold tax on any interest, dividends, etc. Otherwise, I would never have seen/known about the form. I have never seen it used here though and about two weeks ago, I spoke to an officer at my bank (BNS) and I directly asked him, is this going to be the procedure, and for everyone? And he said "Yes." :-(


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## Bevdeforges

Ladyhawk - there are two sides to all these things.

That 30% they're talking about withholding is just that, a "withholding" of taxes that MAY BE due. If you're not in that tax bracket, or don't owe US taxes on the amounts under consideration, then you can file a tax return at the end of the year to claim back the amounts withheld.

If you fill out the W-9 form, they they will withhold 0 because you're a US citizen and are assumed to be filing your taxes like a good citizen at the end of the year.

If what you're transferring is just savings, you're actually doing yourself a favor by filling out the W-9. Now, what the Canadian banks do with information about your accounts after you've made the transfer is up to the bank and the Canadian privacy laws. 
Cheers,
Bev


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## Ladyhawk

*Wforms*

Thank you to both nobledreamer and Bev. These are indeed the two perspectives that create the dilemma and the subjects of our discussions here. 

I can, and perhaps may have to, fully comply with the tax and FATCA requirements for USC in order to continue to live a reasonably normal life in the short term. But I am deeply conflicted about the potential pressure I will face to provide the banks and thus the IRS with information that in the longer term I may not have to give them, as FATCA approaches or as it rolls out and the consequences result in a world-wide outcry and Canadian banks will be allowed to exempt ordinary people like me. This is the change that TD bank is trying to persuade the IRS to make.

Even if the inevitable occurs, I do not want to make this easy for the banks, and I do not want to give them one single piece of information I don't have to give them, until I have no choice (I am not planning to renounce - at least not at this point). My thinking right now is that, if presented with the form, I would challenge the bank's enforcing FATCA before it formally takes effect and I would refuse to waive my privacy rights since I do not know what the IRS may do with my personal information in the longer term. In particular I am extremely reluctant to give my SSN to any entity that doesn't need it. (I have refused to open charge accounts at US stores because they wanted my SSN - what's up with that??) If they close my account, I would then apply to reopen it, which they are required to do by law. _FATCA is not Canadian law, and therefore it is voluntary in Canada. _

I would make it clear that I do not approve of my bank initiating discriminatory behaviour towards me based on my citizenship, which I believe to be illegal under Canada's human rights laws. Especially if the bank actually withholds 30% of my money because I refuse to comply with FATCA, something that I doubt they have a legal right to do. If my bank continues to insist on my filling in this form, I would then go looking for a bank that has not (yet) started implementing the FATCA provisions. 
.


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## Guest

_*Here is what the pamphlet recently put out by the Canadian Bankers Association says about this:*_

_If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, *your financial institution may refuse to open an account or may be required to close existing accounts.*_ 

So...if this information is coming directly form the Canadian Banking Association, does this not contradict all the discussion we have had on why a Canadian Bank cannot close your account without circumnavigationg our laws in Canada?....or have we been mistaken all this time?


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## Ladyhawk

Mach7 said:


> _*Here is what the pamphlet recently put out by the Canadian Bankers Association says about this:*_
> 
> _If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, *your financial institution may refuse to open an account or may be required to close existing accounts.*_
> 
> So...if this information is coming directly form the Canadian Banking Association, does this not contradict all the discussion we have had on why a Canadian Bank cannot close your account without circumnavigationg our laws in Canada?....or have we been mistaken all this time?


Mach7, I believe that at this time banks in Canada cannot refuse to open an account for you if you provide the required ID, which for now would be proof of residence in Canada, and some other form of ID. There are two lists of acceptable documents and you need two from list A or one from list A and one from list B. So you can have eg a Cdn drivers license and a provincial health insurance card, or DL and a valid credit card etc. (See here for the lists:
How do I open a bank account?

The letter from TD to the IRS mentioned the banks' dilemma that while the bank may close an account if you refuse to comply with FATCA, it cannot refuse to re-open it for you if you present them with the accepted ID. But that is frankly THEIR problem, not ours. We are not ruled by FATCA, nor are they, but they wish to comply with FATCA to keep their US business viable.
.


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## pwdunn

*Impact of FATCA's 30% withholding on investments*



Bevdeforges said:


> Ladyhawk - there are two sides to all these things.
> 
> That 30% they're talking about withholding is just that, a "withholding" of taxes that MAY BE due. If you're not in that tax bracket, or don't owe US taxes on the amounts under consideration, then you can file a tax return at the end of the year to claim back the amounts withheld.
> 
> If you fill out the W-9 form, they they will withhold 0 because you're a US citizen and are assumed to be filing your taxes like a good citizen at the end of the year.
> 
> If what you're transferring is just savings, you're actually doing yourself a favor by filling out the W-9. Now, what the Canadian banks do with information about your accounts after you've made the transfer is up to the bank and the Canadian privacy laws.
> Cheers,
> Bev


Hi Bev: I appreciate your attempt to downplay the impact of FATCA. Yet the 30% withholding you talk about is not a trivial amount that an investor is going to be happy to get back at the end of the year. In my article on FATCA, I wrote the following: 

Let’s suppose a foreign investor trades stocks on a US exchange, but his broker is FATCA non-compliant. One day he buys 10,000 shares of XYZ at $25 per share, and the next day, he takes advantage of a nice uptick of $1.00 in XYZ and sells at $26 per share. He makes a tidy profit of $10,000. But because his broker is non-compliant, the IRS now withholds 30%, not of the profit but of the gross proceeds of the sale! So the client now receives the sum of $260,000 minus 30%. The foreign investor is unhappy because his $250,000 investment has become $182,000. If he wants his money back, he must file a US tax return.​ See FATCA: A ticking time bomb for the economy | The Isaac Brock Society

This will drastically change the way I do business, because I will not accept that the derivatives that I sell (put options on the OCC), will experience a 30% withholding, because as an investor, I count on that income for cash flow. I cannot accept in my investment business that the US government keeps my cash until tax time. This is not just a preference but a hard economic reality. And it will have a total chilling effect on the ability of non-compliant FFIs and recalcitrant account holders to do business in the United States. I think we should be careful about downplaying the overall impact that FATCA will have.

Thus, one is required to fill out the W-8BEN (non-US persons) or the W9 (US persons) AND invest with a FATCA compliant FFI. If you refuse to fill out the W-8BEN or W9, then any transfers from the United States will be subject to 30% withholding because you are "recalcitrant" account holder according to the FATCA legislation. To be sure, these forms existed before and it was very easy at the time to make a volutary disclosure in order to have access to US markets. The difference is that now, it is not just for brokerage accounts where the account holder is trading on US markets, but for all accounts at the FATCA compliant FFI--this makes the US into a financial bully. 

So here are your choices Canadians (actually all the world): waive your privacy rights and allow the banks to discriminate against you, or have your bank withhold 30% for the IRS your US source investment payments, and then you will have to try to get it back at tax time. Obama said he wanted to stop bullying the rest of the world--he promised the bullying would end.


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## Guest

PetrosResesearch...

Very well written my friend.


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