Need an ITIN number for a W-8BEN to work for a US agency?
Thread poster: Phil Hand

Phil Hand  Identity Verified
China
Local time: 23:19
Chinese to English
Sep 6, 2012

This is most odd - I've done some work for US agencies before and no-one's asked for the W-8. But apparently it's a real requirement.

Has anyone gone through the process, got themselves an ITIN and done this paperwork? More importantly for me, how do you do it if you don't live in your country of origin? Do I apply in the UK or in China? Who do I apply to?


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Sabine Akabayov, PhD
Israel
Local time: 18:19
Member (2011)
English to German
+ ...
ITIN Sep 6, 2012

Hi Phil,

the IRS is getting stricter regarding aliens with US source income and they are trying to reduce fraud attempts.
If you have US source income you need to supply form W8, especially if there is a tax treaty allowing a reduced withholding rate for non-resident aliens). If you don't, the payer is required to withhold US taxes at a rate of 30%. You would then need to file a US tax return to get a refund and would need an ITIN anyway.
Here is the IRS site with more information:
http://www.irs.gov/Individuals/General-ITIN-Information
You can either send the application to the IRS directly (address is in the instructions for form W7). You will need to send a certified copy of your passport (certified by the government that issued the passport; with an Apostille if applicable).
You can also go to an Acceptance Agent.
Here is a list of agents:
http://www.irs.gov/Individuals/Acceptance-Agent-Program
The passport copy needs to be certified by the government issuing the passport, but you can apply for the ITIN anywhere.
You would also claim the tax treaty with the country you are residing in (and pay taxes). So if you live in China and pay taxes there but have a UK passport it wouldn't hurt to have some kind of document showing that you are a resident of China.
Here is form W7:
www.irs.gov/pub/irs-pdf/fw7.pdf
And the instructions:
www.irs.gov/pub/irs-pdf/iw7.pdf


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John Fossey  Identity Verified
Canada
Local time: 11:19
Member (2008)
French to English
W8-BEN, a simple requirement Sep 6, 2012

W8-BEN is very simple, you don't have to apply to anyone or anything. Simply fill out the form, available from http://www.irs.gov/pub/irs-pdf/fw8ben.pdf , and send it to the client. They simply keep it on file as justification why they have not withheld taxes from your payments, in case they are audited by the IRS.

Takes 5 minutes.

An ITIN number is only required if you are a US taxpayer. If you are not, no ITIN required.

[Edited at 2012-09-06 19:08 GMT]


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Sabine Akabayov, PhD
Israel
Local time: 18:19
Member (2011)
English to German
+ ...
ITIN needed if you claim a tax treaty Sep 6, 2012

You do need an ITIN if you want to claim reduced/no withholding based on a tax treaty.
The instructions for form W8BEN clearly state that an individual needs an ITIN:
http://www.irs.gov/pub/irs-pdf/iw8ben.pdf


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John Fossey  Identity Verified
Canada
Local time: 11:19
Member (2008)
French to English
ITIN is only for taxpayers Sep 7, 2012

In general, tax treaties apply to business done in the United States by persons who are non-residents. Doing business in the United States is defined as having a presence in the United States. Translators who work outside the United States and do not have a presence in the United States are not considered to be doing business in the United States and their payments are therefore not taxable. As the IRS explained to me, an ITIN is only for taxpayers - for a person who does not do business in the United States no tax is payable and hence no ITIN is necessary. Once you have an ITIN you have to file tax returns every year, even if they are nil returns.

If you have any doubts, call the IRS.


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Phil Hand  Identity Verified
China
Local time: 23:19
Chinese to English
TOPIC STARTER
John, you appear to be incorrect Sep 7, 2012

John Fossey wrote:

In general, tax treaties apply to business done in the United States by persons who are non-residents. Doing business in the United States is defined as having a presence in the United States. Translators who work outside the United States and do not have a presence in the United States are not considered to be doing business in the United States and their payments are therefore not taxable. As the IRS explained to me, an ITIN is only for taxpayers - for a person who does not do business in the United States no tax is payable and hence no ITIN is necessary. Once you have an ITIN you have to file tax returns every year, even if they are nil returns.

If you have any doubts, call the IRS.


Here's what the guidance for filling out form W-8 says:

"If you do not have an SSN and are not eligible to get one, you must get an individual taxpayer identification number (ITIN). To apply for an ITIN, file Form W-7 with the IRS. It usually takes 4-6 weeks to get an ITIN."

I know a lot of people have been filing W-8s without ITINs, but that's not strictly allowed. The only question is whether an agency will allow you to get away with it.


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Phil Hand  Identity Verified
China
Local time: 23:19
Chinese to English
TOPIC STARTER
But... Sep 7, 2012

on the other hand, when you say ITINs are for taxpayers and imply a duty to file returns, that appears to be right!

I can't work it out. I have a request for an explanation in to the IRS, and I'll report back what they tell me.


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Marcela Robaina Boyd  Identity Verified
Argentina
Local time: 12:19
English to Spanish
+ ...
If they require an ITIN, you can be assured they are a serious company Sep 7, 2012

As a non-resident of US and not a tax payer you do not need anything, yet.... the company you work for needs you to have the ITIN number. However, this is only the case if the agency or direct client you work for is well-established and "big". It's probably because they have a full-blown accounting dept. Smaller firms (aka as translators 'cum intermediaries) usually do not bother with ITINs.

