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Taxact Login Tax Return Taxact Login Page

Taxact login tax return taxact login page Index A Accelerated death benefits, Accelerated Death Benefits, Accelerated death benefits. Taxact login tax return taxact login page Archer MSA, HSA, Archer MSA, or Medicare Advantage MSA, HSA, Archer MSA, or a Medicare Advantage MSA. Taxact login tax return taxact login page Assistance (see Tax help) Astronauts Tax forgiveness, Astronauts B Basis Inherited property, Basis of Inherited Property Joint interest property, Joint interest. Taxact login tax return taxact login page Qualified joint interest, Qualified joint interest. Taxact login tax return taxact login page Beneficiary Basis of property, Basis of Inherited Property Character of distributions, Character of Distributions Excess deductions, Excess deductions. Taxact login tax return taxact login page Income received, Other Items of Income Liability, estate's income tax, Liability of the beneficiary. Taxact login tax return taxact login page Nonresident alien, Nonresident alien beneficiary. Taxact login tax return taxact login page Reporting distributions, How and When To Report Successor, Successor beneficiary. Taxact login tax return taxact login page Treatment of distributions, Distributions to Beneficiaries Unused loss carryovers, Unused loss carryovers. Taxact login tax return taxact login page Bequest Defined, Bequest Property received, Gifts, Insurance, and Inheritances C Claim, credit or refund, Claim for Credit or Refund Combat zone, Combat Zone Comments, Comments and suggestions. Taxact login tax return taxact login page Coverdell education savings account (ESA), Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). Taxact login tax return taxact login page Credit Child tax, Child tax credit. Taxact login tax return taxact login page Earned income, Earned income credit. Taxact login tax return taxact login page Elderly or disabled, Credit for the elderly or the disabled. Taxact login tax return taxact login page Final return for decedent, Credits General business, General business tax credit. Taxact login tax return taxact login page D Death benefits Accelerated, Accelerated Death Benefits, Accelerated death benefits. Taxact login tax return taxact login page Public safety officers, Death benefits. Taxact login tax return taxact login page Decedent Final return, Final Income Tax Return for Decedent—Form 1040 Income in respect of, Income in Respect of a Decedent Deductions Estate tax, Estate Tax Deduction In respect of decedent, Deductions in Respect of a Decedent Medical expenses, Medical Expenses Standard, Standard Deduction Distributable net income, Distributable net income. Taxact login tax return taxact login page Distributions Deduction, Income Distribution Deduction Limit on deduction, Tax-exempt income not deductible. Taxact login tax return taxact login page Not treated as bequests, Distributions not treated as bequests. Taxact login tax return taxact login page Property, in kind, Property distributed in kind. Taxact login tax return taxact login page E Education savings account, Coverdell, Coverdell Education Savings Account (ESA), Coverdell education savings account (ESA). Taxact login tax return taxact login page Estate Income tax return, Income Tax Return of an Estate— Form 1041 Insolvent, Insolvent estate. Taxact login tax return taxact login page Period of administration, Period of Administration Tax deduction, Estate Tax Deduction Termination, Termination of Estate Transfer of unused deductions, Transfer of Unused Deductions to Beneficiaries Estate tax deduction, Estate Tax Deduction Estimated tax, Estimated tax. Taxact login tax return taxact login page , Transfer of Credit for Estimated Tax Payments Example Comprehensive, Comprehensive Example Decedent's final return, Final Return for Decedent—Form 1040 Estate's tax return, Income Tax Return of an Estate—Form 1041 Exemption Estate's tax return, Exemption Deduction Final return for decedent, Exemptions Expenses Accrued, Accrued expenses. Taxact login tax return taxact login page Administration, Administration Expenses Deductions in respect of decedent, Deductions in Respect of a Decedent Funeral, Funeral and Medical Expenses Medical, Medical Expenses, Medical and dental expenses of a decedent. Taxact login tax return taxact login page Extension to file Form 1041, Extension of time to file. Taxact login tax return taxact login page F Fiduciary relationship, Notice of fiduciary relationship. Taxact login tax return taxact login page Filing requirements Decedent's final return, Filing Requirements Estate's tax return, Filing Requirements Final return for decedent Credits, Credits Exemption and deductions, Exemptions and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Joint return, Joint Return Name, address, and signature, Name, Address, and Signature Other taxes, Other Taxes Payments, Payments of Tax When and where to file, When and Where To File Who must file, Final Income Tax Return for Decedent—Form 1040 Form 1040NR, Nonresident Alien, Filing Requirements 1041, Income Tax Return of an Estate— Form 1041 1042, Nonresident alien beneficiary. Taxact login tax return taxact login page 1310, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Taxact login tax return taxact login page 4810, Form 4810. Taxact login tax return taxact login page 56, Notice of fiduciary relationship. Taxact login tax return taxact login page 6251, Form 6251. Taxact login tax return taxact login page 706, Estate and Gift Taxes SS–4, Identification number. Taxact login tax return taxact login page Free tax services, Free help with your tax return. Taxact login tax return taxact login page Funeral expenses, Funeral expenses. Taxact login tax return taxact login page G Gift, property, Gifts, Insurance, and Inheritances H Help (see Tax help) I Identification number, application, Identification number. Taxact login tax return taxact login page Income Community, Community Income Distributable net income, Distributable net income. Taxact login tax return taxact login page Distributed currently, Income That Must Be Distributed Currently Interest and dividend, Interest and Dividend Income (Forms 1099) Partnership, final return, Partnership Income S corporation, S Corporation Income Self-employment, Self-Employment Income Income in