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File 2009 Tax Return Online Free

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File 2009 Tax Return Online Free

File 2009 tax return online free 2. File 2009 tax return online free   Employees' Pay Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Tests for Deducting PayTest 1—Reasonableness Test 2—For Services Performed Kinds of PayAwards Bonuses Education Expenses Fringe Benefits Loans or Advances Property Reimbursements for Business Expenses Sick and Vacation Pay Introduction You can generally deduct the amount you pay your employees for the services they perform. File 2009 tax return online free The pay may be in cash, property, or services. File 2009 tax return online free It may include wages, salaries, bonuses, commissions, or other non-cash compensation such as vacation allowances and fringe benefits. File 2009 tax return online free For information about deducting employment taxes, see chapter 5. File 2009 tax return online free You can claim employment credits, such as the following, if you hire individuals who meet certain requirements. File 2009 tax return online free Empowerment zone employment credit (Form 8844). File 2009 tax return online free Indian employment credit (Form 8845). File 2009 tax return online free Work opportunity credit (Form 5884). File 2009 tax return online free Credit for employer differential wage payments (Form 8932). File 2009 tax return online free Reduce your deduction for employee wages by the amount of employment credits you claim. File 2009 tax return online free For more information about these credits, see the form on which the credit is claimed. File 2009 tax return online free Topics - This chapter discusses: Tests for deducting pay Kinds of pay Useful Items - You may want to see: Publication 15 (Circular E), Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits See chapter 12 for information about getting publications and forms. File 2009 tax return online free Tests for Deducting Pay To be deductible, your employees' pay must be an ordinary and necessary business expense and you must pay or incur it. File 2009 tax return online free These and other requirements that apply to all business expenses are explained in chapter 1. File 2009 tax return online free In addition, the pay must meet both of the following tests. File 2009 tax return online free Test 1. File 2009 tax return online free It must be reasonable. File 2009 tax return online free Test 2. File 2009 tax return online free It must be for services performed. File 2009 tax return online free The form or method of figuring the pay does not affect its deductibility. File 2009 tax return online free For example, bonuses and commissions based on sales or earnings, and paid under an agreement made before the services were performed, are both deductible. File 2009 tax return online free Test 1—Reasonableness You must be able to prove that the pay is reasonable. File 2009 tax return online free Whether the pay is reasonable depends on the circumstances that existed when you contracted for the services, not those that exist when reasonableness is questioned. File 2009 tax return online free If the pay is excessive, the excess pay is disallowed as a deduction. File 2009 tax return online free Factors to consider. File 2009 tax return online free   Determine the reasonableness of pay by the facts and circumstances. File 2009 tax return online free Generally, reasonable pay is the amount that a similar business would pay for the same or similar services. File 2009 tax return online free   To determine if pay is reasonable, also consider the following items and any other pertinent facts. File 2009 tax return online free The duties performed by the employee. File 2009 tax return online free The volume of business handled. File 2009 tax return online free The character and amount of responsibility. File 2009 tax return online free The complexities of your business. File 2009 tax return online free The amount of time required. File 2009 tax return online free The cost of living in the locality. File 2009 tax return online free The ability and achievements of the individual employee performing the service. File 2009 tax return online free The pay compared with the gross and net income of the business, as well as with distributions to shareholders if the business is a corporation. File 2009 tax return online free Your policy regarding pay for all your employees. File 2009 tax return online free The history of pay for each employee. File 2009 tax return online free Test 2—For Services Performed You must be able to prove the payment was made for services actually performed. File 2009 tax return online free Employee-shareholder salaries. File 2009 tax return online free   If a corporation pays an employee who is also a shareholder a salary that is unreasonably high considering the services actually performed, the excessive part of the salary may be treated as a constructive dividend to the employee-shareholder. File 2009 tax return online free The excessive part of the salary would not be allowed as a salary deduction by the corporation. File 2009 tax return online free For more information on corporate distributions to shareholders, see Publication 542, Corporations. File 2009 tax return online free Kinds of Pay Some of the ways you may provide pay to your employees in addition to regular wages or salaries are discussed next. File 2009 tax return online free For specialized and detailed information on employees' pay and the employment tax treatment of employees' pay, see Publications 15, 15-A, and 15-B. File 2009 tax return online free Awards You can generally deduct amounts you pay to your employees as awards, whether paid in cash or property. File 2009 tax return online free If you give property to an employee as an employee achievement award, your deduction may be limited. File 2009 tax return online free Achievement awards. File 2009 tax return online free   An achievement award is an item of tangible personal property that meets all the following requirements. File 2009 tax return online free It is given to an employee for length of service or safety achievement. File 2009 tax return online free It is awarded as part of a meaningful presentation. File 2009 tax return online free It is awarded under conditions and circumstances that do not create a significant likelihood of disguised pay. File 2009 tax return online free Length-of-service award. File 2009 tax return online free    An award will qualify as a length-of-service award only if either of the following applies. File 2009 tax return online free The employee receives the award after his or her first 5 years of employment. File 2009 tax return online free The employee did not receive another length-of-service award (other than one of very small value) during the same year or in any of the prior 4 years. File 2009 tax return online free Safety achievement award. File 2009 tax return online free    An award for safety achievement will qualify as an achievement award unless one of the following applies. File 2009 tax return online free It is given to a manager, administrator, clerical employee, or other professional employee. File 2009 tax return online free During the tax year, more than 10% of your employees, excluding those listed in (1), have already received a safety achievement award (other than one of very small value). File 2009 tax return online free Deduction limit. File 2009 tax return online free   Your deduction for the cost of employee achievement awards given to any one employee during the tax year is limited to the following. File 2009 tax return online free $400 for awards that are not qualified plan awards. File 2009 tax return online free $1,600 for all awards, whether or not qualified plan awards. File 2009 tax return online free   A qualified plan award is an achievement award given as part of an established written plan or program that does not favor highly compensated employees as to eligibility or benefits. File 2009 tax return online free   A highly compensated employee is an employee who meets either of the following tests. File 2009 tax return online free The employee was a 5% owner at any time during the year or the preceding year. File 2009 tax return online free The employee received more than $115,000 in pay for the preceding year. File 2009 tax return online free You can choose to ignore test (2) if the employee was not also in the top 20% of employees ranked by pay for the preceding year. File 2009 tax return online free   An award is not a qualified plan award if the average cost of all the employee achievement awards given during the tax year (that would be qualified plan awards except for this limit) is more than $400. File 2009 tax return online free To figure this average cost, ignore awards of nominal value. File 2009 tax return online free Deduct achievement awards as a nonwage business expense on your return or business schedule. File 2009 tax