Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Taxslayer Com Main Aspx Destination

Irs 1040x 20101090 EzFree H&r BlockIrs AmendmentsForms For 2012 Income TaxCan I File A 1040ezH&r Block E FileIrs Tax Filing OnlineTax Return AmendmentFile An Amended Return Online1040ez FormOhio 1040xHow To Amend Federal Taxes2012 Tax Forms IrsPrior Year Tax ReturnsIrs Gov FormsLast Day To File Taxes 2013State Tax ExtensionWhere Can I Do My State Taxes Online For Free1040nr Form 2013How Do You File An Amended Federal Tax ReturnFederal Income Tax Amendment FormTaxes Online Free1040 2012 Tax Form1040x Amended Return FormTax Form 1040 Year 20081040nr 2012E File Tax ReturnsIncome Tax Amendment FormHow To Fill Out 1040x ExampleHow To File Amended Tax ReturnH& R BlockFiling State Taxes Only1040 EzNeed Amend My 2009 TaxesHow To Amend Tax ReturnH&r Block Free Efile 20111040ez Form Online1040nr Calculator2011 Tax Forms Ez

Taxslayer Com Main Aspx Destination

Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Taxpayer Identification NumbersUnexpected payment. Taxslayer com main aspx destination Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Taxslayer com main aspx destination Electronic reporting. Taxslayer com main aspx destination Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Real Property InterestForeign corporations. Taxslayer com main aspx destination Domestic corporations. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination real property holding corporations. Taxslayer com main aspx destination Partnerships. Taxslayer com main aspx destination Trusts and estates. Taxslayer com main aspx destination Domestically controlled QIE. Taxslayer com main aspx destination Late filing of certifications or notices. Taxslayer com main aspx destination Certifications. Taxslayer com main aspx destination Liability of agent or qualified substitute. Taxslayer com main aspx destination Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Taxslayer com main aspx destination Withholding of Tax In most cases, a foreign person is subject to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination tax on its U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source income. Taxslayer com main aspx destination Most types of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source income received by a foreign person are subject to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination tax of 30%. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source income. Taxslayer com main aspx destination Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Taxslayer com main aspx destination NRA withholding does not include withholding under section 1445 of the Code (see U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Taxslayer com main aspx destination A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Taxslayer com main aspx destination However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person is not required to withhold. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Withholding Agent You are a withholding agent if you are a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch of certain foreign banks and insurance companies. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Taxslayer com main aspx destination In most cases, the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person who pays an amount subject to NRA withholding is the person responsible for withholding. Taxslayer com main aspx destination However, other persons may be required to withhold. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Liability for tax. Taxslayer com main aspx destination   As a withholding agent, you are personally liable for any tax required to be withheld. Taxslayer com main aspx destination This liability is independent of the tax liability of the foreign person to whom the payment is made. Taxslayer com main aspx destination If you fail to withhold and the foreign payee fails to satisfy its U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Taxslayer com main aspx destination   The applicable tax will be collected only once. Taxslayer com main aspx destination If the foreign person satisfies its U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Taxslayer com main aspx destination Determination of amount to withhold. Taxslayer com main aspx destination   You must withhold on the gross amount subject to NRA withholding. Taxslayer com main aspx destination You cannot reduce the gross amount by any deductions. Taxslayer com main aspx destination However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination In no case, however, should you withhold more than 30% of the total amount paid. Taxslayer com main aspx destination Or, you may make a reasonable estimate of the amount from U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination sources and put a corresponding part of the amount due in escrow until the amount from U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination sources can be determined, at which time withholding becomes due. Taxslayer com main aspx destination When to withhold. Taxslayer com main aspx destination   Withholding is required at the time you make a payment of an amount subject to withholding. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination A payment is considered made to a person if it is paid for that person's benefit. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination A payment also is considered made to a person if it is made to that person's agent. Taxslayer com main aspx destination   A U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination partnership should withhold when any distributions that include amounts subject to withholding are made. Taxslayer com main aspx destination However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Taxslayer com main aspx destination A U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination To the extent a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination (See Returns Required , later. Taxslayer com main aspx destination ) 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. Taxslayer com main aspx destination Form 1099 reporting and backup withholding. Taxslayer com main aspx destination    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person. Taxslayer com main aspx destination You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person that is subject to Form 1099 reporting if any of the following apply. Taxslayer com main aspx destination The U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person has not provided its taxpayer identification number (TIN) in the manner required. Taxslayer com main aspx