respect of decedent, Income in Respect of a Decedent, Inherited IRAs. Taxact login tax return taxact login page Income tax return of an estate Credits, tax, and payments, Credits, Tax, and Payments Exemption and deductions, Exemption and Deductions Filing requirements, Filing Requirements Income to include, Income To Include Name, address, and signature, Name, Address, and Signature When and where to file, When and Where To File Inherited IRAs, Inherited IRAs. Taxact login tax return taxact login page Inherited property, Gifts, Insurance, and Inheritances Installment obligations, Installment obligations. Taxact login tax return taxact login page , Installment obligations. Taxact login tax return taxact login page Insurance, Insurance J Joint return Revoked by personal representative, Personal representative may revoke joint return election. Taxact login tax return taxact login page Who can file, Joint Return L Losses Deduction on final return, Deduction for Losses Estate's tax return, Losses M Military or terrorist actions Claim for credit or refund, Claim for Credit or Refund Defined, Military or terrorist action defined. Taxact login tax return taxact login page Tax forgiveness, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts N Notice of fiduciary relationship Form 56, Notice of fiduciary relationship. Taxact login tax return taxact login page P Partnership income, Partnership Income, Partnership income. Taxact login tax return taxact login page Penalty Information returns, Penalty. Taxact login tax return taxact login page Substantial valuation misstatement, Valuation misstatements. Taxact login tax return taxact login page Personal representative Defined, Personal Representative Duties, Duties Fees received, Fees Received by Personal Representatives Penalty, Penalty. Taxact login tax return taxact login page , Penalty. Taxact login tax return taxact login page Prompt assessment, request, Request for prompt assessment (charge) of tax. Taxact login tax return taxact login page Public safety officers, death benefits, Death benefits. Taxact login tax return taxact login page Publications (see Tax help) R Refund File for decedent, Refund Military or terrorist action deaths, Claim for Credit or Refund Release from liability, Request for discharge from personal liability for tax. Taxact login tax return taxact login page Return Decedent's final, Final Income Tax Return for Decedent—Form 1040 Estate's income tax, Income Tax Return of an Estate— Form 1041 Information, Information Returns Roth IRA, Roth IRAs. Taxact login tax return taxact login page S Separate shares rule, Separate shares rule. Taxact login tax return taxact login page Suggestions, Comments and suggestions. Taxact login tax return taxact login page Survivors Income, Other Items of Income Tax benefits, Tax Benefits for Survivors T Tax Alternative minimum Estate, Alternative minimum tax (AMT). Taxact login tax return taxact login page Individuals, Alternative minimum tax (AMT). Taxact login tax return taxact login page Benefits, survivors, Tax Benefits for Survivors Estimated, estate, Estimated tax. Taxact login tax return taxact login page , Transfer of Credit for Estimated Tax Payments Payments, final return, Payments of Tax Refund of income (claim), Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. Taxact login tax return taxact login page Self-employment, Self-employment tax. Taxact login tax return taxact login page Transfer of credit, Transfer of Credit for Estimated Tax Payments Tax help, How To Get Tax Help Terrorist action, tax relief, Tax Forgiveness for Armed Forces Members, Victims of Terrorism, and Astronauts Terrorist victim, Specified Terrorist Victim TTY/TDD information, How To Get Tax Help V Valuation method Inherited property, Basis of Inherited Property Special-use, Special-use valuation. Taxact login tax return taxact login page Victims of terrorist attacks, Specified Terrorist Victim W Widows and widowers, tax benefits, Qualifying widows and widowers. Taxact login tax return taxact login page Prev  Up     Home   More Online Publications
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Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Taxpayer Identification NumbersUnexpected payment. Taxact login tax return taxact login page Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Taxact login tax return taxact login page Electronic reporting. Taxact login tax return taxact login page Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Real Property InterestForeign corporations. Taxact login tax return taxact login page Domestic corporations. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page real property holding corporations. Taxact login tax return taxact login page Partnerships. Taxact login tax return taxact login page Trusts and estates. Taxact login tax return taxact login page Domestically controlled QIE. Taxact login tax return taxact login page Late filing of certifications or notices. Taxact login tax return taxact login page Certifications. Taxact login tax return taxact login page Liability of agent or qualified substitute. Taxact login tax return taxact login page Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Taxact login tax return taxact login page Withholding of Tax In most cases, a foreign person is subject to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page tax on its U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source income. Taxact login tax return taxact login page Most types of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source income received by a foreign person are subject to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page tax of 30%. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source income. Taxact login tax return taxact login page Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Taxact login tax return taxact login page NRA withholding does not include withholding under section 1445 of the Code (see U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Taxact login tax return taxact login page A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Taxact login tax return taxact login page However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person is not required to withhold. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Withholding Agent You are a withholding agent if you are a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch of certain foreign banks and insurance companies. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Taxact login tax return taxact login page In most cases, the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person who pays an amount subject to NRA withholding is the person responsible for withholding. Taxact login tax return taxact login page However, other persons may be required to withhold. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Liability for tax. Taxact login tax return taxact login page   As a withholding agent, you are personally liable for any tax required to be withheld. Taxact login tax return taxact login page This liability is independent of the tax liability of the foreign person to whom the payment is made. Taxact login tax return taxact login page If you fail to withhold and the foreign payee fails to satisfy its U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Taxact login tax return taxact login page   The applicable tax will be collected only once. Taxact login tax return taxact login page If the foreign person satisfies its U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Taxact login tax return taxact login page Determination of amount to withhold. Taxact login tax return taxact login page   You must withhold on the gross amount subject to NRA withholding. Taxact login tax return taxact login page You cannot reduce the gross amount by any deductions. Taxact login tax return taxact login page However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page In no case, however, should you withhold more than 30% of the total amount paid. Taxact login tax return taxact login page Or, you may make a reasonable estimate of the amount from U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page sources and put a corresponding part of the amount due in escrow until the amount from U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page sources can be determined, at which time withholding becomes due. Taxact login tax return taxact login page When to withhold. Taxact login tax return taxact login page   Withholding is required at the time you make a payment of an amount subject to withholding. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page A payment is considered made to a person if it is paid for that person's benefit. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page A payment also is considered made to a person if it is made to that person's agent. Taxact login tax return taxact login page   A U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page partnership should withhold when any distributions that include amounts subject to withholding are made. Taxact login tax return taxact login page However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Taxact login tax return taxact login page A U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page To the extent a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page (See Returns Required , later. Taxact login tax return taxact login page ) 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. Taxact login tax return taxact login page Form 1099 reporting and backup withholding. Taxact login tax return taxact login page    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person. Taxact login tax return taxact login page You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person that is subject to Form 1099 reporting if any of the following apply. Taxact login tax return taxact login page The U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person has not provided its taxpayer identification number (TIN) in the manner required. Taxact login tax return taxact login page The IRS notifies you that the TIN furnished by the payee is incorrect. Taxact login tax return taxact login page There has been a notified payee underreporting. Taxact login tax return taxact login page There has been a payee certification failure. Taxact login tax return taxact login page In most cases, a TIN must be provided by a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Taxact login tax return taxact login page A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person. Taxact login tax return taxact login page For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person subject to Form 1099 reporting. Taxact login tax return taxact login page See Identifying the Payee , later, for more information. Taxact login tax return taxact login page Also see Section S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Wages paid to employees. Taxact login tax return taxact login page   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Taxact login tax return taxact login page See Pay for Personal Services Performed , later. Taxact login tax return taxact login page Effectively connected income by partnerships. Taxact login tax return taxact login page   A withholding agent that is a partnership (whether U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page or foreign) is also responsible for withholding on its income effectively connected with a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page trade or business that is allocable to foreign partners. Taxact login tax return taxact login page See Partnership Withholding on Effectively Connected Income , later, for more information. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page real property interest. Taxact login tax return taxact login page   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page real property interest to a shareholder, partner, or beneficiary that is a foreign person. Taxact login tax return taxact login page See U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Real Property Interest , later. Taxact login tax return taxact login page Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Taxact login tax return taxact login page It does not apply to payments made to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page persons. Taxact login tax return taxact login page Usually, you determine the payee's status as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page or foreign person based on the documentation that person provides. Taxact login tax return taxact login page See Documentation , later. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page agent of foreign person. Taxact login tax return taxact login page   If you make a payment to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person and you have actual knowledge that the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Taxact login tax return taxact login page However, if the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person and not as a payment to a foreign person. Taxact login tax return taxact login page You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Taxact login tax return taxact login page Disregarded entities. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page The payee of a payment made to a disregarded entity is the owner of the entity. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   If the owner is a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person, you do not apply NRA withholding. Taxact login tax return taxact login page However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Flow-Through Entities The payees of payments (other than income effectively connected with a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Taxact login tax return taxact login page This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Taxact login tax return taxact login page Income that is, or is deemed to be, effectively connected with the conduct of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page trade or business of a flow-through entity is treated as paid to the entity. Taxact login tax return taxact login page All of the following are flow-through entities. Taxact login tax return taxact login page A foreign partnership (other than a withholding foreign partnership). Taxact login tax return taxact login page A foreign simple or foreign grantor trust (other than a withholding foreign trust). Taxact login tax return taxact login page A fiscally transparent entity receiving income for which treaty benefits are claimed. Taxact login tax return taxact login page See Fiscally transparent entity , later. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Taxact login tax return taxact login page You must determine whether the owners or beneficiaries of a flow-through entity are U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page See Documentation and Presumption Rules , later. Taxact login tax return taxact login page Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Taxact login tax return taxact login page Foreign partnerships. Taxact login tax return taxact login page    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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Example 1. Taxact login tax return taxact login page A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen. Taxact login tax return taxact login page You make a payment of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source interest to the partnership. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen. Taxact login tax return taxact login page The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Taxact login tax return taxact login page You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Taxact login tax return taxact login page Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Taxact login tax return taxact login page Report the payment to the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen on Form 1099-INT. Taxact login tax return taxact login page Example 2. Taxact login tax return taxact login page A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Taxact login tax return taxact login page The second partnership has two partners, both nonresident alien individuals. Taxact login tax return taxact login page You make a payment of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source interest to the first partnership. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Taxact login tax return taxact login page The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Example 3. Taxact login tax return taxact login page You make a payment of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source dividends to a withholding foreign partnership. Taxact login tax return taxact login page The partnership has two partners, both foreign corporations. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page You must treat the partnership as the payee of the dividends. Taxact login tax return taxact login page Foreign simple and grantor trust. Taxact login tax return taxact login page   A trust is foreign unless it meets both of the following tests. Taxact login tax return taxact login page A court within the United States is able to exercise primary supervision over the administration of the trust. Taxact login tax return taxact login page One or more U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page persons have the authority to control all substantial decisions of the trust. Taxact login tax return taxact login page   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Taxact login tax return taxact login page A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Taxact login tax return taxact login page   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Taxact login tax return taxact login page The payees of a payment made to a foreign grantor trust are the owners of the trust. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Example. Taxact login tax return taxact login page A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen. Taxact login tax return taxact login page You make a payment of interest to the foreign trust. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Taxact login tax return taxact login page Report the payment to the nonresident aliens on Forms 1042-S. Taxact login tax return taxact login page Report the payment to the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen on Form 1099-INT. Taxact login tax return taxact login page Fiscally transparent entity. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page ). Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Taxact login tax return taxact login page Example. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page A has two interest holders, B and C. Taxact login tax return taxact login page B is a corporation organized under the laws of country Y. Taxact login tax return taxact login page C is a corporation organized under the laws of country Z. Taxact login tax return taxact login page Both countries Y and Z have an income tax treaty in force with the United States. Taxact login tax return taxact login page A receives royalty income from U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page sources that is not effectively connected with the conduct of a trade or business in the United States. Taxact login tax return taxact login page For U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page income tax purposes, A is treated as a partnership. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Accordingly, A is fiscally transparent in its jurisdiction, country X. Taxact login tax return taxact login page B and C are not fiscally transparent under the laws of their respective countries of incorporation. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source royalty income for purposes of the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page -Y income tax treaty. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Therefore, A is not treated as fiscally transparent under the laws of country Z. Taxact login tax return taxact login page Accordingly, C is not treated as deriving its share of the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source royalty income for purposes of the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page -Z income tax treaty. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Taxact login tax return taxact login page A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page You must determine whether the customers or account holders of a foreign intermediary are U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Taxact login tax return taxact login page You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page See Documentation and Presumption Rules , later. Taxact login tax return taxact login page Nonqualified intermediary. Taxact login tax return taxact login page   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Taxact login tax return taxact login page The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Taxact login tax return taxact login page Example. Taxact login tax return taxact login page You make a payment of interest to a foreign bank that is a nonqualified intermediary. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person for whom the bank is collecting the payments. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The account holders are the payees of the interest payment. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person on Form 1099-INT. Taxact login tax return taxact login page Qualified intermediary. Taxact login tax return taxact login page   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page In this situation, the QI is required to withhold the tax. Taxact login tax return taxact login page You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person. Taxact login tax return taxact login page Branches of financial institutions. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page The countries with approved KYC rules are listed on IRS. Taxact login tax return taxact login page gov. Taxact login tax return taxact login page QI withholding agreement. Taxact login tax return taxact login page   Foreign financial institutions and foreign branches of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Taxact login tax return taxact login page   A QI is entitled to certain simplified withholding and reporting rules. Taxact login tax return taxact login page In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Taxact login tax return taxact login page   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Taxact login tax return taxact login page These forms, and the procedures required to obtain a QI withholding agreement are available at www. Taxact login tax return taxact login page irs. Taxact login tax return taxact login page gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Taxact login tax return taxact login page Documentation. Taxact login tax return taxact login page   A QI is not required to forward documentation obtained from foreign account holders to the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page withholding agent from whom the QI receives a payment of U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page source income. Taxact login tax return taxact login page The QI maintains such documentation at its location and provides the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page withholding agent with withholding rate pools. Taxact login tax return taxact login page A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Taxact login tax return taxact login page   A QI is required to provide the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page withholding agent with information regarding U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Form 1042-S reporting. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Taxact login tax return taxact login page Collective refund procedures. Taxact login tax return taxact login page   A QI may seek a refund on behalf of its direct account holders. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branches of foreign banks and foreign insurance companies. Taxact login tax return taxact login page   Special rules apply to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Taxact login tax return taxact login page If you agree to treat the branch as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person, you may treat the branch as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch on which the agreement is evidenced. Taxact login tax return taxact login page If you treat the branch as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page payee, you are not required to withhold. Taxact login tax return taxact login page Even though you agree to treat the branch as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person, you must report the payment on Form 1042-S. Taxact login tax return taxact login page   A financial institution organized in a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page possession is treated as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch. Taxact login tax return taxact login page The special rules discussed in this section apply to a possessions financial institution. Taxact login tax return taxact login page   If you are paying a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person for amounts subject to NRA withholding. Taxact login tax return taxact login page Consequently, amounts not subject to NRA withholding that are paid to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch are not subject to Form 1099 reporting or backup withholding. Taxact login tax return taxact login page   Alternatively, a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page See Nonqualified Intermediaries under  Documentation, later. Taxact login tax return taxact login page   If the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Withholding foreign partnership and foreign trust. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page WP and WT withholding agreements. Taxact login tax return taxact login page   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Taxact login tax return taxact login page Also see the following items. Taxact login tax return taxact login page Revenue Procedure 2004-21. Taxact login tax return taxact login page Revenue Procedure 2005-77. Taxact login tax return taxact login page Employer identification number (EIN). Taxact login tax return taxact login page   A completed Form SS-4 must be submitted with the application for being a WP or WT. Taxact login tax return taxact login page The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Taxact login tax return taxact login page Documentation. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The Form W-8IMY must contain the WP-EIN or WT-EIN. Taxact login tax return taxact login page Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person. Taxact login tax return taxact login page It also includes a foreign branch of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page financial institution if the foreign branch is a qualified intermediary. Taxact login tax return taxact login page In most cases, the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch of a foreign corporation or partnership is treated as a foreign person. Taxact login tax return taxact login page Nonresident alien. Taxact login tax return taxact login page   A nonresident alien is an individual who is not a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen or a resident alien. Taxact login tax return taxact login page A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Taxact login tax return taxact login page Married to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen or resident alien. Taxact login tax return taxact login page   Nonresident alien individuals married to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Taxact login tax return taxact login page However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Taxact login tax return taxact login page Wages paid to these individuals are subject to graduated withholding. Taxact login tax return taxact login page See Wages Paid to Employees—Graduated Withholding . Taxact login tax return taxact login page Resident alien. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page Green card test. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Taxact login tax return taxact login page Substantial presence test. Taxact login tax return taxact login page An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page This exception is for a limited period of time. Taxact login tax return taxact login page   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Taxact login tax return taxact login page Note. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Taxact login tax return taxact login page Resident of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page possession. Taxact login tax return taxact login page   A bona fide resident of Puerto Rico, the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page citizen or a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page national is treated as a nonresident alien for the withholding rules explained here. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Possessions. Taxact login tax return taxact login page Foreign corporations. Taxact login tax return taxact login page   A foreign corporation is one that does not fit the definition of a domestic corporation. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Guam or Northern Mariana Islands corporations. Taxact login tax return taxact login page   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). Taxact login tax return taxact login page Note. Taxact login tax return taxact login page   The provisions discussed below under U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Virgin Islands and American Samoa corporations. Taxact login tax return taxact login page   A corporation created or organized in, or under the laws of, the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Taxact login tax return taxact login page Foreign private foundations. Taxact login tax return taxact login page   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Other foreign organizations, associations, and charitable institutions. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branches of foreign persons. Taxact login tax return taxact login page   In most cases, a payment to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch of a foreign person is a payment made to the foreign person. Taxact login tax return taxact login page However, you may treat payments to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page regulatory supervision as payments made to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person, if you and the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Taxact login tax return taxact login page For this purpose, a financial institution organized under the laws of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page possession is treated as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The payee is a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person. Taxact login tax return taxact login page The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Taxact login tax return taxact login page In most cases, you must get the documentation before you make the payment. Taxact login tax return taxact login page The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Taxact login tax return taxact login page See Standards of Knowledge , later. Taxact login tax return taxact login page If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The specific types of documentation are discussed in this section. Taxact login tax