return online free You may not owe employment taxes on the value of some achievement awards you provide to an employee. File 2009 tax return online free See Publication 15-B. File 2009 tax return online free Bonuses You can generally deduct a bonus paid to an employee if you intended the bonus as additional pay for services, not as a gift, and the services were performed. File 2009 tax return online free However, the total bonuses, salaries, and other pay must be reasonable for the services performed. File 2009 tax return online free If the bonus is paid in property, see Property , later. File 2009 tax return online free Gifts of nominal value. File 2009 tax return online free    If, to promote employee goodwill, you distribute food or merchandise of nominal value to your employees at holidays, you can deduct the cost of these items as a nonwage business expense. File 2009 tax return online free Your deduction for de minimis gifts of food or drink are not subject to the 50% deduction limit that generally applies to meals. File 2009 tax return online free For more information on this deduction limit, see Meals and lodging , later. File 2009 tax return online free Education Expenses If you pay or reimburse education expenses for an employee, you can deduct the payments if they are part of a qualified educational assistance program. File 2009 tax return online free Deduct them on the “Employee benefit programs” or other appropriate line of your tax return. File 2009 tax return online free For information on educational assistance programs, see Educational Assistance in section 2 of Publication 15-B. File 2009 tax return online free Fringe Benefits A fringe benefit is a form of pay for the performance of services. File 2009 tax return online free You can generally deduct the cost of fringe benefits. File 2009 tax return online free You may be able to exclude all or part of the value of some fringe benefits from your employees' pay. File 2009 tax return online free You also may not owe employment taxes on the value of the fringe benefits. File 2009 tax return online free See Table 2-1, Special Rules for Various Types of Fringe Benefits, in Publication 15-B for details. File 2009 tax return online free Your deduction for the cost of fringe benefits for activities generally considered entertainment, amusement, or recreation, or for a facility used in connection with such an activity (for example, a company aircraft) for certain officers, directors, and more-than-10% shareholders is limited. File 2009 tax return online free Certain fringe benefits are discussed next. File 2009 tax return online free See Publication 15-B for more details on these and other fringe benefits. File 2009 tax return online free Meals and lodging. File 2009 tax return online free   You can usually deduct the cost of furnishing meals and lodging to your employees. File 2009 tax return online free Deduct the cost in whatever category the expense falls. File 2009 tax return online free For example, if you operate a restaurant, deduct the cost of the meals you furnish to employees as part of the cost of goods sold. File 2009 tax return online free If you operate a nursing home, motel, or rental property, deduct the cost of furnishing lodging to an employee as expenses for utilities, linen service, salaries, depreciation, etc. File 2009 tax return online free Deduction limit on meals. File 2009 tax return online free   You can generally deduct only 50% of the cost of furnishing meals to your employees. File 2009 tax return online free However, you can deduct the full cost of the following meals. File 2009 tax return online free Meals whose value you include in an employee's wages. File 2009 tax return online free Meals that qualify as a de minimis fringe benefit as discussed in section 2 of Publication 15-B. File 2009 tax return online free This generally includes meals you furnish to employees at your place of business if more than half of these employees are provided the meals for your convenience. File 2009 tax return online free Meals you furnish to your employees at the work site when you operate a restaurant or catering service. File 2009 tax return online free Meals you furnish to your employees as part of the expense of providing recreational or social activities, such as a company picnic. File 2009 tax return online free Meals you are required by federal law to furnish to crew members of certain commercial vessels (or would be required to furnish if the vessels were operated at sea). File 2009 tax return online free This does not include meals you furnish on vessels primarily providing luxury water transportation. File 2009 tax return online free Meals you furnish on an oil or gas platform or drilling rig located offshore or in Alaska. File 2009 tax return online free This includes meals you furnish at a support camp that is near and integral to an oil or gas drilling rig located in Alaska. File 2009 tax return online free Employee benefit programs. File 2009 tax return online free   Employee benefit programs include the following. File 2009 tax return online free Accident and health plans. File 2009 tax return online free Adoption assistance. File 2009 tax return online free Cafeteria plans. File 2009 tax return online free Dependent care assistance. File 2009 tax return online free Education assistance. File 2009 tax return online free Life insurance coverage. File 2009 tax return online free Welfare benefit funds. File 2009 tax return online free   You can generally deduct amounts you spend on employee benefit programs on the applicable line of your tax return. File 2009 tax return online free For example, if you provide dependent care by operating a dependent care facility for your employees, deduct your costs in whatever categories they fall (utilities, salaries, etc. File 2009 tax return online free ). File 2009 tax return online free Life insurance coverage. File 2009 tax return online free   You cannot deduct the cost of life insurance coverage for you, an employee, or any person with a financial interest in your business, if you are directly or indirectly the beneficiary of the policy. File 2009 tax return online free See Regulations section 1. File 2009 tax return online free 264-1 for more information. File 2009 tax return online free Welfare benefit funds. File 2009 tax return online free   A welfare benefit fund is a funded plan (or a funded arrangement having the effect of a plan) that provides welfare benefits to your employees, independent contractors, or their beneficiaries. File 2009 tax return online free Welfare benefits are any benefits other than deferred compensation or transfers of restricted property. File 2009 tax return online free   Your deduction for contributions to a welfare benefit fund is limited to the fund's qualified cost for the tax year. File 2009 tax return online free If your contributions to the fund are more than its qualified cost, carry the excess over to the next tax year. File 2009 tax return online free   Generally, the fund's “qualified cost” is the total of the following amounts, reduced by the after-tax income of the fund. File 2009 tax return online free The cost you would have been able to deduct using the cash method of accounting if you had paid for the benefits directly. File 2009 tax return online free The contributions added to a reserve account that are needed to fund claims incurred but not paid as of the end of the year. File 2009 tax return online free These claims can be for supplemental unemployment benefits, severance pay, or disability, medical, or life insurance benefits. File 2009 tax return online free   For more information, see sections 419(c) and 419A of the Internal Revenue Code and the related regulations. File 2009 tax return online free Loans or Advances You generally can deduct as wages an advance you make to an employee for services performed if you do not expect the employee to repay the advance. File 2009 tax return online free However, if the employee performs no services, treat the amount you advanced as a loan. File 2009 tax return online free If the employee does not repay the loan, treat it as income to the employee. File 2009 tax return online free Below-market interest rate loans. File 2009 tax return online free   On certain loans you make to an employee or shareholder, you are treated as having received interest income and as having paid compensation or dividends equal to that interest. File 2009 tax return online free See Below-Market Loans in chapter 4. File 2009 tax return online free Property If you transfer property (including your company's stock) to an employee as payment for services, you can generally deduct it as wages. File 2009 tax return online free The amount you can deduct is the property's fair market value on the date of the transfer less any amount the employee paid for the property. File 2009 tax return online free You can claim the deduction only for the tax year in which your employee includes the property's value in