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H And R Block For Military

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H And R Block For Military

H and r block for military Publication 515 - Main Content Table of Contents Withholding of TaxWithholding Agent Withholding and Reporting Obligations Persons Subject to NRA WithholdingIdentifying the Payee Foreign Persons DocumentationBeneficial Owners Foreign Intermediaries and Foreign Flow-Through Entities Standards of Knowledge Presumption Rules Income Subject to NRA WithholdingSource of Income Fixed or Determinable Annual or Periodical Income (FDAP) Withholding on Specific IncomeEffectively Connected Income Income Not Effectively Connected Pay for Personal Services Performed Artists and Athletes (Income Codes 42 and 43) Other Income Foreign Governments and Certain Other Foreign Organizations U. H and r block for military S. H and r block for military Taxpayer Identification NumbersUnexpected payment. H and r block for military Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. H and r block for military Electronic reporting. H and r block for military Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. H and r block for military S. H and r block for military Real Property InterestForeign corporations. H and r block for military Domestic corporations. H and r block for military U. H and r block for military S. H and r block for military real property holding corporations. H and r block for military Partnerships. H and r block for military Trusts and estates. H and r block for military Domestically controlled QIE. H and r block for military Late filing of certifications or notices. H and r block for military Certifications. H and r block for military Liability of agent or qualified substitute. H and r block for military Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). H and r block for military Withholding of Tax In most cases, a foreign person is subject to U. H and r block for military S. H and r block for military tax on its U. H and r block for military S. H and r block for military source income. H and r block for military Most types of U. H and r block for military S. H and r block for military source income received by a foreign person are subject to U. H and r block for military S. H and r block for military tax of 30%. H and r block for military A reduced rate, including exemption, may apply if there is a tax treaty between the foreign person's country of residence and the United States. H and r block for military The tax is generally withheld (NRA withholding) from the payment made to the foreign person. H and r block for military The term “NRA withholding” is used in this publication descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. H and r block for military In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. H and r block for military S. H and r block for military source income. H and r block for military Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. H and r block for military NRA withholding does not include withholding under section 1445 of the Code (see U. H and r block for military S. H and r block for military Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). H and r block for military A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. H and r block for military However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. H and r block for military S. H and r block for military person is not required to withhold. H and r block for military In addition, a withholding agent may apply a reduced rate of withholding (including an exemption from withholding) if it can reliably associate the payment with documentation from a beneficial owner that is a foreign person entitled to a reduced rate of withholding. H and r block for military Withholding Agent You are a withholding agent if you are a U. H and r block for military S. H and r block for military or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. H and r block for military A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U. H and r block for military S. H and r block for military branch of certain foreign banks and insurance companies. H and r block for military You may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has withheld the required amount from the payment. H and r block for military Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. H and r block for military In most cases, the U. H and r block for military S. H and r block for military person who pays an amount subject to NRA withholding is the person responsible for withholding. H and r block for military However, other persons may be required to withhold. H and r block for military For example, a payment made by a flow-through entity or nonqualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment is required to do the appropriate withholding since it also falls within the definition of a withholding agent. H and r block for military In addition, withholding must be done by any qualified intermediary, withholding foreign partnership, or withholding foreign trust in accordance with the terms of its withholding agreement, discussed later. H and r block for military Liability for tax. H and r block for military   As a withholding agent, you are personally liable for any tax required to be withheld. H and r block for military This liability is independent of the tax liability of the foreign person to whom the payment is made. H and r block for military If you fail to withhold and the foreign payee fails to satisfy its U. H and r block for military S. H and r block for military tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. H and r block for military   The applicable tax will be collected only once. H and r block for military If the foreign person satisfies its U. H and r block for military S. H and r block for military tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. H and r block for military Determination of amount to withhold. H and r block for military   You must withhold on the gross amount subject to NRA withholding. H and r block for military You cannot reduce the gross amount by any deductions. H and r block for military However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. H and r block for military   If the determination of the source of the income or the amount subject to tax depends on facts that are not known at the time of payment, you must withhold an amount sufficient to ensure that at least 30% of the amount subsequently determined to be subject to withholding is withheld. H and r block for military In no case, however, should you withhold more than 30% of the total amount paid. H and r block for military Or, you may make a reasonable estimate of the amount from U. H and r block for military S. H and r block for military sources and put a corresponding part of the amount due in escrow until the amount from U. H and r block for military S. H and r block for military sources can be determined, at which time withholding becomes due. H and r block for military When to withhold. H and r block for military   Withholding is required at the time you make a payment of an amount subject to withholding. H and r block for military A payment is made to a person if that person realizes income, whether or not there is an actual transfer of cash or other property. H and r block for military A payment is considered made to a person if it is paid for that person's benefit. H and r block for military For example, a payment made to a creditor of a person in satisfaction of that person's debt to the creditor is considered made to the person. H and r block for military A payment also is considered made to a person if it is made to that person's agent. H and r block for military   A U. H and r block for military S. H and r block for military partnership should withhold when any distributions that include amounts subject to withholding are made. H and r block for military However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. H and r block for military S. H and r block for military partnership must withhold on the foreign partner's distributive share of the income on the earlier of the date that a Schedule K-1 (Form 1065) is provided or mailed to the partner or the due date for furnishing that schedule. H and r block for military If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. H and r block for military A U. H and r block for military S. H and r block for military trust is required to withhold on the amount includible in the gross income of a foreign beneficiary to the extent the trust's distributable net income consists of an amount subject to withholding. H and r block for military To the extent a U. H and r block for military S. H and r block for military trust is required to distribute an amount subject to withholding but does not actually distribute the amount, it must withhold on the foreign beneficiary's allocable share at the time the income is required to be reported on Form 1042-S. H and r block for military Withholding and Reporting Obligations You are required to report payments subject to NRA withholding on Form 1042-S and to file a tax return on Form 1042. H and r block for military (See Returns Required , later. H and r block for military ) An exception from reporting may apply to individuals who are not required to withhold from a payment and who do not make the payment in the course of their trade or business. H and r block for military Form 1099 reporting and backup withholding. H and r block for military    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. H and r block for military S. H and r block for military person. H and r block for military You must withhold 28% (backup withholding rate) from a reportable payment made to a U. H and r block for military S. H and r block for military person that is subject to Form 1099 reporting if any of the following apply. H and r block for military The U. H and r block for military S. H and r block for military person has not provided its taxpayer identification number (TIN) in the manner required. H and r block for military The IRS notifies you that the TIN furnished by the payee is