W-8BEN form for doing a freelance job for company based in the USA
Thread poster: Alexandra Bourne

Alexandra Bourne  Identity Verified
Local time: 03:42
Spanish to English
+ ...
Sep 18

Hello all,

I have found conflicting information about this topic and I have tried reading the form itself on the IRS website, but find it very confusing.

Case Scenario
A translator will be doing a freelance translation job for a US based company. The freelancer is based in another country (not in the USA) and he is NOT a resident or citizen of the USA.

- Does the translator need to fill out the W8-BEN form?
- Will he be taxed at 30% on the income unless his country has a "tax treaty" with the USA?
- Is the W8-BEN form only for people (non-residents or citizens of other countries) who are performing the job while living/residing in the USA?

Thanks

Alexandra


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Joel Pina Diaz  Identity Verified
Argentina
Local time: 07:42
Member (2009)
English to Spanish
+ ...
W8 Sep 18

No.Only if the amounts are up to 10k, or if customer requesting for his/her specific reason, or for her/his own records or because your country requires to tax such payment.

There is no tax for the freelancer at all. Payer will be taxed accordingly depending the state.

No. W9 is for those living and /or working in US soil. W8 is only for foreigners.

https://support.upwork.com/hc/en-us/articles/211063938-What-is-the-Form-W-8BEN-?mobile_site=truer


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Angela Rimmer  Identity Verified
United Kingdom
Local time: 11:42
Member (2014)
German to English
+ ...
And this is why I don't generally do business with US companies Sep 18

...or at least it's one of the main reasons why. Perhaps that will change in the future. The last time I looked into this, which was when I started working with a large multinational corporation, here's what I determined:

- ALL income from a US source is subject to 30% tax unless there is a tax treaty in place between the US and your tax country. In the US the person or company paying the money (your client) withholds the tax rather than you collecting the money and filing your taxes and paying the tax later on in the process.

- As a non-US person you might need to fill in the W8-BEN so that the withholding company (your client) has documented proof that you are not a US person. I think you would also use the W8-BEN form to claim any treaties that may exist between the US and your tax country, so it is an opportunity to reduce that 30% or even eliminate it completely. You would need to complete this form BEFORE your client pays you.

- It is my understanding that the W8-BEN form is for all income from a US source, even if the work was performed outside of the US.

But I am not an expert by any means!!!


[Edited at 2017-09-18 20:50 GMT]


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Mirko Mainardi  Identity Verified
Italy
Local time: 12:42
Member
English to Italian
+ ...
My experience Sep 18

I did this a few years ago. When I read about it (mainly the instructions PDF and the IRS website), what I gathered was that by filling this form you are just declaring you're not a US citizen or 'resident alien' and that therefore you shouldn't be paying taxes there. You don't have to use the tax treaty exemption clause (because I believe you'd need a TIN for that - e.g. https://www.irs.gov/individuals/international-taxpayers/us-taxpayer-identification-number-requirement ).

So, basically, 'Part I', signature, date.


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JL01  Identity Verified
United States
Local time: 06:42
English to French
+ ...
Basically, no Sep 18

The W8-BEN form is for persons not subject to US taxation, i.e., like you write, living in another country and neither legal resident nor citizen of the USA (since both categories are treated the same by the IRS).

Now there's a scoop: IRS explanations are confusing!

As an foreign-based independent contractor, you should not be subject to withholding since you are, in effect, selling a service to a US company, not an employee.
But I can't prove that because I have no legal basis, or status, to do so.

Until going deep into IRS instructions for filling form W8-BEN (https://www.irs.gov/pub/irs-pdf/iw8ben.pdf), I had always assumed that the purpose of that form was to allow a US-based agency to justify to the IRS not withholding amounts from payment made to foreign translators.

Now, I'm just confused, which is perfectly normal when reading IRS instructions, but this does not help you.



Alexandra Bourne wrote:

Hello all,

I have found conflicting information about this topic and I have tried reading the form itself on the IRS website, but find it very confusing.

Case Scenario
A translator will be doing a freelance translation job for a US based company. The freelancer is based in another country (not in the USA) and he is NOT a resident or citizen of the USA.

- Does the translator need to fill out the W8-BEN form?
- Will he be taxed at 30% on the income unless his country has a "tax treaty" with the USA?
- Is the W8-BEN form only for people (non-residents or citizens of other countries) who are performing the job while living/residing in the USA?