income. File 2009 tax return online free Your employee is deemed to have included the value in income if you report it on Form W-2, Wage and Tax Statement, in a timely manner. File 2009 tax return online free You treat the deductible amount as received in exchange for the property, and you must recognize any gain or loss realized on the transfer, unless it is the company's stock transferred as payment for services. File 2009 tax return online free Your gain or loss is the difference between the fair market value of the property and its adjusted basis on the date of transfer. File 2009 tax return online free These rules also apply to property transferred to an independent contractor for services, generally reported on Form 1099-MISC, Miscellaneous Income. File 2009 tax return online free Restricted property. File 2009 tax return online free   If the property you transfer for services is subject to restrictions that affect its value, you generally cannot deduct it and do not report gain or loss until it is substantially vested in the recipient. File 2009 tax return online free However, if the recipient pays for the property, you must report any gain at the time of the transfer up to the amount paid. File 2009 tax return online free    “Substantially vested” means the property is not subject to a substantial risk of forfeiture. File 2009 tax return online free This means that the recipient is not likely to have to give up his or her rights in the property in the future. File 2009 tax return online free Reimbursements for Business Expenses You can generally deduct the amount you pay or reimburse employees for business expenses incurred for your business. File 2009 tax return online free However, your deduction may be limited. File 2009 tax return online free If you make the payment under an accountable plan, deduct it in the category of the expense paid. File 2009 tax return online free For example, if you pay an employee for travel expenses incurred on your behalf, deduct this payment as a travel expense. File 2009 tax return online free If you make the payment under a nonaccountable plan, deduct it as wages and include it in the employee's Form W-2. File 2009 tax return online free See Reimbursement of Travel, Meals, and Entertainment in chapter 11 for more information about deducting reimbursements and an explanation of accountable and nonaccountable plans. File 2009 tax return online free Sick and Vacation Pay Sick pay. File 2009 tax return online free   You can deduct amounts you pay to your employees for sickness and injury, including lump-sum amounts, as wages. File 2009 tax return online free However, your deduction is limited to amounts not compensated by insurance or other means. File 2009 tax return online free Vacation pay. File 2009 tax return online free   Vacation pay is an employee benefit. File 2009 tax return online free It includes amounts paid for unused vacation leave. File 2009 tax return online free You can deduct vacation pay only in the tax year in which the employee actually receives it. File 2009 tax return online free This rule applies regardless of whether you use the cash or accrual method of accounting. File 2009 tax return online free Prev  Up  Next   Home   More Online Publications
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The File 2009 Tax Return Online Free

File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free Taxpayer Identification NumbersUnexpected payment. File 2009 tax return online free Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. File 2009 tax return online free Electronic reporting. File 2009 tax return online free Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. File 2009 tax return online free S. File 2009 tax return online free Real Property InterestForeign corporations. File 2009 tax return online free Domestic corporations. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free real property holding corporations. File 2009 tax return online free Partnerships. File 2009 tax return online free Trusts and estates. File 2009 tax return online free Domestically controlled QIE. File 2009 tax return online free Late filing of certifications or notices. File 2009 tax return online free Certifications. File 2009 tax return online free Liability of agent or qualified substitute. File 2009 tax return online free Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). File 2009 tax return online free Withholding of Tax In most cases, a foreign person is subject to U. File 2009 tax return online free S. File 2009 tax return online free tax on its U. File 2009 tax return online free S. File 2009 tax return online free source income. File 2009 tax return online free Most types of U. File 2009 tax return online free S. File 2009 tax return online free source income received by a foreign person are subject to U. File 2009 tax return online free S. File 2009 tax return online free tax of 30%. File 2009 tax return online free 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. File 2009 tax return online free The tax is generally withheld (NRA withholding) from the payment made to the foreign person. File 2009 tax return online free 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. File 2009 tax return online free In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. File 2009 tax return online free S. File 2009 tax return online free source income. File 2009 tax return online free Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. File 2009 tax return online free NRA withholding does not include withholding under section 1445 of the Code (see U. File 2009 tax return online free S. File 2009 tax return online free Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). File 2009 tax return online free A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. File 2009 tax return online free However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. File 2009 tax return online free S. File 2009 tax return online free person is not required to withhold. File 2009 tax return online free 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. File 2009 tax return online free Withholding Agent You are a withholding agent if you are a U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free branch of certain foreign banks and insurance companies. File 2009 tax return online free 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. File 2009 tax return online free Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. File 2009 tax return online free In most cases, the U. File 2009 tax return online free S. File 2009 tax return online free person who pays an amount subject to NRA withholding is the person responsible for withholding. File 2009 tax return online free However, other persons may be required to withhold. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Liability for tax. File 2009 tax return online free   As a withholding agent, you are personally liable for any tax required to be withheld. File 2009 tax return online free This liability is independent of the tax liability of the foreign person to whom the payment is made. File 2009 tax return online free If you fail to withhold and the foreign payee fails to satisfy its U. File 2009 tax return online free S. File 2009 tax return online free tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. File 2009 tax return online free   The applicable tax will be collected only once. File 2009 tax return online free If the foreign person satisfies its U. File 2009 tax return online free S. File 2009 tax return online free tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. File 2009 tax return online free Determination of amount to withhold. File 2009 tax return online free   You must withhold on the gross amount subject to NRA withholding. File 2009 tax return online free You cannot reduce the gross amount by any deductions. File 2009 tax return online free However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. File 2009 tax return online free   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. File 2009 tax return online free In no case, however, should you withhold more than 30% of the total amount paid. File 2009 tax return online free Or, you may make a reasonable estimate of the amount from U. File 2009 tax return online free S. File 2009 tax return online free sources and put a corresponding part of the amount due in escrow until the amount from U. File 2009 tax return online free S. File 2009 tax return online free sources can be determined, at which time withholding becomes due. File 2009 tax return online free When to withhold. File 2009 tax return online free   Withholding is required at the time you make a payment of an amount subject to withholding. File 2009 tax return online free 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. File 2009 tax return online free A payment is considered made to a person if it is paid for that person's benefit. File 2009 tax return online free 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. File 2009 