destination The IRS notifies you that the TIN furnished by the payee is incorrect. Taxslayer com main aspx destination There has been a notified payee underreporting. Taxslayer com main aspx destination There has been a payee certification failure. Taxslayer com main aspx destination In most cases, a TIN must be provided by a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Taxslayer com main aspx destination A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person. Taxslayer com main aspx destination For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person subject to Form 1099 reporting. Taxslayer com main aspx destination See Identifying the Payee , later, for more information. Taxslayer com main aspx destination Also see Section S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Wages paid to employees. Taxslayer com main aspx destination   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Taxslayer com main aspx destination See Pay for Personal Services Performed , later. Taxslayer com main aspx destination Effectively connected income by partnerships. Taxslayer com main aspx destination   A withholding agent that is a partnership (whether U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination or foreign) is also responsible for withholding on its income effectively connected with a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination trade or business that is allocable to foreign partners. Taxslayer com main aspx destination See Partnership Withholding on Effectively Connected Income , later, for more information. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination real property interest. Taxslayer com main aspx destination   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination real property interest to a shareholder, partner, or beneficiary that is a foreign person. Taxslayer com main aspx destination See U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Real Property Interest , later. Taxslayer com main aspx destination Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Taxslayer com main aspx destination It does not apply to payments made to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination persons. Taxslayer com main aspx destination Usually, you determine the payee's status as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination or foreign person based on the documentation that person provides. Taxslayer com main aspx destination See Documentation , later. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination agent of foreign person. Taxslayer com main aspx destination   If you make a payment to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person and you have actual knowledge that the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Taxslayer com main aspx destination However, if the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person and not as a payment to a foreign person. Taxslayer com main aspx destination You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Taxslayer com main aspx destination Disregarded entities. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination The payee of a payment made to a disregarded entity is the owner of the entity. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   If the owner is a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person, you do not apply NRA withholding. Taxslayer com main aspx destination However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Flow-Through Entities The payees of payments (other than income effectively connected with a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Taxslayer com main aspx destination This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Taxslayer com main aspx destination Income that is, or is deemed to be, effectively connected with the conduct of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination trade or business of a flow-through entity is treated as paid to the entity. Taxslayer com main aspx destination All of the following are flow-through entities. Taxslayer com main aspx destination A foreign partnership (other than a withholding foreign partnership). Taxslayer com main aspx destination A foreign simple or foreign grantor trust (other than a withholding foreign trust). Taxslayer com main aspx destination A fiscally transparent entity receiving income for which treaty benefits are claimed. Taxslayer com main aspx destination See Fiscally transparent entity , later. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Taxslayer com main aspx destination You must determine whether the owners or beneficiaries of a flow-through entity are U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination See Documentation and Presumption Rules , later. Taxslayer com main aspx destination Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Taxslayer com main aspx destination Foreign partnerships. Taxslayer com main aspx destination    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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Example 1. Taxslayer com main aspx destination A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen. Taxslayer com main aspx destination You make a payment of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source interest to the partnership. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen. Taxslayer com main aspx destination The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Taxslayer com main aspx destination You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Taxslayer com main aspx destination Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Taxslayer com main aspx destination Report the payment to the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen on Form 1099-INT. Taxslayer com main aspx destination Example 2. Taxslayer com main aspx destination A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Taxslayer com main aspx destination The second partnership has two partners, both nonresident alien individuals. Taxslayer com main aspx destination You make a payment of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source interest to the first partnership. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Taxslayer com main aspx destination The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Example 3. Taxslayer com main aspx destination You make a payment of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source dividends to a withholding foreign partnership. Taxslayer com main aspx destination The partnership has two partners, both foreign corporations. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination You must treat the partnership as the payee of the dividends. Taxslayer com main aspx destination Foreign simple and grantor trust. Taxslayer com main aspx destination   A trust is foreign unless it meets both of the following tests. Taxslayer com main aspx destination A court within the United States is able to exercise primary supervision over the administration of the trust. Taxslayer com main aspx destination One or more U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination persons have the authority to control all substantial decisions of the trust. Taxslayer com main aspx destination   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Taxslayer com main aspx destination A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Taxslayer com main aspx destination   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Taxslayer com main aspx destination The payees of a payment made to a foreign grantor trust are the owners of the trust. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Example. Taxslayer com main aspx destination A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen. Taxslayer com main aspx destination You make a payment of interest to the foreign trust. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Taxslayer com main aspx destination Report the payment to the nonresident aliens on Forms 1042-S. Taxslayer com main aspx destination Report the payment to the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen on Form 1099-INT. Taxslayer com main aspx destination Fiscally transparent entity. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination ). Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Taxslayer com main aspx destination Example. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination A has two interest holders, B and C. Taxslayer com main aspx destination B is a corporation organized under the laws of country Y. Taxslayer com main aspx destination C is a corporation organized under the laws of country Z. Taxslayer com main aspx destination Both countries Y and Z have an income tax treaty in force with the United States. Taxslayer com main aspx destination A receives royalty income from U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination sources that is not effectively connected with the conduct of a trade or business in the United States. Taxslayer com main aspx destination For U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination income tax purposes, A is treated as a partnership. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Accordingly, A is fiscally transparent in its jurisdiction, country X. Taxslayer com main aspx destination B and C are not fiscally transparent under the laws of their respective countries of incorporation. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source royalty income for purposes of the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination -Y income tax treaty. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Therefore, A is not treated as fiscally transparent under the laws of country Z. Taxslayer com main aspx destination Accordingly, C is not treated as deriving its share of the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source royalty income for purposes of the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination -Z income tax treaty. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Taxslayer com main aspx destination A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination You must determine whether the customers or account holders of a foreign intermediary are U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Taxslayer com main aspx destination You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination See Documentation and Presumption Rules , later. Taxslayer com main aspx destination Nonqualified intermediary. Taxslayer com main aspx destination   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Taxslayer com main aspx destination The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Taxslayer com main aspx destination Example. Taxslayer com main aspx destination You make a payment of interest to a foreign bank that is a nonqualified intermediary. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person for whom the bank is collecting the payments. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The account holders are the payees of the interest payment. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person on Form 1099-INT. Taxslayer com main aspx destination Qualified intermediary. Taxslayer com main aspx destination   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination In this situation, the QI is required to withhold the tax. Taxslayer com main aspx destination You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person. Taxslayer com main aspx destination Branches of financial institutions. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination The countries with approved KYC rules are listed on IRS. Taxslayer com main aspx destination gov. Taxslayer com main aspx destination QI withholding agreement. Taxslayer com main aspx destination   Foreign financial institutions and foreign branches of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Taxslayer com main aspx destination   A QI is entitled to certain simplified withholding and reporting rules. Taxslayer com main aspx destination In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Taxslayer com main aspx destination   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Taxslayer com main aspx destination These forms, and the procedures required to obtain a QI withholding agreement are available at www. Taxslayer com main aspx destination irs. Taxslayer com main aspx destination gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Taxslayer com main aspx destination Documentation. Taxslayer com main aspx destination   A QI is not required to forward documentation obtained from foreign account holders to the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination withholding agent from whom the QI receives a payment of U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination source income. Taxslayer com main aspx destination The QI maintains such documentation at its location and provides the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination withholding agent with withholding rate pools. Taxslayer com main aspx destination A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Taxslayer com main aspx destination   A QI is required to provide the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination withholding agent with information regarding U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Form 1042-S reporting. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Taxslayer com main aspx destination Collective refund procedures. Taxslayer com main aspx destination   A QI may seek a refund on behalf of its direct account holders. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branches of foreign banks and foreign insurance companies. Taxslayer com main aspx destination   Special rules apply to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Taxslayer com main aspx destination If you agree to treat the branch as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person, you may treat the branch as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch on which the agreement is evidenced. Taxslayer com main aspx destination If you treat the branch as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination payee, you are not required to withhold. Taxslayer com main aspx destination Even though you agree to treat the branch as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person, you must report the payment on Form 1042-S. Taxslayer com main aspx destination   A financial institution organized in a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination possession is treated as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch. Taxslayer com main aspx destination The special rules discussed in this section apply to a possessions financial institution. Taxslayer com main aspx destination   If you are paying a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person for amounts subject to NRA withholding. Taxslayer com main aspx destination Consequently, amounts not subject to NRA withholding that are paid to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch are not subject to Form 1099 reporting or backup withholding. Taxslayer com main aspx destination   Alternatively, a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination See Nonqualified Intermediaries under  Documentation, later. Taxslayer com main aspx destination   If the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Withholding foreign partnership and foreign trust. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination WP and WT withholding agreements. Taxslayer com main aspx destination   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Taxslayer com main aspx destination Also see the following items. Taxslayer com main aspx destination Revenue Procedure 2004-21. Taxslayer com main aspx destination Revenue Procedure 2005-77. Taxslayer com main aspx destination Employer identification number (EIN). Taxslayer com main aspx destination   A completed Form SS-4 must be submitted with the application for being a WP or WT. Taxslayer com main aspx destination The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Taxslayer com main aspx destination Documentation. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The Form W-8IMY must contain the WP-EIN or WT-EIN. Taxslayer com main aspx destination Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person. Taxslayer com main aspx destination It also includes a foreign branch of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination financial institution if the foreign branch is a qualified intermediary. Taxslayer com main aspx destination In most cases, the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch of a foreign corporation or partnership is treated as a foreign person. Taxslayer com main aspx destination Nonresident alien. Taxslayer com main aspx destination   A nonresident alien is an individual who is not a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen or a resident alien. Taxslayer com main aspx destination A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Taxslayer com main aspx destination Married to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen or resident alien. Taxslayer com main aspx destination   Nonresident alien individuals married to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Taxslayer com main aspx destination However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Taxslayer com main aspx destination Wages paid to these individuals are subject to graduated withholding. Taxslayer com main aspx destination See Wages Paid to Employees—Graduated Withholding . Taxslayer com main aspx destination Resident alien. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination Green card test. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Taxslayer com main aspx destination Substantial presence test. Taxslayer com main aspx destination An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination This exception is for a limited period of time. Taxslayer com main aspx destination   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Taxslayer com main aspx destination Note. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Taxslayer com main aspx destination Resident of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination possession. Taxslayer com main aspx destination   A bona fide resident of Puerto Rico, the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination citizen or a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination national is treated as a nonresident alien for the withholding rules explained here. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Possessions. Taxslayer com main aspx destination Foreign corporations. Taxslayer com main aspx destination   A foreign corporation is one that does not fit the definition of a domestic corporation. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Guam or Northern Mariana Islands corporations. Taxslayer com main aspx destination   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). Taxslayer com main aspx destination Note. Taxslayer com main aspx destination   The provisions discussed below under U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Virgin Islands and American Samoa corporations. Taxslayer com main aspx destination   A corporation created or organized in, or under the laws of, the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Taxslayer com main aspx destination Foreign private foundations. Taxslayer com main aspx destination   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Other foreign organizations, associations, and charitable institutions. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branches of foreign persons. Taxslayer com main aspx destination   In most cases, a payment to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch of a foreign person is a payment made to the foreign person. Taxslayer com main aspx destination However, you may treat payments to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination regulatory supervision as payments made to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person, if you and the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Taxslayer com main aspx destination For this purpose, a financial institution organized under the laws of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination possession is treated as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The payee is a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person. Taxslayer com main aspx destination The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Taxslayer com main aspx destination In most cases, you must get the documentation before you make the payment. Taxslayer com main aspx destination The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Taxslayer com main aspx destination See Standards of Knowledge , later. Taxslayer com main aspx destination If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The specific types of documentation are discussed in this section. Taxslayer com main aspx destination However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Section 1446 withholding. Taxslayer com main aspx destination   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Joint owners. Taxslayer com main aspx destination    If you make a payment to joint owners, you need to get documentation from each owner. Taxslayer com main aspx destination Form W-9. Taxslayer com main aspx destination   In most cases, you can treat the payee as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person if the payee gives you a Form W-9. Taxslayer com main aspx destination The Form W-9 can be used only by a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person and must contain the payee's taxpayer identification number (TIN). Taxslayer com main aspx destination If there is more than one owner, you may treat the total amount as paid to a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person if any one of the owners gives you a Form W-9. Taxslayer com main aspx destination See U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Taxpayer Identification Numbers , later. Taxslayer com main aspx destination U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Taxslayer com main aspx destination Form W-8. Taxslayer com main aspx destination   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Taxslayer com main aspx destination Until further notice, you can rely upon Forms W-8 that contain a P. Taxslayer com main aspx destination O. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person and that a street address is available. Taxslayer com main aspx destination You may rely on Forms W-8 for which there is a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination mailing address provided you received the form prior to December 31, 2001. Taxslayer com main aspx destination   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Taxslayer com main aspx destination You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination possession. Taxslayer com main aspx destination Other documentation. Taxslayer com main aspx destination   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Claiming treaty benefits. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Taxslayer com main aspx destination See Fiscally transparent entity discussed earlier under Flow-Through Entities. Taxslayer com main aspx destination   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   The exemptions from, or reduced rates of, U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination tax vary under each treaty. Taxslayer com main aspx destination You must check the provisions of the tax treaty that apply. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Exceptions to TIN requirement. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination Income from marketable securities (discussed next). Taxslayer com main aspx destination Unexpected payments to an individual (discussed under U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Taxpayer Identification Numbers ). Taxslayer com main aspx destination Marketable securities. Taxslayer com main aspx destination   A Form W-8BEN provided to claim treaty benefits does not need a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Taxslayer com main aspx destination For this purpose, income from a marketable security consists of the following items. Taxslayer com main aspx destination Dividends and interest from stocks and debt obligations that are actively traded. Taxslayer com main aspx destination Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Income related to loans of any of the above securities. Taxslayer com main aspx destination Offshore accounts. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination An offshore account is an account maintained at an office or branch of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination or foreign bank or other financial institution at any location outside the United States. Taxslayer com main aspx destination   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Taxslayer com main aspx destination This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Documentary evidence. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination (See Effectively Connected Income , later. Taxslayer com main aspx destination )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Taxslayer com main aspx destination   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination trade or business is subject to withholding under section 1446. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination    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. Taxslayer com main aspx destination Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   See Foreign Governments and Certain Other Foreign Organizations , later. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Taxslayer com main aspx destination Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination Branches for United States Tax Withholding. Taxslayer com main aspx destination   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Taxslayer com main aspx destination 1446-5. Taxslayer com main aspx destination Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Responsibilities. Taxslayer com main aspx destination   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Taxslayer com main aspx destination However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Taxslayer com main aspx destination Instead, it provides you with a withholding statement that contains withholding rate pool information. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination A qualified intermediary is required to provide you with information regarding U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person unless it has assumed Form 1099 reporting and backup withholding responsibility. Taxslayer com main aspx destination For the alternative procedure for providing rate pool information for U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt persons, see the Form W-8IMY instructions. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Taxslayer com main aspx destination Primary responsibility not assumed. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person subject to Form 1099 reporting and/or backup withholding. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Primary NRA withholding responsibility assumed. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Primary NRA and Form 1099 responsibility assumed. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination It is not necessary to associate the payment with withholding rate pools. Taxslayer com main aspx destination Example. Taxslayer com main aspx destination You make a payment of dividends to a QI. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination individual who provides it with a Form W-9. Taxslayer com main aspx destination Each customer is entitled to 20% of the dividend payment. Taxslayer com main aspx destination The QI does not assume any primary withholding responsibility. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination individual. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The part of the payment allocable to the U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination individual (20%) is reportable on Form 1099-DIV. Taxslayer com main aspx destination Smaller partnerships and trusts. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination It is a foreign partnership or foreign simple or grantor trust. Taxslayer com main aspx destination It is a direct account holder of the QI. Taxslayer com main aspx destination It does not have any partner, beneficiary, or owner that is a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person or a pass- through partner, beneficiary, or owner. Taxslayer com main aspx destination   For information on these rules, see section 4A. Taxslayer com main aspx destination 01 of the QI agreement. Taxslayer com main aspx destination This is found in Appendix 3 of Revenue Procedure 2003-64. Taxslayer com main aspx destination Also see Revenue Procedure 2004-21. Taxslayer com main aspx destination Related partnerships and trusts. Taxslayer com main aspx destination    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Taxslayer com main aspx destination It is a foreign partnership or foreign simple or grantor trust. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination For information on these rules, see section 4A. Taxslayer com main aspx destination 02 of the QI agreement. Taxslayer com main aspx destination This is found in Appendix 3 of Revenue Procedure 2003-64. Taxslayer com main aspx destination Also see Revenue Procedure 2005-77. Taxslayer com main aspx destination Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Taxslayer com main aspx destination The NQI, flow-through entity, or U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Taxslayer com main aspx destination A withholding statement must be updated to keep the information accurate prior to each payment. Taxslayer com main aspx destination Withholding statement. Taxslayer com main aspx destination   In most cases, a withholding statement must contain the following information. Taxslayer com main aspx destination The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Taxslayer com main aspx destination The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Taxslayer com main aspx destination The status of the person for whom the documentation has been provided, such as whether the person is a U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination exempt recipient (U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person exempt from Form 1099 reporting), U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt recipient (U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination person subject to Form 1099 reporting), or a foreign person. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch. Taxslayer com main aspx destination The type of recipient the person is, based on the recipient codes used on Form 1042-S. Taxslayer com main aspx destination Information allocating each payment, by income type, to each payee (including U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination exempt and U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt recipients) for whom documentation has been provided. Taxslayer com main aspx destination The rate of withholding that applies to each foreign person to whom a payment is allocated. Taxslayer com main aspx destination A foreign payee's country of residence. Taxslayer com main aspx destination If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Taxslayer com main aspx destination ). Taxslayer com main aspx destination 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. Taxslayer com main aspx destination The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination branch from which the payee will directly receive a payment. Taxslayer com main aspx destination Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Taxslayer com main aspx destination Alternative procedure. Taxslayer com main aspx destination   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Taxslayer com main aspx destination    This alternative procedure cannot be used for payments to U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt recipients. Taxslayer com main aspx destination Therefore, an NQI must always provide you with allocation information for all U. Taxslayer com main aspx destination S. Taxslayer com main aspx destination non-exempt recipients prior to a payment being made. Taxslayer com main aspx destination Pooled withholding information. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination 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. Taxslayer com main aspx destination 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). Taxslayer com main aspx destination 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. Taxslayer com main aspx destination Failure to provide allocation information. Taxslayer com main aspx destination   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. Taxslayer com main aspx destination You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Taxslayer com main aspx destination An NQI is deemed to have f
Print - Click this link to Print this page