incorrect. H and r block for military There has been a notified payee underreporting. H and r block for military There has been a payee certification failure. H and r block for military In most cases, a TIN must be provided by a U. H and r block for military S. H and r block for military non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. H and r block for military A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. H and r block for military You may be required to file Form 1099 and, if appropriate, backup withhold, even if you do not make the payments directly to that U. H and r block for military S. H and r block for military person. H and r block for military For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. H and r block for military S. H and r block for military person subject to Form 1099 reporting. H and r block for military See Identifying the Payee , later, for more information. H and r block for military Also see Section S. H and r block for military Special Rules for Reporting Payments Made Through Foreign Intermediaries and Foreign Flow-Through Entities on Form 1099 in the General Instructions for Certain Information Returns. H and r block for military Foreign persons who provide Form W-8BEN, Form W-8ECI, or Form W-8EXP (or applicable documentary evidence) are exempt from backup withholding and Form 1099 reporting. H and r block for military Wages paid to employees. H and r block for military   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. H and r block for military See Pay for Personal Services Performed , later. H and r block for military Effectively connected income by partnerships. H and r block for military   A withholding agent that is a partnership (whether U. H and r block for military S. H and r block for military or foreign) is also responsible for withholding on its income effectively connected with a U. H and r block for military S. H and r block for military trade or business that is allocable to foreign partners. H and r block for military See Partnership Withholding on Effectively Connected Income , later, for more information. H and r block for military U. H and r block for military S. H and r block for military real property interest. H and r block for military   A withholding agent also may be responsible for withholding if a foreign person transfers a U. H and r block for military S. H and r block for military real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. H and r block for military S. H and r block for military real property interest to a shareholder, partner, or beneficiary that is a foreign person. H and r block for military See U. H and r block for military S. H and r block for military Real Property Interest , later. H and r block for military Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. H and r block for military It does not apply to payments made to U. H and r block for military S. H and r block for military persons. H and r block for military Usually, you determine the payee's status as a U. H and r block for military S. H and r block for military or foreign person based on the documentation that person provides. H and r block for military See Documentation , later. H and r block for military However, if you have received no documentation or you cannot reliably associate all or a part of a payment with documentation, then you must apply certain presumption rules, discussed later. H and r block for military Identifying the Payee In most cases, the payee is the person to whom you make the payment, regardless of whether that person is the beneficial owner of the income. H and r block for military However, there are situations in which the payee is a person other than the one to whom you actually make a payment. H and r block for military U. H and r block for military S. H and r block for military agent of foreign person. H and r block for military   If you make a payment to a U. H and r block for military S. H and r block for military person and you have actual knowledge that the U. H and r block for military S. H and r block for military person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. H and r block for military However, if the U. H and r block for military S. H and r block for military person is a financial institution, you may treat the institution as the payee provided you have no reason to believe that the institution will not comply with its own obligation to withhold. H and r block for military   If the payment is not subject to NRA withholding (for example, gross proceeds from the sales of securities), you must treat the payment as made to a U. H and r block for military S. H and r block for military person and not as a payment to a foreign person. H and r block for military You may be required to report the payment on Form 1099 and, if applicable, backup withhold. H and r block for military Disregarded entities. H and r block for military   A business entity that is not a corporation and that has a single owner may be disregarded as an entity separate from its owner (a disregarded entity) for federal tax purposes. H and r block for military The payee of a payment made to a disregarded entity is the owner of the entity. H and r block for military   If the owner of the entity is a foreign person, you must apply NRA withholding unless you can treat the foreign owner as a beneficial owner entitled to a reduced rate of withholding. H and r block for military   If the owner is a U. H and r block for military S. H and r block for military person, you do not apply NRA withholding. H and r block for military However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. H and r block for military You may assume that a foreign entity is not a disregarded entity unless you can reliably associate the payment with documentation provided by the owner or you have actual knowledge or reason to know that the foreign entity is a disregarded entity. H and r block for military Flow-Through Entities The payees of payments (other than income effectively connected with a U. H and r block for military S. H and r block for military trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. H and r block for military This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. H and r block for military Income that is, or is deemed to be, effectively connected with the conduct of a U. H and r block for military S. H and r block for military trade or business of a flow-through entity is treated as paid to the entity. H and r block for military All of the following are flow-through entities. H and r block for military A foreign partnership (other than a withholding foreign partnership). H and r block for military A foreign simple or foreign grantor trust (other than a withholding foreign trust). H and r block for military A fiscally transparent entity receiving income for which treaty benefits are claimed. H and r block for military See Fiscally transparent entity , later. H and r block for military In most cases, you treat a payee as a flow-through entity if it provides you with a Form W-8IMY (see Documentation , later) on which it claims such status. H and r block for military You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. H and r block for military You must determine whether the owners or beneficiaries of a flow-through entity are U. H and r block for military S. H and r block for military or foreign persons, how much of the payment relates to each owner or beneficiary, and, if the owner or beneficiary is foreign, whether a reduced rate of NRA withholding applies. H and r block for military You make these determinations based on the documentation and other information (contained in a withholding statement) that is associated with the flow-through entity's Form W-8IMY. H and r block for military If you do not have all of the information that is required to reliably associate a payment with a specific payee, you must apply the presumption rules. H and r block for military See Documentation and Presumption Rules , later. H and r block for military Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. H and r block for military Foreign partnerships. H and r block for military    A foreign partnership is any partnership that is not organized under the laws of any state of the United States or the District of Columbia or any partnership that is treated as foreign under the income tax regulations. H and r block for military If a foreign partnership is not a withholding foreign partnership, the payees of income are the partners of the partnership, provided the partners are not themselves a flow-through entity or a foreign intermediary. H and r block for military However, the payee is the partnership itself if the partnership is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. H and r block for military If a partner is a foreign flow-through entity or a foreign intermediary, you apply the payee determination rules to that partner to determine the payees. H and r block for military Example 1. H and r block for military A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. H and r block for military S. H and r block for military citizen. H and r block for military You make a payment of U. H and r block for military S. H and r block for military source interest to the partnership. H and r block for military It gives you a Form W-8IMY with which it associates Form W-8BEN from the nonresident alien; Form W-8BEN from the foreign corporation; and Form W-9 from the U. H and r block for military S. H and r block for military citizen. H and r block for military The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. H and r block for military You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. H and r block for military Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. H and r block for military Report the payment to the U. H and r block for military S. H and r block for military citizen on Form 1099-INT. H and r block for military Example 2. H and r block for military A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. H and r block for military The second partnership has two partners, both nonresident alien individuals. H and r block for military