Thanks

Alexandra


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John Fossey  Identity Verified
Canada
Local time: 06:42
Member (2008)
French to English
W8-BEN form Sep 18

Alexandra Bourne wrote:


- Does the translator need to fill out the W8-BEN form?


Yes

- Will he be taxed at 30% on the income unless his country has a "tax treaty" with the USA?


Not if he fills out the W8-BEN form

- Is the W8-BEN form only for people (non-residents or citizens of other countries) who are performing the job while living/residing in the USA?


No the W8-BEN form is for people who are not subject to US taxes, i.e., in the case of a translator, if you are not living/residing in the USA.

The W8-BEN form is needed by the US-based client to prove to the IRS that they do not need to withhold income taxes from their payment to you. The client just holds the form on record in case asked to show it by an IRS auditor.



[Edited at 2017-09-18 23:55 GMT]


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Riccardo Schiaffino  Identity Verified
United States
Local time: 04:42
Member (2003)
English to Italian
+ ...
What John says is correct Sep 19

John Fossey wrote:

Alexandra Bourne wrote:


- Does the translator need to fill out the W8-BEN form?


Yes

- Will he be taxed at 30% on the income unless his country has a "tax treaty" with the USA?


Not if he fills out the W8-BEN form

- Is the W8-BEN form only for people (non-residents or citizens of other countries) who are performing the job while living/residing in the USA?


No the W8-BEN form is for people who are not subject to US taxes, i.e., in the case of a translator, if you are not living/residing in the USA.

The W8-BEN form is needed by the US-based client to prove to the IRS that they do not need to withhold income taxes from their payment to you. The client just holds the form on record in case asked to show it by an IRS auditor.



[Edited at 2017-09-18 23:55 GMT]


Correct, although I would I would have expanded "...i.e., in the case of a translator, if you are not living/residing in the USA, and you are NOT a US citizen or permanent resident ("green card" holder)"

Basically, the US (unlike most other countries) taxes its citizens and permanent residents no matter where they are located in the world (so, as a US citizen, if I moved permanently to another country, I would still have to file US income taxes).

The W8-BEN form is simply a means to declare one is not subject to US taxation, i.e., that one does not live in the USA and is not a US citizen or a permanent resident ("green card" holder).

So:

  • If you are a US citizen or permanent resident, you are subject to US taxation and should not sign a W8-BEN
  • If you are not a US citizen or permanent resident, BUT live in the USA, you are subject to US taxation and should not sign a W8-BEN
  • If you are not a US citizen or permanent resident, AND do not live in the USA, you are not subject to US taxation, and SHOULD sign a W8-BEN


...with the usual proviso that I'm not an attorney, and so this should not be considered as legal advice.


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Kirsten Bodart  Identity Verified
United Kingdom
Local time: 12:42
Dutch to English
+ ...
The last time I looked into this in May Sep 19

I concluded that we're not even liable to fill this form in, because income derived from translation services performed OUTSIDE the US is not considered 'US income', i.e. income derived from a US source, so it's not subject to any withholding tax under US law anyway. Not like dividends for instance.

Thus there should be no need to fill in this form.

The form also requests that you tick the type of income which is where my problem was. There was no category which freelance translation services in another country fit into.

We informed our client about this and they didn't get back to us about that (yet).


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John Fossey  Identity Verified
Canada
Local time: 06:42
Member (2008)
French to English
Correct Sep 19

Riccardo Schiaffino wrote:


Correct, although I would I would have expanded "...i.e., in the case of a translator, if you are not living/residing in the USA, and you are NOT a US citizen or permanent resident ("green card" holder)"

Basically, the US (unlike most other countries) taxes its citizens and permanent residents no matter where they are located in the world (so, as a US citizen, if I moved permanently to another country, I would still have to file US income taxes).



Yes, absolutely correct.


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John Fossey  Identity Verified
Canada
Local time: 06:42
Member (2008)
French to English
Incorrect Sep 19

Kirsten Bodart wrote:

I concluded that we're not even liable to fill this form in, because income derived from translation services performed OUTSIDE the US is not considered 'US income', i.e. income derived from a US source, so it's not subject to any withholding tax under US law anyway. Not like dividends for instance.

Thus there should be no need to fill in this form.

The form also requests that you tick the type of income which is where my problem was. There was no category which freelance translation services in another country fit into.