Treasury Acquisition Institute

 

Who We Are
The Treasury Acquisition Institute (TAI) was established by the Department of the
Treasury and the Internal Revenue Service in partnerships with other Treasury Bureaus on September 14, 1993.

Our Mission
Our Mission Is to provide ongoing training and development for the Department of the Treasury procurement and acquisition professionals.

1102 Series Acquisition Professionals - OPM 1102 Series Qualification Standard, Treasury Mandatory 1102 Training Regulations, Treasury Acquisition/Business Career Management Handbook, course/curriculum requirements and approved sources to conduct training.

Contracting Officers Representatives (CORs) (formerly COTRs) - Federal Certification Requirements for CORs.

Course Catalog - TAI Course Catalog, registration form and monthly schedule of courses.

Registration, General Information & Policies - Information about how to register, course times, withdrawal/substitution/cancellation policy, dress code, attendance, directions and more.

TAI Staff Directory - Who to contact for assistance.


Questions about the Procurement information on this site, please contact the webmaster.
Contact the Office of Procurement for other Procurement related questions.

Page Last Reviewed or Updated: 09-Sep-2013

The Taxslayer Com Main Aspx Destination

Taxslayer com main aspx destination 3. Taxslayer com main aspx destination   Abandonments Table of Contents You abandon property when you voluntarily and permanently give up possession and use of the property with the intention of ending your ownership but without passing it on to anyone else. Taxslayer com main aspx destination Whether an abandonment has occurred is determined in light of all the facts and circumstances. Taxslayer com main aspx destination You must both show an intention to abandon the property and affirmatively act to abandon the property. Taxslayer com main aspx destination A voluntary conveyance of the property in lieu of foreclosure is not an abandonment and is treated as the exchange of property to satisfy a debt. Taxslayer com main aspx destination For more information, see Sales and Exchanges in Publication 544. Taxslayer com main aspx destination The tax consequences of abandonment of property that secures a debt depend on whether you were personally liable for the debt (recourse debt) or were not personally liable for the debt (nonrecourse debt). Taxslayer com main aspx destination See Publication 544 if you abandoned property that did not secure debt. Taxslayer com main aspx destination This publication only discusses the tax consequences of abandoning property that secured a debt. Taxslayer com main aspx destination Abandonment of property securing recourse debt. Taxslayer com main aspx destination    In most cases, if you abandon property that secures debt for which you are personally liable (recourse debt), you do not have gain or loss until the later foreclosure is completed. Taxslayer com main aspx destination For details on figuring gain or loss on the foreclosure, see chapter 2. Taxslayer com main aspx destination Example 1—abandonment of personal-use property securing recourse debt. Taxslayer com main aspx destination In 2009, Anne purchased a home for $200,000. Taxslayer com main aspx destination She borrowed the entire purchase price, for which she was personally liable, and gave the bank a mortgage on the home. Taxslayer com main aspx destination In 2013, Anne lost her job and was unable to continue making her mortgage loan payments. Taxslayer com main aspx destination Because her mortgage loan balance was $185,000 and the FMV of her home was only $150,000, Anne decided to abandon her home by permanently moving out on August 1, 2013. Taxslayer com main aspx destination Because Anne was personally liable for the debt and the bank did not complete a foreclosure of the property in 2013, Anne has neither gain nor loss in tax year 2013 from abandoning the home. Taxslayer com main aspx destination If the bank sells the house at a foreclosure sale in 2014, Anne will have to figure her gain or nondeductible loss for tax year 2014 as discussed earlier in chapter 2. Taxslayer com main aspx destination Example 2—abandonment of business or investment property securing recourse debt. Taxslayer com main aspx destination In 2009, Sue purchased business property for $200,000. Taxslayer com main aspx destination She borrowed the entire purchase price, for which she was personally liable, and gave the lender a security interest in the property. Taxslayer com main aspx destination In 2013, Sue was unable to continue making her loan payments. Taxslayer com main aspx destination Because her loan balance was $185,000 and the FMV of the property was only $150,000, Sue abandoned the property on August 1, 2013. Taxslayer com main aspx destination Because Sue was personally liable for the debt and the lender did not complete a foreclosure of the property in 2013, Sue has neither gain nor loss in tax year 2013 from abandoning the property. Taxslayer com main aspx destination If the lender sells the property at a foreclosure sale in 2014, Sue will have to figure her gain or deductible loss for tax year 2014 as discussed earlier in chapter 2. Taxslayer com main aspx destination Abandonment of property securing nonrecourse debt. Taxslayer com main aspx destination    If you abandon property that secures debt for which you are not personally liable (nonrecourse debt), the abandonment is treated as a sale or exchange. Taxslayer com main aspx destination   The amount you realize on the abandonment of property that secured nonrecourse debt is the amount of the nonrecourse debt. Taxslayer