You make a payment of U. H and r block for military S. H and r block for military source interest to the first partnership. H and r block for military It gives you a valid Form W-8IMY with which it associates a Form W-8BEN from the foreign corporation and a Form W-8IMY from the second partnership. H and r block for military In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. H and r block for military The Forms W-8IMY from the partnerships have complete withholding statements associated with them. H and r block for military Because you can reliably associate a part of the interest payment with the Form W-8BEN provided by the foreign corporation and the Forms W-8BEN provided by the nonresident alien individual partners as a result of the withholding statements, you must treat them as the payees of the interest. H and r block for military Example 3. H and r block for military You make a payment of U. H and r block for military S. H and r block for military source dividends to a withholding foreign partnership. H and r block for military The partnership has two partners, both foreign corporations. H and r block for military You can reliably associate the payment with a valid Form W-8IMY from the partnership on which it represents that it is a withholding foreign partnership. H and r block for military You must treat the partnership as the payee of the dividends. H and r block for military Foreign simple and grantor trust. H and r block for military   A trust is foreign unless it meets both of the following tests. H and r block for military A court within the United States is able to exercise primary supervision over the administration of the trust. H and r block for military One or more U. H and r block for military S. H and r block for military persons have the authority to control all substantial decisions of the trust. H and r block for military   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. H and r block for military A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. H and r block for military   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. H and r block for military The payees of a payment made to a foreign grantor trust are the owners of the trust. H and r block for military However, the payee is the foreign simple or grantor trust itself if the trust is claiming treaty benefits on the basis that it is not fiscally transparent and that it meets all the other requirements for claiming treaty benefits. H and r block for military If the beneficiaries or owners are themselves flow-through entities or foreign intermediaries, you apply the payee determination rules to that beneficiary or owner to determine the payees. H and r block for military Example. H and r block for military A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. H and r block for military S. H and r block for military citizen. H and r block for military You make a payment of interest to the foreign trust. H and r block for military It gives you a Form W-8IMY with which it associates Forms W-8BEN from the nonresident aliens and a Form W-9 from the U. H and r block for military S. H and r block for military citizen. H and r block for military The trust also gives you a complete withholding statement that enables you to associate a part of the interest payment with the forms provided by each beneficiary. H and r block for military You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. H and r block for military Report the payment to the nonresident aliens on Forms 1042-S. H and r block for military Report the payment to the U. H and r block for military S. H and r block for military citizen on Form 1099-INT. H and r block for military Fiscally transparent entity. H and r block for military   If a reduced rate of withholding under an income tax treaty is claimed, a flow-through entity includes any entity in which the interest holder must treat the entity as fiscally transparent. H and r block for military The determination of whether an entity is fiscally transparent is made on an item of income basis (that is, the determination is made separately for interest, dividends, royalties, etc. H and r block for military ). H and r block for military The interest holder in an entity makes the determination by applying the laws of the jurisdiction where the interest holder is organized, incorporated, or otherwise considered a resident. H and r block for military An entity is considered to be fiscally transparent for the income to the extent the laws of that jurisdiction require the interest holder to separately take into account on a current basis the interest holder's share of the income, whether or not distributed to the interest holder, and the character and source of the income to the interest holder are determined as if the income was realized directly from the source that paid it to the entity. H and r block for military Subject to the standards of knowledge rules discussed later, you generally make the determination that an entity is fiscally transparent based on a Form W-8IMY provided by the entity. H and r block for military   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. H and r block for military Example. H and r block for military Entity A is a business organization organized under the laws of country X that has an income tax treaty in force with the United States. H and r block for military A has two interest holders, B and C. H and r block for military B is a corporation organized under the laws of country Y. H and r block for military C is a corporation organized under the laws of country Z. H and r block for military Both countries Y and Z have an income tax treaty in force with the United States. H and r block for military A receives royalty income from U. H and r block for military S. H and r block for military sources that is not effectively connected with the conduct of a trade or business in the United States. H and r block for military For U. H and r block for military S. H and r block for military income tax purposes, A is treated as a partnership. H and r block for military Country X treats A as a partnership and requires the interest holders in A to separately take into account on a current basis their respective shares of the income paid to A even if the income is not distributed. H and r block for military The laws of country X provide that the character and source of the income to A's interest holders are determined as if the income was realized directly from the source that paid it to A. H and r block for military Accordingly, A is fiscally transparent in its jurisdiction, country X. H and r block for military B and C are not fiscally transparent under the laws of their respective countries of incorporation. H and r block for military Country Y requires B to separately take into account on a current basis B's share of the income paid to A, and the character and source of the income to B is determined as if the income was realized directly from the source that paid it to A. H and r block for military Accordingly, A is fiscally transparent for that income under the laws of country Y, and B is treated as deriving its share of the U. H and r block for military S. H and r block for military source royalty income for purposes of the U. H and r block for military S. H and r block for military -Y income tax treaty. H and r block for military Country Z, on the other hand, treats A as a corporation and does not require C to take into account its share of A's income on a current basis whether or not distributed. H and r block for military Therefore, A is not treated as fiscally transparent under the laws of country Z. H and r block for military Accordingly, C is not treated as deriving its share of the U. H and r block for military S. H and r block for military source royalty income for purposes of the U. H and r block for military S. H and r block for military -Z income tax treaty. H and r block for military Foreign Intermediaries In most cases, if you make payments to a foreign intermediary, the payees are the persons for whom the foreign intermediary collects the payment, such as account holders or customers, not the intermediary itself. H and r block for military This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. H and r block for military You may, however, treat a qualified intermediary that has assumed primary withholding responsibility for a payment as the payee, and you are not required to withhold. H and r block for military An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. H and r block for military A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. H and r block for military In most cases, you determine whether an entity is a qualified intermediary or a nonqualified intermediary based on the representations the intermediary makes on Form W-8IMY. H and r block for military You must determine whether the customers or account holders of a foreign intermediary are U. H and r block for military S. H and r block for military or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. H and r block for military You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. H and r block for military If you do not have all of the information or documentation that is required to reliably associate a payment with a payee, you must apply the presumption rules. H and r block for military See Documentation and Presumption Rules , later. H and r block for military Nonqualified intermediary. H and r block for military   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. H and r block for military The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. H and r block for military Example. H and r block for military You make a payment of interest to a foreign bank that is a nonqualified intermediary. H and r block for military The bank gives you a Form W-8IMY and the Forms W-8BEN of two foreign persons, and a Form W-9 from a U. H and r block for military S. H and r block for military person for whom the bank is collecting the payments. H and r block for military The bank also associates with its Form W-8IMY a withholding statement on which it allocates the interest payment to each account holder and