W8BEN Form For Canadians And Foreigners
Every now and then, I have a paid speaking engagement in the US when an organization or company contracts me to do either my motivational speech or diversity training presentation – see my available speaking programs. Most of the time, the payment process if not a problem but sometimes especially if the organization is large enough to have a separate finance department responsible for issuing payment checks, they would send me a special W8BEN form to fill out.
This W8BEN form is for Canadians and other foreigners who have some work in the US. It is used to declare that as a foreign national, I do not have any connection to a trade or business in the US and that I am claiming tax treaty benefits. Like any IRS form, the W8BEN form can be quite complicated at first, much like any tax form from our own Canadian Revenue Agency.
If the W8BEN form is not submitted, the organization or company contracting me could withhold a staggering 30% of the payment to me as a US withholding tax. For the few instances where I was requested to fill a W8BEN form, 30% would have been quite significant.
Since Canada and the US has a tax treaty to ensure that I would not get double taxation (from both Canada and the US). As a resident in Canada, I should be paying only tax to the Canadian Revenue Agency. With any income I earn in the US, I want to make sure that this form helps me get full payment. On the W8BEN form, I supply my Canadian GST tax number as the foreign tax identification.
Initial W8BEN Form Submissions
My initial W8BEN form submissions to the first few US organizations who asked me to fill out this form went through okay without any complications. I simply entered my company name and address details plus my Canadian GST business number.
I had no problems getting checks for the full amounts I was contracted for either in person right away at the speaking engagement or in the mail afterwards. I indicated on teh W8BEN form that I should be under a zero percentage rate of withholding on any income.
IRS Identification Number Required
Then during my most recent paid speaking engagement in the US, this particular organization’s finance department told me that the W8BEN form as I have always been filling out was not enough to prevent the 30% withholding. They claimed that I needed to have an IRS identification number.
I thought that this was kind of weird since I’m a Canadian citizen with no business office located in the US and therefore have no ties with the IRS. Why would I have an IRS tax number of any kind? I’m a Canadian citizen and resident.
But this finance department wouldn’t budge and wanted either a US social security number or an EIN (employer identification number). Since I was contracting with my company name rather than my own individual name, I did some research into the EIN.
It turns out that the IRS has a special application for foreign entities or companies to get a US EIN and this is absolutely free of charge. However, the IRS does not allow anyone located outside the US to apply online for an EIN but has a special telephone number set up specifically for people like me.
This telephone number is 267-941-1099 which is unfortunately not toll free but after waiting for several minutes, I was connected to a live agent who took my application over the phone. She basically asked me some general questions and I was given an EIN on the spot over the phone even though my company does not have any employees other than myself.
When asked by the agent why I was requesting an EIN, I told her about the W8BEN form requirement and she understood right away. This must be a very common reason why EINs are requested. She then told me afterwards that the IRS will mail the official documentation to me here in Canada in a few weeks.
Resubmitting W8BEN With EIN
With the EIN I got over the phone, I contacted the finance department of the organization I did the speaking engagement at and resubmitted a revised W8BEN with the new EIN I just got. The finance contact I was dealing with verified this number with the IRS but this took a few days since it takes IRS some time to make new EINs available for verification.
I was told later upon successful verification that my check will be processed with the full amount and no withholding at all.
So although I was delayed getting payment for my speaking engagement, the actual process of getting the EIN and submitting a revised W8BEN by email was actually quite simple. So now I’ll use this same W8BEN form for any future business I do in the US where I will be requested to submit one.
I know that this all seems like extra paperwork and administrative hassles but I would much rather do these initial steps and receive full payments rather than have organizations withhold 30% of my speaking fees. If they did withhold any amounts, I would have to file for a refund with IRS at the end of the year even though I’m a Canadian entity. There is a way to do this but fortunately for me, I will not have to bother going through this route.
Hopefully my recent experience here helps out any Canadians or other foreigners who will be doing business in the US. If you get a request to fill out a W8BEN form, you just might want to consider being proactive and get an EIN as well to make the form more complete in the eyes of US finance departments.
I know that all these extra steps might sound crazy but anything that you do to prevent a 30% withholding would be worthwhile. That’s a large chunk of income that I’m sure you would want in your hands rather than have the IRS take it.
If you have any similar experiences regarding the W8BEN form or withh0lding of your income, feel free to share below.