com main aspx destination If the amount you realize is more than your adjusted basis, then you have a gain. Taxslayer com main aspx destination If your adjusted basis is more than the amount you realize, then you have a loss. Taxslayer com main aspx destination For more information on how to figure gain and loss, see Gain or Loss from Sales or Exchanges in Publication 544. Taxslayer com main aspx destination   Loss from abandonment of business or investment property is deductible as a loss. Taxslayer com main aspx destination The character of the loss depends on the character of the property. Taxslayer com main aspx destination The amount of deductible capital loss may be limited. Taxslayer com main aspx destination For more information, see Treatment of Capital Losses in Publication 544. Taxslayer com main aspx destination You cannot deduct any loss from abandonment of your home or other property held for personal use. Taxslayer com main aspx destination Example 1—abandonment of personal-use property securing nonrecourse debt. Taxslayer com main aspx destination In 2009, Timothy purchased a home for $200,000. Taxslayer com main aspx destination He borrowed the entire purchase price, for which he was not personally liable, and gave the bank a mortgage on the home. Taxslayer com main aspx destination In 2013, Timothy lost his job and was unable to continue making his mortgage loan payments. Taxslayer com main aspx destination Because his mortgage loan balance was $185,000 and the FMV of his home was only $150,000, Timothy decided to abandon his home by permanently moving out on August 1, 2013. Taxslayer com main aspx destination Because Timothy was not personally liable for the debt, the abandonment is treated as a sale or exchange of the home in tax year 2013. Taxslayer com main aspx destination Timothy's amount realized is $185,000 and his adjusted basis in the home is $200,000. Taxslayer com main aspx destination Timothy has a $15,000 nondeductible loss in tax year 2013. Taxslayer com main aspx destination (Had Timothy’s adjusted basis been less than the amount realized, Timothy would have had a gain that he would have to include in gross income. Taxslayer com main aspx destination ) The bank sells the house at a foreclosure sale in 2014. Taxslayer com main aspx destination Timothy has neither gain nor loss from the foreclosure sale. Taxslayer com main aspx destination Because he was not personally liable for the debt, he also has no cancellation of debt income. Taxslayer com main aspx destination Example 2—abandonment of business or investment property securing nonrecourse debt. Taxslayer com main aspx destination In 2009, Robert purchased business property for $200,000. Taxslayer com main aspx destination He borrowed the entire purchase price, for which he was not personally liable, and gave the lender a security interest in the property. Taxslayer com main aspx destination In 2013, Robert was unable to continue making his loan payments. Taxslayer com main aspx destination Because his loan balance was $185,000 and the FMV of the property was only $150,000, Robert decided to abandon the property on August 1, 2013. Taxslayer com main aspx destination Because Robert was not personally liable for the debt, the abandonment is treated as a sale or exchange of the property in tax year 2013. Taxslayer com main aspx destination Robert's amount realized is $185,000 and his adjusted basis in the property is $180,000 (as a result of $20,000 of depreciation deductions on the property). Taxslayer com main aspx destination Robert has a $5,000 gain in tax year 2013. Taxslayer com main aspx destination (Had Robert’s adjusted basis been greater than the amount realized, he would have had a deductible loss. Taxslayer com main aspx destination ) The lender sells the property at a foreclosure sale in 2014. Taxslayer com main aspx destination Robert has neither gain nor loss from the foreclosure sale. Taxslayer com main aspx destination Because he was not personally liable for the debt, he also has no cancellation of debt income. Taxslayer com main aspx destination Canceled debt. Taxslayer com main aspx destination    If the abandoned property secures a debt for which you are personally liable and the debt is canceled, you will realize ordinary income equal to the canceled debt. Taxslayer com main aspx destination This income is separate from any amount realized from abandonment of the property. Taxslayer com main aspx destination You must report this income on your return unless one of the exceptions or exclusions described in chapter 1 applies. Taxslayer com main aspx destination See chapter 1 for more details. Taxslayer com main aspx destination Forms 1099-A and 1099-C. Taxslayer com main aspx destination    In most cases, if you abandon real property (such as a home), intangible property, or tangible personal property held (wholly or partly) for use in a trade or business or for investment, that secures a loan and the lender knows the property has been abandoned, the lender should send you Form 1099-A showing information you need to figure your gain or loss from the abandonment. Taxslayer com main aspx destination Also, if your debt is canceled and the lender must file Form 1099-C, the lender can include the information about the abandonment on that form instead of on Form 1099-A. Taxslayer com main aspx destination The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. Taxslayer com main aspx destination For abandonments of property and debt cancellations occurring in 2013, these forms should be sent to you by January 31, 2014. Taxslayer com main aspx destination Prev  Up  Next   Home   More Online Publications