provides all other information required to be on the withholding statement. H and r block for military The account holders are the payees of the interest payment. H and r block for military You should report the part of the interest paid to the two foreign persons on Forms 1042-S and the part paid to the U. H and r block for military S. H and r block for military person on Form 1099-INT. H and r block for military Qualified intermediary. H and r block for military   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. H and r block for military S. H and r block for military intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. H and r block for military You may treat a QI as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. H and r block for military In this situation, the QI is required to withhold the tax. H and r block for military You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. H and r block for military   A payment to a QI to the extent it does not assume primary NRA withholding responsibility is considered made to the person on whose behalf the QI acts. H and r block for military If a QI does not assume Form 1099 reporting and backup withholding responsibility, you must report on Form 1099 and, if applicable, backup withhold as if you were making the payment directly to the U. H and r block for military S. H and r block for military person. H and r block for military Branches of financial institutions. H and r block for military   Branches of financial institutions are not permitted to operate as QIs if they are located outside of countries having approved “know-your-customer” (KYC) rules. H and r block for military The countries with approved KYC rules are listed on IRS. H and r block for military gov. H and r block for military QI withholding agreement. H and r block for military   Foreign financial institutions and foreign branches of U. H and r block for military S. H and r block for military financial institutions can enter into an agreement with the IRS to be a qualified intermediary. H and r block for military   A QI is entitled to certain simplified withholding and reporting rules. H and r block for military In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. H and r block for military   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. H and r block for military These forms, and the procedures required to obtain a QI withholding agreement are available at www. H and r block for military irs. H and r block for military gov/Businesses/Corporations/Qualified-Intermediaries-(QI). H and r block for military Documentation. H and r block for military   A QI is not required to forward documentation obtained from foreign account holders to the U. H and r block for military S. H and r block for military withholding agent from whom the QI receives a payment of U. H and r block for military S. H and r block for military source income. H and r block for military The QI maintains such documentation at its location and provides the U. H and r block for military S. H and r block for military withholding agent with withholding rate pools. H and r block for military A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. H and r block for military   A QI is required to provide the U. H and r block for military S. H and r block for military withholding agent with information regarding U. H and r block for military S. H and r block for military persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. H and r block for military   If a QI obtains documentary evidence under the “know-your-customer” rules that apply to the QI under local law, and the documentary evidence is of a type specified in an attachment to the QI agreement, the documentary evidence remains valid until there is a change in circumstances or the QI knows the information is incorrect. H and r block for military This indefinite validity period rule does not apply to Forms W-8 or to documentary evidence that is not of the type specified in the attachment to the agreement. H and r block for military Form 1042-S reporting. H and r block for military   A QI is permitted to report payments made to its direct foreign account holders on a pooled basis rather than reporting payments to each direct account holder specifically. H and r block for military Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). H and r block for military Collective refund procedures. H and r block for military   A QI may seek a refund on behalf of its direct account holders. H and r block for military The direct account holders, therefore, are not required to file returns with the IRS to obtain refunds, but rather may obtain them from the QI. H and r block for military U. H and r block for military S. H and r block for military branches of foreign banks and foreign insurance companies. H and r block for military   Special rules apply to a U. H and r block for military S. H and r block for military branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. H and r block for military If you agree to treat the branch as a U. H and r block for military S. H and r block for military person, you may treat the branch as a U. H and r block for military S. H and r block for military payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. H and r block for military S. H and r block for military branch on which the agreement is evidenced. H and r block for military If you treat the branch as a U. H and r block for military S. H and r block for military payee, you are not required to withhold. H and r block for military Even though you agree to treat the branch as a U. H and r block for military S. H and r block for military person, you must report the payment on Form 1042-S. H and r block for military   A financial institution organized in a U. H and r block for military S. H and r block for military possession is treated as a U. H and r block for military S. H and r block for military branch. H and r block for military The special rules discussed in this section apply to a possessions financial institution. H and r block for military   If you are paying a U. H and r block for military S. H and r block for military branch an amount that is not subject to NRA withholding, treat the payment as made to a foreign person, irrespective of any agreement to treat the branch as a U. H and r block for military S. H and r block for military person for amounts subject to NRA withholding. H and r block for military Consequently, amounts not subject to NRA withholding that are paid to a U. H and r block for military S. H and r block for military branch are not subject to Form 1099 reporting or backup withholding. H and r block for military   Alternatively, a U. H and r block for military S. H and r block for military branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. H and r block for military In this situation, the payees are the persons on whose behalf the branch acts provided you can reliably associate the payment with valid documentation from those persons. H and r block for military See Nonqualified Intermediaries under  Documentation, later. H and r block for military   If the U. H and r block for military S. H and r block for military branch does not provide you with a Form W-8IMY, then you should treat a payment subject to NRA withholding as made to the foreign person of which the branch is a part and the income as effectively connected with the conduct of a trade or business in the United States. H and r block for military Withholding foreign partnership and foreign trust. H and r block for military   A withholding foreign partnership (WP) is any foreign partnership that has entered into a WP withholding agreement with the IRS and is acting in that capacity. H and r block for military A withholding foreign trust (WT) is a foreign simple or grantor trust that has entered into a WT withholding agreement with the IRS and is acting in that capacity. H and r block for military   A WP or WT may act in that capacity only for payments of amounts subject to NRA withholding that are distributed to, or included in the distributive share of, its direct partners, beneficiaries, or owners. H and r block for military A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. H and r block for military You may treat a WP or WT as a payee if it has provided you with documentation (discussed later) that represents that it is acting as a WP or WT for such amounts. H and r block for military WP and WT withholding agreements. H and r block for military   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. H and r block for military Also see the following items. H and r block for military Revenue Procedure 2004-21. H and r block for military Revenue Procedure 2005-77. H and r block for military Employer identification number (EIN). H and r block for military   A completed Form SS-4 must be submitted with the application for being a WP or WT. H and r block for military The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. H and r block for military Documentation. H and r block for military   A WP or WT must provide you with a Form W-8IMY that certifies that the WP or WT is acting in that capacity and a written statement identifying the amounts for which it is so acting. H and r block for military The statement is not required to contain withholding rate pool information or any information relating to the identity of a direct partner, beneficiary, or owner. H and r block for military The Form W-8IMY must contain the WP-EIN or WT-EIN. H and r block for military Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. H and r block for military A foreign person includes a nonresident alien individual, foreign corporation, foreign partnership, foreign trust, foreign estate, and any other person that is not a U. H and r block for military S. H and r block for military person. H and r block for military It also includes a foreign branch of a U. H and r block for military S. H and r block for military financial institution if the foreign branch is a qualified intermediary. H and r block for military In most cases, the U. H and r block for military S. H and r block for military branch of a foreign corporation