tax return online free A payment also is considered made to a person if it is made to that person's agent. File 2009 tax return online free   A U. File 2009 tax return online free S. File 2009 tax return online free partnership should withhold when any distributions that include amounts subject to withholding are made. File 2009 tax return online free However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. File 2009 tax return online free A U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free To the extent a U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free (See Returns Required , later. File 2009 tax return online free ) 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. File 2009 tax return online free Form 1099 reporting and backup withholding. File 2009 tax return online free    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. File 2009 tax return online free S. File 2009 tax return online free person. File 2009 tax return online free You must withhold 28% (backup withholding rate) from a reportable payment made to a U. File 2009 tax return online free S. File 2009 tax return online free person that is subject to Form 1099 reporting if any of the following apply. File 2009 tax return online free The U. File 2009 tax return online free S. File 2009 tax return online free person has not provided its taxpayer identification number (TIN) in the manner required. File 2009 tax return online free The IRS notifies you that the TIN furnished by the payee is incorrect. File 2009 tax return online free There has been a notified payee underreporting. File 2009 tax return online free There has been a payee certification failure. File 2009 tax return online free In most cases, a TIN must be provided by a U. File 2009 tax return online free S. File 2009 tax return online free non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. File 2009 tax return online free A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person. File 2009 tax return online free For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. File 2009 tax return online free S. File 2009 tax return online free person subject to Form 1099 reporting. File 2009 tax return online free See Identifying the Payee , later, for more information. File 2009 tax return online free Also see Section S. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Wages paid to employees. File 2009 tax return online free   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. File 2009 tax return online free See Pay for Personal Services Performed , later. File 2009 tax return online free Effectively connected income by partnerships. File 2009 tax return online free   A withholding agent that is a partnership (whether U. File 2009 tax return online free S. File 2009 tax return online free or foreign) is also responsible for withholding on its income effectively connected with a U. File 2009 tax return online free S. File 2009 tax return online free trade or business that is allocable to foreign partners. File 2009 tax return online free See Partnership Withholding on Effectively Connected Income , later, for more information. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free real property interest. File 2009 tax return online free   A withholding agent also may be responsible for withholding if a foreign person transfers a U. File 2009 tax return online free S. File 2009 tax return online free real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. File 2009 tax return online free S. File 2009 tax return online free real property interest to a shareholder, partner, or beneficiary that is a foreign person. File 2009 tax return online free See U. File 2009 tax return online free S. File 2009 tax return online free Real Property Interest , later. File 2009 tax return online free Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. File 2009 tax return online free It does not apply to payments made to U. File 2009 tax return online free S. File 2009 tax return online free persons. File 2009 tax return online free Usually, you determine the payee's status as a U. File 2009 tax return online free S. File 2009 tax return online free or foreign person based on the documentation that person provides. File 2009 tax return online free See Documentation , later. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free However, there are situations in which the payee is a person other than the one to whom you actually make a payment. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free agent of foreign person. File 2009 tax return online free   If you make a payment to a U. File 2009 tax return online free S. File 2009 tax return online free person and you have actual knowledge that the U. File 2009 tax return online free S. File 2009 tax return online free person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. File 2009 tax return online free However, if the U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free S. File 2009 tax return online free person and not as a payment to a foreign person. File 2009 tax return online free You may be required to report the payment on Form 1099 and, if applicable, backup withhold. File 2009 tax return online free Disregarded entities. File 2009 tax return online free   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. File 2009 tax return online free The payee of a payment made to a disregarded entity is the owner of the entity. File 2009 tax return online free   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. File 2009 tax return online free   If the owner is a U. File 2009 tax return online free S. File 2009 tax return online free person, you do not apply NRA withholding. File 2009 tax return online free However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. File 2009 tax return online free 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. File 2009 tax return online free Flow-Through Entities The payees of payments (other than income effectively connected with a U. File 2009 tax return online free S. File 2009 tax return online free trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. File 2009 tax return online free This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. File 2009 tax return online free Income that is, or is deemed to be, effectively connected with the conduct of a U. File 2009 tax return online free S. File 2009 tax return online free trade or business of a flow-through entity is treated as paid to the entity. File 2009 tax return online free All of the following are flow-through entities. File 2009 tax return online free A foreign partnership (other than a withholding foreign partnership). File 2009 tax return online free A foreign simple or foreign grantor trust (other than a withholding foreign trust). File 2009 tax return online free A fiscally transparent entity receiving income for which treaty benefits are claimed. File 2009 tax return online free See Fiscally transparent entity , later. File 2009 tax return online free 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. File 2009 tax return online free You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. File 2009 tax return online free You must determine whether the owners or beneficiaries of a flow-through entity are U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free See Documentation and Presumption Rules , later. File 2009 tax return online free Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. File 2009 tax return online free Foreign partnerships. File 2009 tax return online free    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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Example 1. File 2009 tax return online free A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. File 2009 tax return online free S. File 2009 tax return online free citizen. File 2009 tax return online free You make a payment of U. File 2009 tax return online free S. File 2009 tax return online free source interest to the partnership. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free citizen. File 2009 tax return online free The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. File 2009 tax return online free You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. File 2009 tax return online free Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. File 2009 tax return online free Report the payment to the U. File 2009 tax return online free S. File 2009 tax return online free citizen on Form 1099-INT. File 2009 tax return online free Example 2. File 2009 tax return online free A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. File 2009 tax return online free The second partnership has two partners, both nonresident alien individuals. File 2009 tax return online free You make a payment of U. File 2009 tax return online free S. File 2009 tax return online free source interest to the first partnership. File 2009 tax return online free 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. File 2009 tax return online free In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. File 2009 tax return online free The Forms W-8IMY from the partnerships have complete withholding statements associated with them. File 2009 tax return online free 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. File 2009 tax return online free Example 3. File 2009 tax return online free You make a payment of U. File 2009 tax return online free S. File 2009 tax return online free source dividends to a withholding foreign partnership. File 2009 tax return online free The partnership has two partners, both foreign corporations. File 2009 tax return online free 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. File 2009 tax return online free You must treat the partnership as the payee of the dividends. File 2009 tax return online free Foreign simple and grantor trust. File 2009 tax return online free   A trust is foreign unless it meets both of the following tests. File 2009 tax return online free A court within the United States is able to exercise primary supervision over the administration of the trust. File 2009 tax return online free One or more U. File 2009 tax return online free S. File 2009 tax return online free persons have the authority to control all substantial decisions of the trust. File 2009 tax return online free   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. File 2009 tax return online free A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. File 2009 tax return online free   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. File 2009 tax return online free The payees of a payment made to a foreign grantor trust are the owners of the trust. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Example. File 2009 tax return online free A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. File 2009 tax return online free S. File 2009 tax return online free citizen. File 2009 tax return online free You make a payment of interest to the foreign trust. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free citizen. File 2009 tax return online free 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. File 2009 tax return online free You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. File 2009 tax return online free Report the payment to the nonresident aliens on Forms 1042-S. File 2009 tax return online free Report the payment to the U. File 2009 tax return online free S. File 2009 tax return online free citizen on Form 1099-INT. File 2009 tax return online free Fiscally transparent entity. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free ). File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. File 2009 tax return online free Example. File 2009 tax return online free 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. File 2009 tax return online free A has two interest holders, B and C. File 2009 tax return online free B is a corporation organized under the laws of country Y. File 2009 tax return online free C is a corporation organized under the laws of country Z. File 2009 tax return online free Both countries Y and Z have an income tax treaty in force with the United States. File 2009 tax return online free A receives royalty income from U. File 2009 tax return online free S. File 2009 tax return online free sources that is not effectively connected with the conduct of a trade or business in the United States. File 2009 tax return online free For U. File 2009 tax return online free S. File 2009 tax return online free income tax purposes, A is treated as a partnership. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Accordingly, A is fiscally transparent in its jurisdiction, country X. File 2009 tax return online free B and C are not fiscally transparent under the laws of their respective countries of incorporation. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free source royalty income for purposes of the U. File 2009 tax return online free S. File 2009 tax return online free -Y income tax treaty. File 2009 tax return online free 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. File 2009 tax return online free Therefore, A is not treated as fiscally transparent under the laws of country Z. File 2009 tax return online free Accordingly, C is not treated as deriving its share of the U. File 2009 tax return online free S. File 2009 tax return online free source royalty income for purposes of the U. File 2009 tax return online free S. File 2009 tax return online free -Z income tax treaty. File 2009 tax return online free 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. File 2009 tax return online free This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. File 2009 tax return online free 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. File 2009 tax return online free An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. File 2009 tax return online free A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. File 2009 tax return online free 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. File 2009 tax return online free You must determine whether the customers or account holders of a foreign intermediary are U. File 2009 tax return online free S. File 2009 tax return online free or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. File 2009 tax return online free You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. File 2009 tax return online free 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. File 2009 tax return online free See Documentation and Presumption Rules , later. File 2009 tax return online free Nonqualified intermediary. File 2009 tax return online free   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. File 2009 tax return online free The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. File 2009 tax return online free Example. File 2009 tax return online free You make a payment of interest to a foreign bank that is a nonqualified intermediary. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person for whom the bank is collecting the payments. File 2009 tax return online free 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. File 2009 tax return online free The account holders are the payees of the interest payment. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person on Form 1099-INT. File 2009 tax return online free Qualified intermediary. File 2009 tax return online free   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. File 2009 tax return online free S. File 2009 tax return online free intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. File 2009 tax return online free 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. File 2009 tax return online free In this situation, the QI is required to withhold the tax. File 2009 tax return online free You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person. File 2009 tax return online free Branches of financial institutions. File 2009 tax return online free   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. File 2009 tax return online free The countries with approved KYC rules are listed on IRS. File 2009 tax return online free gov. File 2009 tax return online free QI withholding agreement. File 2009 tax return online free   Foreign financial institutions and foreign branches of U. File 2009 tax return online free S. File 2009 tax return online free financial institutions can enter into an agreement with the IRS to be a qualified intermediary. File 2009 tax return online free   A QI is entitled to certain simplified withholding and reporting rules. File 2009 tax return online free In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. File 2009 tax return online free   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. File 2009 tax return online free These forms, and the procedures required to obtain a QI withholding agreement are available at www. File 2009 tax return online free irs. File 2009 tax return online free gov/Businesses/Corporations/Qualified-Intermediaries-(QI). File 2009 tax return online free Documentation. File 2009 tax return online free   A QI is not required to forward documentation obtained from foreign account holders to the U. File 2009 tax return online free S. File 2009 tax return online free withholding agent from whom the QI receives a payment of U. File 2009 tax return online free S. File 2009 tax return online free source income. File 2009 tax return online free The QI maintains such documentation at its location and provides the U. File 2009 tax return online free S. File 2009 tax return online free withholding agent with withholding rate pools. File 2009 tax return online free A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. File 2009 tax return online free   A QI is required to provide the U. File 2009 tax return online free S. File 2009 tax return online free withholding agent with information regarding U. File 2009 tax return online free S. File 2009 tax return online free persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free Form 1042-S reporting. File 2009 tax return online free   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. File 2009 tax return online free Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). File 2009 tax return online free Collective refund procedures. File 2009 tax return online free   A QI may seek a refund on behalf of its direct account holders. File 2009 tax return online free 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. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free branches of foreign banks and foreign insurance companies. File 2009 tax return online free   Special rules apply to a U. File 2009 tax return online free S. File 2009 tax return online free branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. File 2009 tax return online free If you agree to treat the branch as a U. File 2009 tax return online free S. File 2009 tax return online free person, you may treat the branch as a U. File 2009 tax return online free S. File 2009 tax return online free payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. File 2009 tax return online free S. File 2009 tax return online free branch on which the agreement is evidenced. File 2009 tax return online free If you treat the branch as a U. File 2009 tax return online free S. File 2009 tax return online free payee, you are not required to withhold. File 2009 tax return online free Even though you agree to treat the branch as a U. File 2009 tax return online free S. File 2009 tax return online free person, you must report the payment on Form 1042-S. File 2009 tax return online free   A financial institution organized in a U. File 2009 tax return online free S. File 2009 tax return online free possession is treated as a U. File 2009 tax return online free S. File 2009 tax return online free branch. File 2009 tax return online free The special rules discussed in this section apply to a possessions financial institution. File 2009 tax return online free   If you are paying a U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person for amounts subject to NRA withholding. File 2009 tax return online free Consequently, amounts not subject to NRA withholding that are paid to a U. File 2009 tax return online free S. File 2009 tax return online free branch are not subject to Form 1099 reporting or backup withholding. File 2009 tax return online free   Alternatively, a U. File 2009 tax return online free S. File 2009 tax return online free branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. File 2009 tax return online free 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. File 2009 tax return online free See Nonqualified Intermediaries under  Documentation, later. File 2009 tax return online free   If the U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free Withholding foreign partnership and foreign trust. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. File 2009 tax return online free 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. File 2009 tax return online free WP and WT withholding agreements. File 2009 tax return online free   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. File 2009 tax return online free Also see the following items. File 2009 tax return online free Revenue Procedure 2004-21. File 2009 tax return online free Revenue Procedure 2005-77. File 2009 tax return online free Employer identification number (EIN). File 2009 tax return online free   A completed Form SS-4 must be submitted with the application for being a WP or WT. File 2009 tax return online free The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. File 2009 tax return online free Documentation. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free The Form W-8IMY must contain the WP-EIN or WT-EIN. File 2009 tax return online free Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person. File 2009 tax return online free It also includes a foreign branch of a U. File 2009 tax return online free S. File 2009 tax return online free financial institution if the foreign branch is a qualified intermediary. File 2009 tax return online free In most cases, the U. File 2009 tax return online free S. File 2009 tax return online free branch of a foreign corporation or partnership is treated as a foreign person. File 2009 tax return online free Nonresident alien. File 2009 tax return online free   A nonresident alien is an individual who is not a U. File 2009 tax return online free S. File 2009 tax return online free citizen or a resident alien. File 2009 tax return online free A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. File 2009 tax return online free Married to U. File 2009 tax return online free S. File 2009 tax return online free citizen or resident alien. File 2009 tax return online free   Nonresident alien individuals married to U. File 2009 tax return online free S. File 2009 tax return online free citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. File 2009 tax return online free However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. File 2009 tax return online free Wages paid to these individuals are subject to graduated withholding. File 2009 tax return online free See Wages Paid to Employees—Graduated Withholding . File 2009 tax return online free Resident alien. File 2009 tax return online free   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. File 2009 tax return online free Green card test. File 2009 tax return online free 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. File 2009 tax return online free This is known as the green card test because these aliens hold immigrant visas (also known as green cards). File 2009 tax return online free Substantial presence test. File 2009 tax return online free An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free This exception is for a limited period of time. File 2009 tax return online free   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. File 2009 tax return online free Note. File 2009 tax return online free   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. File 2009 tax return online free For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). File 2009 tax return online free Resident of a U. File 2009 tax return online free S. File 2009 tax return online free possession. File 2009 tax return online free   A bona fide resident of Puerto Rico, the U. File 2009 tax return online free S. File 2009 tax return online free Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. File 2009 tax return online free S. File 2009 tax return online free citizen or a U. File 2009 tax return online free S. File 2009 tax return online free national is treated as a nonresident alien for the withholding rules explained here. File 2009 tax return online free 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. File 2009 tax return online free   For more information, see Publication 570, Tax Guide for Individuals With Income From U. File 2009 tax return online free S. File 2009 tax return online free Possessions. File 2009 tax return online free Foreign corporations. File 2009 tax return online free   A foreign corporation is one that does not fit the definition of a domestic corporation. File 2009 tax return online free 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. File 2009 tax return online free Guam or Northern Mariana Islands corporations. File 2009 tax return online free   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). File 2009 tax return online free Note. File 2009 tax return online free   The provisions discussed below under U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free Virgin Islands and American Samoa corporations. File 2009 tax return online free   A corporation created or organized in, or under the laws of, the U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free Virgin Islands, American Samoa, Guam, the CNMI, or the United States. File 2009 tax return online free Foreign private foundations. File 2009 tax return online free   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. File 2009 tax return online free 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. File 2009 tax return online free Other foreign organizations, associations, and charitable institutions. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. File 2009 tax return online free   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. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free branches of foreign persons. File 2009 tax return online free   In most cases, a payment to a U. File 2009 tax return online free S. File 2009 tax return online free branch of a foreign person is a payment made to the foreign person. File 2009 tax return online free However, you may treat payments to U. File 2009 tax return online free S. File 2009 tax return online free branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. File 2009 tax return online free S. File 2009 tax return online free regulatory supervision as payments made to a U. File 2009 tax return online free S. File 2009 tax return online free person, if you and the U. File 2009 tax return online free S. File 2009 tax return online free branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. File 2009 tax return online free For this purpose, a financial institution organized under the laws of a U. File 2009 tax return online free S. File 2009 tax return online free possession is treated as a U. File 2009 tax return online free S. File 2009 tax return online free branch. File 2009 tax return online free 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. File 2009 tax return online free The payee is a U. File 2009 tax return online free S. File 2009 tax return online free person. File 2009 tax return online free The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. File 2009 tax return online free In most cases, you must get the documentation before you make the payment. File 2009 tax return online free The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. File 2009 tax return online free See Standards of Knowledge , later. File 2009 tax return online free If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. File 2009 tax return online free 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. File 2009 tax return online free The specific types of documentation are discussed in this section. File 2009 tax return online free However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. File 2009 tax return online free 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. File 2009 tax return online free Section 1446 withholding. File 2009 tax return online free   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free Joint owners. File 2009 tax return online free    If you make a payment to joint owners, you need to get documentation from each owner. File 2009 tax return online free Form W-9. File 2009 tax return online free   In most cases, you can treat the payee as a U. File 2009 tax return online free S. File 2009 tax return online free person if the payee gives you a Form W-9. File 2009 tax return online free The Form W-9 can be used only by a U. File 2009 tax return online free S. File 2009 tax return online free person and must contain the payee's taxpayer identification number (TIN). File 2009 tax return online free If there is more than one owner, you may treat the total amount as paid to a U. File 2009 tax return online free S. File 2009 tax return online free person if any one of the owners gives you a Form W-9. File 2009 tax return online free See U. File 2009 tax return online free S. File 2009 tax return online free Taxpayer Identification Numbers , later. File 2009 tax return online free U. File 2009 tax return online free S. File 2009 tax return online free persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. File 2009 tax return online free Form W-8. File 2009 tax return online free   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. File 2009 tax return online free Until further notice, you can rely upon Forms W-8 that contain a P. File 2009 tax return online free O. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free person and that a street address is available. File 2009 tax return online free You may rely on Forms W-8 for which there is a U. File 2009 tax return online free S. File 2009 tax return online free mailing address provided you received the form prior to December 31, 2001. File 2009 tax return online free   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. File 2009 tax return online free You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. File 2009 tax return online free S. File 2009 tax return online free possession. File 2009 tax return online free Other documentation. File 2009 tax return online free   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. File 2009 tax return online free 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. File 2009 tax return online free These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. File 2009 tax return online free 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. File 2009 tax return online free Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. File 2009 tax return online free   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. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free Claiming treaty benefits. File 2009 tax return online free   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. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. File 2009 tax return online free See Fiscally transparent entity discussed earlier under Flow-Through Entities. File 2009 tax return online free   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. File 2009 tax return online free 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. File 2009 tax return online free   The exemptions from, or reduced rates of, U. File 2009 tax return online free S. File 2009 tax return online free tax vary under each treaty. File 2009 tax return online free You must check the provisions of the tax treaty that apply. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free Exceptions to TIN requirement. File 2009 tax return online free   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. File 2009 tax return online free Income from marketable securities (discussed next). File 2009 tax return online free Unexpected payments to an individual (discussed under U. File 2009 tax return online free S. File 2009 tax return online free Taxpayer Identification Numbers ). File 2009 tax return online free Marketable securities. File 2009 tax return online free   A Form W-8BEN provided to claim treaty benefits does not need a U. File 2009 tax return online free S. File 2009 tax return online free TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. File 2009 tax return online free For this purpose, income from a marketable security consists of the following items. File 2009 tax return online free Dividends and interest from stocks and debt obligations that are actively traded. File 2009 tax return online free Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). File 2009 tax return online free 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. File 2009 tax return online free Income related to loans of any of the above securities. File 2009 tax return online free Offshore accounts. File 2009 tax return online free   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. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free An offshore account is an account maintained at an office or branch of a U. File 2009 tax return online free S. File 2009 tax return online free or foreign bank or other financial institution at any location outside the United States. File 2009 tax return online free   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. File 2009 tax return online free This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. File 2009 tax return online free 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. File 2009 tax return online free Documentary evidence. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free (See Effectively Connected Income , later. File 2009 tax return online free )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. File 2009 tax return online free   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. File 2009 tax return online free S. File 2009 tax return online free trade or business is subject to withholding under section 1446. File 2009 tax return online free 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. File 2009 tax return online free    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. File 2009 tax return online free Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. File 2009 tax return online free   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. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free   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. File 2009 tax return online free   See Foreign Governments and Certain Other Foreign Organizations , later. File 2009 tax return online free 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. File 2009 tax return online free 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. File 2009 tax return online free The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. File 2009 tax return online free Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. File 2009 tax return online free S. File 2009 tax return online free Branches for United States Tax Withholding. File 2009 tax return online free   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free branch of a foreign bank or insurance company and either is agreeing to be treated as a U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. File 2009 tax return online free 1446-5. File 2009 tax return online free Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. File 2009 tax return online free 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. File 2009 tax return online free The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. File 2009 tax return online free 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. File 2009 tax return online free Responsibilities. File 2009 tax return online free   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. File 2009 tax return online free However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. File 2009 tax return online free Instead, it provides you with a withholding statement that contains withholding rate pool information. File 2009 tax return online free 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. File 2009 tax return online free A qualified intermediary is required to provide you with information regarding U. File 2009 tax return online free S. File 2009 tax return online free persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. File 2009 tax return online free S. File 2009 tax return online free person unless it has assumed Form 1099 reporting and backup withholding responsibility. File 2009 tax return online free For the alternative procedure for providing rate pool information for U. File 2009 tax return online free S. File 2009 tax return online free non-exempt persons, see the Form W-8IMY instructions. File 2009 tax return online free   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. File 2009 tax return online free   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. File 2009 tax return online free Primary responsibility not assumed. File 2009 tax return online free   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. File 2009 tax return online free Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. File 2009 tax return online free S. File 2009 tax return online free person subject to Form 1099 reporting and/or backup withholding. File 2009 tax return online free 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. File 2009 tax return online free Primary NRA withholding responsibility assumed. File 2009 tax return online free   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. File 2009 tax return online free S. File 2009 tax return online free person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. File 2009 tax return online free 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. File 2009 tax return online free Primary NRA and Form 1099 responsibility assumed. File 2009 tax return online free   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. File 2009 tax return online free It is not necessary to associate the payment with withholding rate pools. File 2009 tax return online free Example. File 2009 tax return online free You make a payment of dividends to a QI. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free individual who provides it with a Form W-9. File 2009 tax return online free Each customer is entitled to 20% of the dividend payment. File 2009 tax return online free The QI does not assume any primary withholding responsibility. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free individual. File 2009 tax return online free 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. File 2009 tax return online free The part of the payment allocable to the U. File 2009 tax return online free S. File 2009 tax return online free individual (20%) is reportable on Form 1099-DIV. File 2009 tax return online free Smaller partnerships and trusts. File 2009 tax return online free   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. File 2009 tax return online free It is a foreign partnership or foreign simple or grantor trust. File 2009 tax return online free It is a direct account holder of the QI. File 2009 tax return online free It does not have any partner, beneficiary, or owner that is a U. File 2009 tax return online free S. File 2009 tax return online free person or a pass- through partner, beneficiary, or owner. File 2009 tax return online free   For information on these rules, see section 4A. File 2009 tax return online free 01 of the QI agreement. File 2009 tax return online free This is found in Appendix 3 of Revenue Procedure 2003-64. File 2009 tax return online free Also see Revenue Procedure 2004-21. File 2009 tax return online free Related partnerships and trusts. File 2009 tax return online free    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. File 2009 tax return online free It is a foreign partnership or foreign simple or grantor trust. File 2009 tax return online free 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. File 2009 tax return online free For information on these rules, see section 4A. File 2009 tax return online free 02 of the QI agreement. File 2009 tax return online free This is found in Appendix 3 of Revenue Procedure 2003-64. File 2009 tax return online free Also see Revenue Procedure 2005-77. File 2009 tax return online free Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. File 2009 tax return online free S. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. File 2009 tax return online free The NQI, flow-through entity, or U. File 2009 tax return online free S. File 2009 tax return online free branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. File 2009 tax return online free A withholding statement must be updated to keep the information accurate prior to each payment. File 2009 tax return online free Withholding statement. File 2009 tax return online free   In most cases, a withholding statement must contain the following information. File 2009 tax return online free The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. File 2009 tax return online free The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. File 2009 tax return online free The status of the person for whom the documentation has been provided, such as whether the person is a U. File 2009 tax return online free S. File 2009 tax return online free exempt recipient (U. File 2009 tax return online free S. File 2009 tax return online free person exempt from Form 1099 reporting), U. File 2009 tax return online free S. File 2009 tax return online free non-exempt recipient (U. File 2009 tax return online free S. File 2009 tax return online free person subject to Form 1099 reporting), or a foreign person. File 2009 tax return online free 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. File 2009 tax return online free S. File 2009 tax return online free branch. File 2009 tax return online free The type of recipient the person is, based on the recipient codes used on Form 1042-S. File 2009 tax return online free Information allocating each payment, by income type, to each payee (including U. File 2009 tax return online free S. File 2009 tax return online free exempt and U. File 2009 tax return online free S. File 2009 tax return online free non-exempt recipients) for whom documentation has been provided. File 2009 tax return online free The rate of withholding that applies to each foreign person to whom a payment is allocated. File 2009 tax return online free A foreign payee's country of residence. File 2009 tax return online free If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. File 2009 tax return online free ). File 2009 tax return online free 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. File 2009 tax return online free The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. File 2009 tax return online free S. File 2009 tax return online free branch from which the payee will directly receive a payment. File 2009 tax return online free Any other information a withholding agent requests to fulfill its reporting and withholding obligations. File 2009 tax return online free Alternative procedure. File 2009 tax return online free   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. File 2009 tax return online free S. File 2009 tax return online free exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. File 2009 tax return online free 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. File 2009 tax return online free You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. File 2009 tax return online free    This alternative procedure cannot be used for payments to U. File 2009 tax return online free S. File 2009 tax return online free non-exempt recipients. File 2009 tax return online free Therefore, an NQI must always provide you with allocation information for all U. File 2009 tax return online free S. File 2009 tax return online free non-exempt recipients prior to a payment being made. File 2009 tax return online free Pooled withholding information. File 2009 tax return online free   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. File 2009 tax return online free 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. File 2009 tax return online free 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). File 2009 tax return online free 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. File 2009 tax return online free Failure to provide allocation information. File 2009 tax return online free   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. File 2009 tax return online free You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . File 2009 tax return online free An NQI is deemed to have f