We informed our client about this and they didn't get back to us about that (yet).


This is not correct. While you may know that your income is not US income, the IRS doesn't know that if you have not submitted a W8-BEN form. The form is not for you, but for your US-based client. If you don't fill in the form, they will have to withhold 30% of your payment and pay it to the IRS. Then you will have to claim it back from the IRS (in a later tax year). More likely, the US-based client will simply be unable to do business with you.


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Elena Aclasto  Identity Verified
Italy
Local time: 12:42
Member (2015)
English to Italian
+ ...
my experience, too Sep 19

Mirko Mainardi wrote:

I did this a few years ago. When I read about it (mainly the instructions PDF and the IRS website), what I gathered was that by filling this form you are just declaring you're not a US citizen or 'resident alien' and that therefore you shouldn't be paying taxes there. You don't have to use the tax treaty exemption clause (because I believe you'd need a TIN for that - e.g. https://www.irs.gov/individuals/international-taxpayers/us-taxpayer-identification-number-requirement ).

So, basically, 'Part I', signature, date.


My experience, too.
My client did not withhold any sum from what we agreed (my bank did, however, as commissions, but this is another matter), I received my money and paid taxes in my country.


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Kirsten Bodart  Identity Verified
United Kingdom
Local time: 12:42
Dutch to English
+ ...
They do not withhold and we still do business Sep 20

John Fossey wrote:

Kirsten Bodart wrote:

I concluded that we're not even liable to fill this form in, because income derived from translation services performed OUTSIDE the US is not considered 'US income', i.e. income derived from a US source, so it's not subject to any withholding tax under US law anyway. Not like dividends for instance.

Thus there should be no need to fill in this form.

The form also requests that you tick the type of income which is where my problem was. There was no category which freelance translation services in another country fit into.

We informed our client about this and they didn't get back to us about that (yet).


This is not correct. While you may know that your income is not US income, the IRS doesn't know that if you have not submitted a W8-BEN form. The form is not for you, but for your US-based client. If you don't fill in the form, they will have to withhold 30% of your payment and pay it to the IRS. Then you will have to claim it back from the IRS (in a later tax year). More likely, the US-based client will simply be unable to do business with you.


Or maybe that's because they don't pay us over $10,000 a year.

Whatever the case may be, the IRS should 'know' the income doesn't derive from a US source (in which case it would be subject to 30% withholding tax) as it concerns translation services for a translation company, which are classed as 'personal services' and as we are based outside the US (see our invoices), our income just can't be classed as US source by definition, form or not. That's what I got from many long hours (days) of research on the IRS's own website.

What I got from the form was that only non-US persons had to fill it in and include the category their income deemed US source fell into. Our 'personal services' are not US source by definition as they are not deemed to be performed in the US, so how can I tick that category?

Though the whole thing was confusing at the best of times.


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Sarah Lewis-Morgan  Identity Verified
Germany
Local time: 12:42
Member (2014)
German to English
As others have said, a W8 is necessary. Sep 20

Kirsten Bodart wrote:


Whatever the case may be, the IRS should 'know' the income doesn't derive from a US source (in which case it would be subject to 30% withholding tax) as it concerns translation services for a translation company, which are classed as 'personal services' and as we are based outside the US (see our invoices), our income just can't be classed as US source by definition, form or not. That's what I got from many long hours (days) of research on the IRS's own website.

What I got from the form was that only non-US persons had to fill it in and include the category their income deemed US source fell into. Our 'personal services' are not US source by definition as they are not deemed to be performed in the US, so how can I tick that category?

Though the whole thing was confusing at the best of times.


The US tax people will claim your income comes from a US source if there is so much as a sniff of a US connection. So work done for a US client, no matter where in the world you carry it out, is deemed to be taxable in the US if you have not submitted a W8-BEN. This also applies if, for instance, you write books and make them available on Amazon Kindle. If you are in any doubt, I actually recommend you ring the IRS directly - when I did so I spoke to an extremely helpful woman who answered all my questions in a very friendly manner.

Not only, as has been mentioned before, do US citizens living abroad have to pay US tax as well as local tax, if they marry a foreign national - no matter if that foreign national has never visited the US - the foreign spouse becomes liable for US tax as well. I discovered that from an American who lived here in Germany. Nobody can escape the IRS, it seems.


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