or partnership is treated as a foreign person. H and r block for military Nonresident alien. H and r block for military   A nonresident alien is an individual who is not a U. H and r block for military S. H and r block for military citizen or a resident alien. H and r block for military A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. H and r block for military Married to U. H and r block for military S. H and r block for military citizen or resident alien. H and r block for military   Nonresident alien individuals married to U. H and r block for military S. H and r block for military citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. H and r block for military However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. H and r block for military Wages paid to these individuals are subject to graduated withholding. H and r block for military See Wages Paid to Employees—Graduated Withholding . H and r block for military Resident alien. H and r block for military   A resident alien is an individual who is not a citizen or national of the United States and who meets either the green card test or the substantial presence test for the calendar year. H and r block for military Green card test. H and r block for military An alien is a resident alien if the individual was a lawful permanent resident of the United States at any time during the calendar year. H and r block for military This is known as the green card test because these aliens hold immigrant visas (also known as green cards). H and r block for military Substantial presence test. H and r block for military An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. H and r block for military Under this test, the individual must be physically present in the United States on at least: 31 days during the current calendar year, and 183 days during the current year and the 2 preceding years, counting all the days of physical presence in the current year, but only 1/3 the number of days of presence in the first preceding year, and only 1/6 the number of days in the second preceding year. H and r block for military   In most cases, the days the alien is in the United States as a teacher, student, or trainee on an “F,” “J,” “M,” or “Q” visa are not counted. H and r block for military This exception is for a limited period of time. H and r block for military   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. H and r block for military Note. H and r block for military   If your employee is late in notifying you that his or her status changed from nonresident alien to resident alien, you may have to make an adjustment to Form 941 if that employee was exempt from withholding of social security and Medicare taxes as a nonresident alien. H and r block for military For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). H and r block for military Resident of a U. H and r block for military S. H and r block for military possession. H and r block for military   A bona fide resident of Puerto Rico, the U. H and r block for military S. H and r block for military Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. H and r block for military S. H and r block for military citizen or a U. H and r block for military S. H and r block for military national is treated as a nonresident alien for the withholding rules explained here. H and r block for military A bona fide resident of a possession is someone who: Meets the presence test, Does not have a tax home outside the possession, and Does not have a closer connection to the United States or to a foreign country than to the possession. H and r block for military   For more information, see Publication 570, Tax Guide for Individuals With Income From U. H and r block for military S. H and r block for military Possessions. H and r block for military Foreign corporations. H and r block for military   A foreign corporation is one that does not fit the definition of a domestic corporation. H and r block for military A domestic corporation is one that was created or organized in the United States or under the laws of the United States, any of its states, or the District of Columbia. H and r block for military Guam or Northern Mariana Islands corporations. H and r block for military   A corporation created or organized in, or under the laws of, Guam or the CNMI is not considered a foreign corporation for the purpose of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons; and At least 20% of the corporation's gross income is derived from sources within Guam or the CNMI for the 3-year period ending with the close of the preceding tax year of the corporation (or the period the corporation has been in existence, if less). H and r block for military Note. H and r block for military   The provisions discussed below under U. H and r block for military S. H and r block for military Virgin Islands and American Samoa corporations will apply to Guam or CNMI corporations when an implementing agreement is in effect between the United States and that possession. H and r block for military U. H and r block for military S. H and r block for military Virgin Islands and American Samoa corporations. H and r block for military   A corporation created or organized in, or under the laws of, the U. H and r block for military S. H and r block for military Virgin Islands or American Samoa is not considered a foreign corporation for the purposes of withholding tax for the tax year if: At all times during the tax year less than 25% in value of the corporation's stock is owned, directly or indirectly, by foreign persons, At least 65% of the corporation's gross income is effectively connected with the conduct of a trade or business in the U. H and r block for military S. H and r block for military Virgin Islands, American Samoa, Guam, the CNMI, or the United States for the 3-year period ending with the close of the tax year of the corporation (or the period the corporation or any predecessor has been in existence, if less), and No substantial part of the income of the corporation is used, directly or indirectly, to satisfy obligations to a person who is not a bona fide resident of the U. H and r block for military S. H and r block for military Virgin Islands, American Samoa, Guam, the CNMI, or the United States. H and r block for military Foreign private foundations. H and r block for military   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. H and r block for military Gross investment income from sources within the United States paid to a qualified foreign private foundation is subject to NRA withholding at a 4% rate (unless exempted by a treaty) rather than the ordinary statutory 30% rate. H and r block for military Other foreign organizations, associations, and charitable institutions. H and r block for military   An organization may be exempt from income tax under section 501(a) of the Internal Revenue Code even if it was formed under foreign law. H and r block for military In most cases, you do not have to withhold tax on payments of income to these foreign tax-exempt organizations unless the IRS has determined that they are foreign private foundations. H and r block for military   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. H and r block for military   You must withhold tax on the unrelated business income (as described in Publication 598, Tax on Unrelated Business Income of Exempt Organizations) of foreign tax-exempt organizations in the same way that you would withhold tax on similar income of nonexempt organizations. H and r block for military U. H and r block for military S. H and r block for military branches of foreign persons. H and r block for military   In most cases, a payment to a U. H and r block for military S. H and r block for military branch of a foreign person is a payment made to the foreign person. H and r block for military However, you may treat payments to U. H and r block for military S. H and r block for military branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. H and r block for military S. H and r block for military regulatory supervision as payments made to a U. H and r block for military S. H and r block for military person, if you and the U. H and r block for military S. H and r block for military branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. H and r block for military For this purpose, a financial institution organized under the laws of a U. H and r block for military S. H and r block for military possession is treated as a U. H and r block for military S. H and r block for military branch. H and r block for military Documentation In most cases, you must withhold 30% from the gross amount paid to a foreign payee unless you can reliably associate the payment with valid documentation that establishes either of the following. H and r block for military The payee is a U. H and r block for military S. H and r block for military person. H and r block for military The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. H and r block for military In most cases, you must get the documentation before you make the payment. H and r block for military The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. H and r block for military See Standards of Knowledge , later. H and r block for military If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. H and r block for military For example, if you do not have documentation or you cannot determine the part of a payment that is allocable to specific documentation, you must use the presumption rules. H and r block for military The specific types of documentation are discussed in this section. H and r block for military However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. H and r block for military As the withholding agent, you also may want to see the Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY. H and r block for military Section 1446 withholding. H and r block for military   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. H and r block for military In most cases, a partnership determines if a partner is a foreign partner and the partner's tax classification based on the withholding certificate provided by the partner. H and