return taxact login page However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Section 1446 withholding. Taxact login tax return taxact login page   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Joint owners. Taxact login tax return taxact login page    If you make a payment to joint owners, you need to get documentation from each owner. Taxact login tax return taxact login page Form W-9. Taxact login tax return taxact login page   In most cases, you can treat the payee as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person if the payee gives you a Form W-9. Taxact login tax return taxact login page The Form W-9 can be used only by a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person and must contain the payee's taxpayer identification number (TIN). Taxact login tax return taxact login page If there is more than one owner, you may treat the total amount as paid to a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person if any one of the owners gives you a Form W-9. Taxact login tax return taxact login page See U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Taxpayer Identification Numbers , later. Taxact login tax return taxact login page U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Taxact login tax return taxact login page Form W-8. Taxact login tax return taxact login page   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Taxact login tax return taxact login page Until further notice, you can rely upon Forms W-8 that contain a P. Taxact login tax return taxact login page O. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person and that a street address is available. Taxact login tax return taxact login page You may rely on Forms W-8 for which there is a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page mailing address provided you received the form prior to December 31, 2001. Taxact login tax return taxact login page   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Taxact login tax return taxact login page You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page possession. Taxact login tax return taxact login page Other documentation. Taxact login tax return taxact login page   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Claiming treaty benefits. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Taxact login tax return taxact login page See Fiscally transparent entity discussed earlier under Flow-Through Entities. Taxact login tax return taxact login page   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   The exemptions from, or reduced rates of, U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page tax vary under each treaty. Taxact login tax return taxact login page You must check the provisions of the tax treaty that apply. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Exceptions to TIN requirement. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page Income from marketable securities (discussed next). Taxact login tax return taxact login page Unexpected payments to an individual (discussed under U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Taxpayer Identification Numbers ). Taxact login tax return taxact login page Marketable securities. Taxact login tax return taxact login page   A Form W-8BEN provided to claim treaty benefits does not need a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Taxact login tax return taxact login page For this purpose, income from a marketable security consists of the following items. Taxact login tax return taxact login page Dividends and interest from stocks and debt obligations that are actively traded. Taxact login tax return taxact login page Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Income related to loans of any of the above securities. Taxact login tax return taxact login page Offshore accounts. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page An offshore account is an account maintained at an office or branch of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page or foreign bank or other financial institution at any location outside the United States. Taxact login tax return taxact login page   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Taxact login tax return taxact login page This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Documentary evidence. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page (See Effectively Connected Income , later. Taxact login tax return taxact login page )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Taxact login tax return taxact login page   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page trade or business is subject to withholding under section 1446. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page    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. Taxact login tax return taxact login page Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   See Foreign Governments and Certain Other Foreign Organizations , later. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Taxact login tax return taxact login page Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page Branches for United States Tax Withholding. Taxact login tax return taxact login page   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Taxact login tax return taxact login page 1446-5. Taxact login tax return taxact login page Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Responsibilities. Taxact login tax return taxact login page   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Taxact login tax return taxact login page However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Taxact login tax return taxact login page Instead, it provides you with a withholding statement that contains withholding rate pool information. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page A qualified intermediary is required to provide you with information regarding U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person unless it has assumed Form 1099 reporting and backup withholding responsibility. Taxact login tax return taxact login page For the alternative procedure for providing rate pool information for U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt persons, see the Form W-8IMY instructions. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Taxact login tax return taxact login page Primary responsibility not assumed. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person subject to Form 1099 reporting and/or backup withholding. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Primary NRA withholding responsibility assumed. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Primary NRA and Form 1099 responsibility assumed. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page It is not necessary to associate the payment with withholding rate pools. Taxact login tax return taxact login page Example. Taxact login tax return taxact login page You make a payment of dividends to a QI. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page individual who provides it with a Form W-9. Taxact login tax return taxact login page Each customer is entitled to 20% of the dividend payment. Taxact login tax return taxact login page The QI does not assume any primary withholding responsibility. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page individual. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The part of the payment allocable to the U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page individual (20%) is reportable on Form 1099-DIV. Taxact login tax return taxact login page Smaller partnerships and trusts. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page It is a foreign partnership or foreign simple or grantor trust. Taxact login tax return taxact login page It is a direct account holder of the QI. Taxact login tax return taxact login page It does not have any partner, beneficiary, or owner that is a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person or a pass- through partner, beneficiary, or owner. Taxact login tax return taxact login page   For information on these rules, see section 4A. Taxact login tax return taxact login page 01 of the QI agreement. Taxact login tax return taxact login page This is found in Appendix 3 of Revenue Procedure 2003-64. Taxact login tax return taxact login page Also see Revenue Procedure 2004-21. Taxact login tax return taxact login page Related partnerships and trusts. Taxact login tax return taxact login page    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Taxact login tax return taxact login page It is a foreign partnership or foreign simple or grantor trust. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page For information on these rules, see section 4A. Taxact login tax return taxact login page 02 of the QI agreement. Taxact login tax return taxact login page This is found in Appendix 3 of Revenue Procedure 2003-64. Taxact login tax return taxact login page Also see Revenue Procedure 2005-77. Taxact login tax return taxact login page Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Taxact login tax return taxact login page The NQI, flow-through entity, or U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Taxact login tax return taxact login page A withholding statement must be updated to keep the information accurate prior to each payment. Taxact login tax return taxact login page Withholding statement. Taxact login tax return taxact login page   In most cases, a withholding statement must contain the following information. Taxact login tax return taxact login page The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Taxact login tax return taxact login page The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Taxact login tax return taxact login page The status of the person for whom the documentation has been provided, such as whether the person is a U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page exempt recipient (U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person exempt from Form 1099 reporting), U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt recipient (U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page person subject to Form 1099 reporting), or a foreign person. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch. Taxact login tax return taxact login page The type of recipient the person is, based on the recipient codes used on Form 1042-S. Taxact login tax return taxact login page Information allocating each payment, by income type, to each payee (including U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page exempt and U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt recipients) for whom documentation has been provided. Taxact login tax return taxact login page The rate of withholding that applies to each foreign person to whom a payment is allocated. Taxact login tax return taxact login page A foreign payee's country of residence. Taxact login tax return taxact login page If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Taxact login tax return taxact login page ). Taxact login tax return taxact login page 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. Taxact login tax return taxact login page The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page branch from which the payee will directly receive a payment. Taxact login tax return taxact login page Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Taxact login tax return taxact login page Alternative procedure. Taxact login tax return taxact login page   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Taxact login tax return taxact login page    This alternative procedure cannot be used for payments to U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt recipients. Taxact login tax return taxact login page Therefore, an NQI must always provide you with allocation information for all U. Taxact login tax return taxact login page S. Taxact login tax return taxact login page non-exempt recipients prior to a payment being made. Taxact login tax return taxact login page Pooled withholding information. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page 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. Taxact login tax return taxact login page 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). Taxact login tax return taxact login page 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. Taxact login tax return taxact login page Failure to provide allocation information. Taxact login tax return taxact login page   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. Taxact login tax return taxact login page You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Taxact login tax return taxact login page An NQI is deemed to have f