The process is quite simple. The IRS send you the ITIN card, and annual statements. But you do not pay any taxes (to the IRS).

hope this helps.

marcela


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Phil Hand  Identity Verified
China
Local time: 23:19
Chinese to English
TOPIC STARTER
Thanks, Marcela Sep 7, 2012

That's very useful. They do indeed appear to be a very serious company, they've put me through any number of hoops (I'm willing because I have worked with someone at the company previously, and they're very professional).

Do I understand you to mean that I will not have to do any kind of tax return myself if I get an ITIN? I just obtain it, cite it on my W-8s and let the IRS worry about the rest?


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Nicole Schnell  Identity Verified
United States
Local time: 08:19
English to German
+ ...
Ahem... :-) Sep 7, 2012

sibsab wrote:

the IRS is getting stricter regarding aliens with US source income and they are trying to reduce fraud attempts.


The ITIN (Individual Tax Payer Identification Number) is none of your business as a translator providing services from a foreign country. It was created to give our wonderful 11+ million illegal "immigrants" a chance to finally pay some taxes like everybody else, even if they are not eligible for a proper social security number because they are here [insert curse word of your choice] illegally. The ITIN is none of your business as translator. The IRS has no business in the Bundesrepublik Deutschland, just as the German Finanzamt has no business and no saying in the US.

Just sign your W8-BEN. We have to send it to any foreign vendor who made more than $600 / year. This form will never be forwarded to IRS. It is simply to confirm that the vendor lives and pays taxes somewhere else and that we don't have to withhold taxes on his behalf. We are supposed to keep those forms, in case we get audited. That's all.


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Phil Hand  Identity Verified
China
Local time: 23:19
Chinese to English
TOPIC STARTER
Ah, Nicole Sep 7, 2012

You are 100% right - as was John - and I had not understood correctly the instructions on the IRS website.

Here's the guidance just received from them:

If you perform the Independent Personal Services in a foreign country, this income will be “Foreign Sourced”. You could certify with the payer that you are a “Foreign Person”. Although not required by Internal Revenue Service ((IRS), to make this certification, you can sign and complete a form W-8BEN...you will not be required to obtain a U.S. Federal Taxpayer Identification Number (TIN)...If you decide to file a Form W-8BEN with the payer, you should not complete Lines 9 and 10, because this is not a treaty based position.


So I just sign the form and send it in, without any need for an ITIN. OK, that makes things easier!



Full text received from the IRS below, for anyone who's interested:

Thank you for your inquiry regarding the tax treatment of an individual performing work in a foreign country.
Based on the information you provided, we will assume you are not a United States (U.S.) citizen or a resident alien of the United States, because you stated you are a United Kingdom (U.K.) citizen and reside in China. We will assume you perform your personal services as an independent contractor (self-employed) only in the foreign country. According to Publication 519, U.S. Tax Guide for Aliens, and Pub 515, Withholding of Tax on Nonresident Aliens and Foreign Entities, personal service income is sourced where the work is performed. If you perform the Independent Personal Services in a foreign country, this income will be “Foreign Sourced”. You could certify with the payer that you are a “Foreign Person”. Although not required by Internal Revenue Service ((IRS), to make this certification, you can sign and complete a form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. You should not use a Form W-9 (Request for Taxpayer Identification Number and Certification), because this form is used by U.S. persons.
The payer should not issue a Form 1099-MISC, Miscellaneous Income, to you, because you are considered a ”Foreign Person”.
The payer should not issue a Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, to you, because your income is considered “Foreign Sourced”.
Therefore, the payer will not have to issue any U.S. documents to you. Furthermore, the payer should not withhold any amount from these payments, because this income is not considered U.S. sourced.

For the payer’s own recordkeeping, their business should keep records on how the payments were made to you. Such as: copies of the cancelled checks, bank drafts, money orders, or wire transfers.

Furthermore; since this income is considered “Foreign Sourced” and assuming you have no other “U.S. Sourced” incomes, you will not be required to file a U.S. Federal income tax return.
Furthermore, you will not be required to obtain a U.S. Federal Taxpayer Identification Number (TIN). You will not have to complete a Form W-7, Application for IRS Individual Taxpayer Identification Number.
If you decide to file a Form W-8BEN with the payer, you should not complete Lines 9 and 10, because this is not a treaty based position.
If you decide to file a Form W-8BEN, you will not have to enter a U.S. Federal TIN on Line 6, because this is not U.S. sourced income and the Form W-8BEN is not required to be filed.
We hope this information was helpful. If you have other tax questions, please do not hesitate to contact us again.


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Nicole Schnell  Identity Verified
United States
Local time: 08:19
English to German
+ ...
I wish outsourcers would provide a little bit of explanation Sep 7, 2012

Phil Hand wrote:

You are 100% right - as was John - and I had not understood correctly the instructions on the IRS website.


Those forms have been discussed in the forum ad nauseam, simply because companies fail to explain what this harmless little form is all about. They don't realize that there might be people out there who are less willingly to slap their signature onto each and everything.

A simple line in the accompanying email would be sufficient, such as: "This form is for internal purposes only. With your signature you confirm that no taxes are supposed to be withheld."


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