r block for military This is the same documentation that is filed for NRA withholding, but may require additional information as discussed under each of the forms in this section. H and r block for military Joint owners. H and r block for military    If you make a payment to joint owners, you need to get documentation from each owner. H and r block for military Form W-9. H and r block for military   In most cases, you can treat the payee as a U. H and r block for military S. H and r block for military person if the payee gives you a Form W-9. H and r block for military The Form W-9 can be used only by a U. H and r block for military S. H and r block for military person and must contain the payee's taxpayer identification number (TIN). H and r block for military If there is more than one owner, you may treat the total amount as paid to a U. H and r block for military S. H and r block for military person if any one of the owners gives you a Form W-9. H and r block for military See U. H and r block for military S. H and r block for military Taxpayer Identification Numbers , later. H and r block for military U. H and r block for military S. H and r block for military persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. H and r block for military Form W-8. H and r block for military   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. H and r block for military Until further notice, you can rely upon Forms W-8 that contain a P. H and r block for military O. H and r block for military box as a permanent residence address provided you do not know, or have reason to know, that the person providing the form is a U. H and r block for military S. H and r block for military person and that a street address is available. H and r block for military You may rely on Forms W-8 for which there is a U. H and r block for military S. H and r block for military mailing address provided you received the form prior to December 31, 2001. H and r block for military   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. H and r block for military You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. H and r block for military S. H and r block for military possession. H and r block for military Other documentation. H and r block for military   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. H and r block for military The nonresident alien individual may have to give you a Form W-4 or a Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual. H and r block for military These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. H and r block for military Beneficial Owners If all the appropriate requirements have been established on a Form W-8BEN, W-8ECI, W-8EXP or, if applicable, on documentary evidence, you may treat the payee as a foreign beneficial owner. H and r block for military Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. H and r block for military   This form is used by a foreign person to: Establish foreign status; Claim that such person is the beneficial owner of the income for which the form is being furnished or a partner in a partnership subject to section 1446 withholding; and If applicable, claim a reduced rate of, or exemption from, withholding under an income tax treaty. H and r block for military   Form W-8BEN also may be used to claim that the foreign person is exempt from Form 1099 reporting and backup withholding for income that is not subject to NRA withholding. H and r block for military For example, a foreign person may provide a Form W-8BEN to a broker to establish that the gross proceeds from the sale of securities are not subject to Form 1099 reporting or backup withholding. H and r block for military Claiming treaty benefits. H and r block for military   You may apply a reduced rate of withholding to a foreign person that provides a Form W-8BEN claiming a reduced rate of withholding under an income tax treaty only if the person provides a U. H and r block for military S. H and r block for military TIN and certifies that: It is a resident of a treaty country; It is the beneficial owner of the income; If it is an entity, it derives the income within the meaning of section 894 of the Internal Revenue Code (it is not fiscally transparent); and It meets any limitation on benefits provision contained in the treaty, if applicable. H and r block for military   If the foreign beneficial owner claiming a treaty benefit is related to you, the foreign beneficial owner also must certify on Form W-8BEN that it will file Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), if the amount subject to NRA withholding received during a calendar year exceeds, in the aggregate, $500,000. H and r block for military   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. H and r block for military See Fiscally transparent entity discussed earlier under Flow-Through Entities. H and r block for military   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. H and r block for military For example, a foreign corporation may not be entitled to a reduced rate of withholding unless a minimum percentage of its owners are citizens or residents of the United States or the treaty country. H and r block for military   The exemptions from, or reduced rates of, U. H and r block for military S. H and r block for military tax vary under each treaty. H and r block for military You must check the provisions of the tax treaty that apply. H and r block for military Tables at the end of this publication show the countries with which the United States has income tax treaties and the rates of withholding that apply in cases where all conditions of the particular treaty articles are satisfied. H and r block for military   If you know, or have reason to know, that an owner of income is not eligible for treaty benefits claimed, you must not apply the treaty rate. H and r block for military You are not, however, responsible for misstatements on a Form W-8, documentary evidence, or statements accompanying documentary evidence for which you did not have actual knowledge, or reason to know, that the statements were incorrect. H and r block for military Exceptions to TIN requirement. H and r block for military   A foreign person does not have to provide a TIN to claim a reduced rate of withholding under a treaty if the requirements for the following exceptions are met. H and r block for military Income from marketable securities (discussed next). H and r block for military Unexpected payments to an individual (discussed under U. H and r block for military S. H and r block for military Taxpayer Identification Numbers ). H and r block for military Marketable securities. H and r block for military   A Form W-8BEN provided to claim treaty benefits does not need a U. H and r block for military S. H and r block for military TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. H and r block for military For this purpose, income from a marketable security consists of the following items. H and r block for military Dividends and interest from stocks and debt obligations that are actively traded. H and r block for military Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). H and r block for military Dividends, interest, or royalties from units of beneficial interest in a unit investment trust that are (or were upon issuance) publicly offered and are registered with the SEC under the Securities Act of 1933. H and r block for military Income related to loans of any of the above securities. H and r block for military Offshore accounts. H and r block for military   If a payment is made outside the United States to an offshore account, a payee may give you documentary evidence, rather than Form W-8BEN. H and r block for military   In most cases, a payment is made outside the United States if you complete the acts necessary to effect the payment outside the United States. H and r block for military However, an amount paid by a bank or other financial institution on a deposit or account usually will be treated as paid at the branch or office where the amount is credited. H and r block for military An offshore account is an account maintained at an office or branch of a U. H and r block for military S. H and r block for military or foreign bank or other financial institution at any location outside the United States. H and r block for military   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. H and r block for military This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. H and r block for military In most cases, the nonqualified intermediary or flow-through entity that gives you documentary evidence also will have to give you a withholding statement, discussed later. H and r block for military Documentary evidence. H and r block for military   You may apply a reduced rate of withholding to income from marketable securities (discussed earlier) paid outside the United States to an offshore account if the beneficial owner gives you documentary evidence in place of a Form W-8BEN. H and r block for military To claim treaty benefits, the documentary evidence must be one of the following: A certificate of residence that: Is issued by a tax official of the treaty country of which the foreign beneficial owner claims to be a resident, States that the person has filed its most recent income tax return as a resident of that country, and Is issued within 3 years prior to being presented to you. H and r block for military Documentation for an individual that: Includes the individual's name, address, and photograph, Is an official document issued by an authorized governmental body, and Is issued no more than 3 years prior to being presented to you. H and r block for military Documentation for an entity that: Includes the name of the entity, Includes the address of its principal office in the treaty country, and Is an official document issued by an authorized governmental body. H and r block for military In addition to the documentary evidence, a foreign beneficial owner that is an entity must provide a statement that it derives the income for which it claims treaty benefits and that it meets one or more of the conditions set forth in a limitation on benefits article, if any, (or similar provision) contained in the applicable treaty. H and r block for military Form W-8ECI, Certificate of Foreign Person's Claim That Income Is Effectively Connected With the Conduct of a Trade or Business in the United States. H and r block for military   This form is used by a foreign person to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim that the income is effectively connected with the conduct of a trade or business in the United States. H and r block for military (See Effectively Connected Income , later. H and r block for military )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. H and r block for military   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. H and r block for military S. H and r block for military trade or business is subject to withholding under section 1446. H and r block for military If the partner has made, or will make, an election under section 871(d) or 882(d), the partner must submit Form W-8ECI, and attach a copy of the election, or a statement of intent to elect, to the form. H and r block for military    If the partner's only effectively connected income is the income allocated from the partnership and the partner is not making the election under section 871(d) or 882(d), the partner should provide Form W-8BEN to the partnership. H and r block for military Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. H and r block for military   This form is used by a foreign government, international organization, foreign central bank of issue, foreign tax-exempt organization, foreign private foundation, or government of a U. H and r block for military S. H and r block for military possession to: Establish foreign status, Claim that such person is the beneficial owner of the income for which the form is being furnished, and Claim a reduced rate of, or an exemption from, withholding as such an entity. H and r block for military   If the government or organization is a partner in a partnership carrying on a trade or business in the United States, the effectively connected income allocable to the partner is subject to withholding under section 1446. H and r block for military   See Foreign Governments and Certain Other Foreign Organizations , later. H and r block for military Foreign Intermediaries and Foreign Flow-Through Entities Payments made to a foreign intermediary or foreign flow-through entity are treated as made to the payees on whose behalf the intermediary or entity acts. H and r block for military The Form W-8IMY provided by a foreign intermediary or flow-through entity must be accompanied by additional information for you to be able to reliably associate the payment with a payee. H and r block for military The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. H and r block for military Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. H and r block for military S. H and r block for military Branches for United States Tax Withholding. H and r block for military   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. H and r block for military S. H and r block for military branches, to: Represent that a foreign person is a qualified intermediary or nonqualified intermediary, Represent, if applicable, that the qualified intermediary is assuming primary NRA withholding responsibility and/or primary Form 1099 reporting and backup withholding responsibility, Represent that a foreign partnership or a foreign simple or grantor trust is a withholding foreign partnership or a withholding foreign trust, Represent that a foreign flow-through entity is a nonwithholding foreign partnership, or a nonwithholding foreign trust and that the income is not effectively connected with the conduct of a trade or business in the United States, Represent that the provider is a U. H and r block for military S. H and r block for military branch of a foreign bank or insurance company and either is agreeing to be treated as a U. H and r block for military S. H and r block for military person or is transmitting documentation of the persons on whose behalf it is acting, or Represent that, for purposes of section 1446, it is an upper-tier foreign partnership or a foreign grantor trust and that the form is being used to transmit the required documentation. H and r block for military For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. H and r block for military 1446-5. H and r block for military Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. H and r block for military A foreign intermediary that has received a QI employer identification number (QI-EIN) may represent on Form W-8IMY that it is a QI before it receives a fully executed agreement. H and r block for military The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. H and r block for military The IRS will revoke a QI-EIN if the QI agreement is not executed and returned to the IRS within a reasonable period of time after the agreement was sent to the intermediary for signature. H and r block for military Responsibilities. H and r block for military   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. H and r block for military However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. H and r block for military Instead, it provides you with a withholding statement that contains withholding rate pool information. H and r block for military A withholding rate pool is a payment of a single type of income, determined in accordance with the categories of income reported on Form 1042-S that is subject to a single rate of withholding. H and r block for military A qualified intermediary is required to provide you with information regarding U. H and r block for military S. H and r block for military persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. H and r block for military S. H and r block for military person unless it has assumed Form 1099 reporting and backup withholding responsibility. H and r block for military For the alternative procedure for providing rate pool information for U. H and r block for military S. H and r block for military non-exempt persons, see the Form W-8IMY instructions. H and r block for military   The withholding statement must: Designate those accounts for which it acts as a qualified intermediary, Designate those accounts for which it assumes primary NRA withholding responsibility and/or primary Form 1099 and backup withholding responsibility, and Provide sufficient information for you to allocate the payment to a withholding rate pool. H and r block for military   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. H and r block for military Primary responsibility not assumed. H and r block for military   If a QI does not assume primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for the payment, you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to each withholding rate pool for foreign payees. H and r block for military Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. H and r block for military S. H and r block for military person subject to Form 1099 reporting and/or backup withholding. H and r block for military The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. H and r block for military Primary NRA withholding responsibility assumed. H and r block for military   If you make a payment to a QI that assumes primary NRA withholding responsibility (but not primary Form 1099 reporting and backup withholding responsibility), you can reliably associate the payment with valid documentation only to the extent you can reliably determine the part of the payment that relates to the withholding rate pool for which the QI assumes primary NRA withholding responsibility and the part of the payment attributable to withholding rate pools for each U. H and r block for military S. H and r block for military person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. H and r block for military The QI must provide a Form W-9 or, in the absence of the form, the name, address, and TIN, if available, for such person. H and r block for military Primary NRA and Form 1099 responsibility assumed. H and r block for military   If you make a payment to a QI that assumes both primary NRA withholding responsibility and primary Form 1099 reporting and backup withholding responsibility, you can reliably associate a payment with valid documentation provided that you receive a valid Form W-8IMY. H and r block for military It is not necessary to associate the payment with withholding rate pools. H and r block for military Example. H and r block for military You make a payment of dividends to a QI. H and r block for military It has five customers: two are foreign persons who have provided documentation entitling them to a 15% rate of withholding on dividends; two are foreign persons subject to a 30% rate of withholding on dividends; and one is a U. H and r block for military S. H and r block for military individual who provides it with a Form W-9. H and r block for military Each customer is entitled to 20% of the dividend payment. H and r block for military The QI does not assume any primary withholding responsibility. H and r block for military The QI gives you a Form W-8IMY with which it associates the Form W-9 and a withholding statement that allocates 40% of the dividend to a 15% withholding rate pool, 40% to a 30% withholding rate pool, and 20% to the U. H and r block for military S. H and r block for military individual. H and r block for military You should report on Forms 1042-S 40% of the payment as made to a 15% rate dividend pool and 40% of the payment as made to a 30% rate dividend pool. H and r block for military The part of the payment allocable to the U. H and r block for military S. H and r block for military individual (20%) is reportable on Form 1099-DIV. H and r block for military Smaller partnerships and trusts. H and r block for military   A QI may apply special rules to a smaller partnership or trust (Joint Account Provision) only if the partnership or trust meets the following conditions. H and r block for military It is a foreign partnership or foreign simple or grantor trust. H and r block for military It is a direct account holder of the QI. H and r block for military It does not have any partner, beneficiary, or owner that is a U. H and r block for military S. H and r block for military person or a pass- through partner, beneficiary, or owner. H and r block for military   For information on these rules, see section 4A. H and r block for military 01 of the QI agreement. H and r block for military This is found in Appendix 3 of Revenue Procedure 2003-64. H and r block for military Also see Revenue Procedure 2004-21. H and r block for military Related partnerships and trusts. H and r block for military    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. H and r block for military It is a foreign partnership or foreign simple or grantor trust. H and r block for military It is either: A direct account holder of the QI, or An indirect account holder of the QI that is a direct partner, beneficiary, or owner of a partnership or trust to which the QI has applied this rule. H and r block for military For information on these rules, see section 4A. H and r block for military 02 of the QI agreement. H and r block for military This is found in Appendix 3 of Revenue Procedure 2003-64. H and r block for military Also see Revenue Procedure 2005-77. H and r block for military Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. H and r block for military S. H and r block for military branch that is using Form W-8IMY to transmit information about the branch's account holders or customers, you can treat the payment (or a part of the payment) as reliably associated with valid documentation from a specific payee only if, prior to making the payment: You can allocate the payment to a valid Form W-8IMY, You can reliably determine how much of the payment relates to valid documentation provided by a payee (a person that is not itself a foreign intermediary, flow- through entity, or U. H and r block for military S. H and r block for military branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. H and r block for military The NQI, flow-through entity, or U. H and r block for military S. H and r block for military branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. H and r block for military A withholding statement must be updated to keep the information accurate prior to each payment. H and r block for military Withholding statement. H and r block for military   In most cases, a withholding statement must contain the following information. H and r block for military The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. H and r block for military The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. H and r block for military The status of the person for whom the documentation has been provided, such as whether the person is a U. H and r block for military S. H and r block for military exempt recipient (U. H and r block for military S. H and r block for military person exempt from Form 1099 reporting), U. H and r block for military S. H and r block for military non-exempt recipient (U. H and r block for military S. H and r block for military person subject to Form 1099 reporting), or a foreign person. H and r block for military For a foreign person, the statement must indicate whether the person is a beneficial owner or a foreign intermediary, flow-through entity, or a U. H and r block for military S. H and r block for military branch. H and r block for military The type of recipient the person is, based on the recipient codes used on Form 1042-S. H and r block for military Information allocating each payment, by income type, to each payee (including U. H and r block for military S. H and r block for military exempt and U. H and r block for military S. H and r block for military non-exempt recipients) for whom documentation has been provided. H and r block for military The rate of withholding that applies to each foreign person to whom a payment is allocated. H and r block for military A foreign payee's country of residence. H and r block for military If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. H and r block for military ). H and r block for military In the case of treaty benefits claimed by entities, whether the applicable limitation on benefits statement and the statement that the foreign person derives the income for which treaty benefits are claimed, have been made. H and r block for military The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. H and r block for military S. H and r block for military branch from which the payee will directly receive a payment. H and r block for military Any other information a withholding agent requests to fulfill its reporting and withholding obligations. H and r block for military Alternative procedure. H and r block for military   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. H and r block for military S. H and r block for military exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. H and r block for military To take advantage of this procedure, the NQI must: (a) inform you, on its withholding statement, that it is using the alternative procedure; and (b) obtain your consent. H and r block for military You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. H and r block for military    This alternative procedure cannot be used for payments to U. H and r block for military S. H and r block for military non-exempt recipients. H and r block for military Therefore, an NQI must always provide you with allocation information for all U. H and r block for military S. H and r block for military non-exempt recipients prior to a payment being made. H and r block for military Pooled withholding information. H and r block for military   If an NQI uses the alternative procedure, it must provide you with withholding rate pool information, as opposed to individual allocation information, prior to the payment of a reportable amount. H and r block for military A withholding rate pool is a payment of a single type of income (as determined by the income categories on Form 1042-S) that is subject to a single rate of withholding. H and r block for military For example, an NQI that has foreign account holders receiving royalties and dividends, both subject to the 15% rate, will provide you with information for two withholding rate pools (one for royalties and one for dividends). H and r block for military The NQI must provide you with the payee specific allocation information (information allocating each payment to each payee) by January 31 following the calendar year of payment. H and r block for military Failure to provide allocation information. H and r block for military   If an NQI fails to provide you with the payee specific allocation information for a withholding rate pool by January 31, you must not apply the alternative procedure to any of the NQI's withholding rate pools from that date forward. H and r block for military You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . H and r block for military An NQI is deemed to have f
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The H And R Block For Military

H and r block for military Publication 850 (EN/SP) - Introductory Material Table of Contents Introduction Introduction This glossary is developed by the Tax Forms and Publications Division of the Internal Revenue Service, in consultation with the Translation Commission of the North American Academy of the Spanish Language (Comisión de Traducciones de la Academia Norteamericana de la Lengua Española) and with the Graduate Program in Translation of the University of Puerto Rico (Programa Graduado en Traducción de la Universidad de Puerto Rico). H and r block for military Its purpose is to establish high standards for the quality of language usage, to promote uniformity in language usage, and to minimize the risk of misinterpretation of Spanish-language materials issued by the Service. H and r block for military To meet the needs of the largest segment of taxpayers whose primary language is Spanish, the Service has issued certain Spanish-language materials. H and r block for military Problems arise, however, because there is some variation in tax terminology used in Spanish-speaking countries. H and r block for military Also, invention and compromise are involved in selecting words and phrases to describe certain tax concepts that have no precise equivalent in the Spanish language or legal tradition. H and r block for military To help resolve these problems, a group of United States, Spanish, and Spanish-American academicians, professors, lawyers, accountants, translators, and tax law specialists developed this glossary. H and r block for military Their long and varied experience with the tax systems in their own, and other countries, gives assurance of reliability. H and r block for military The criteria used for words in this glossary are: consistency of usage with other governmental agencies, Spanish writing style for the tax forms and publications, and words relating to Accounting, Economics, Finance, Law, Technology and its related fields. H and r block for military Any issuance containing language consistent with this glossary should be reasonably satisfactory for purposes of general guidance regarding the rights and obligations of taxpayers. H and r block for military It is not intended, however, that any term in this glossary should be understood to change the meaning of any provisions of law, regulations, or any other authoritative precedent. H and r block for military A periodic review is made to determine whether any additions, deletions, or revisions are needed. H and r block for military Some of the terms listed are identified by the abbreviation “P. H and r block for military R. H and r block for military ” These terms are for use in tax forms and publications intended for circulation exclusively in Puerto Rico. H and r block for military Users are invited to send their comments to: Internal Revenue Service Virtual Translation Office SE:W:CAR:MP:T:LS:VTO 1111 Constitution Ave. H and r block for military , N. H and r block for military W. H and r block for military , IR-6102 Washington, DC 20224 or electronically to: vto@irs. H and r block for military gov Prev  Up  Next   Home   More Online Publications