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Online 1040ez Form

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Online 1040ez Form

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The Online 1040ez Form

Online 1040ez form 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. Online 1040ez form S. Online 1040ez form Taxpayer Identification NumbersUnexpected payment. Online 1040ez form Depositing Withheld TaxesWhen Deposits Are Required Adjustment for Overwithholding Returns RequiredJoint owners. Online 1040ez form Electronic reporting. Online 1040ez form Partnership Withholding on Effectively Connected IncomeWho Must Withhold Foreign Partner Publicly Traded Partnerships U. Online 1040ez form S. Online 1040ez form Real Property InterestForeign corporations. Online 1040ez form Domestic corporations. Online 1040ez form U. Online 1040ez form S. Online 1040ez form real property holding corporations. Online 1040ez form Partnerships. Online 1040ez form Trusts and estates. Online 1040ez form Domestically controlled QIE. Online 1040ez form Late filing of certifications or notices. Online 1040ez form Certifications. Online 1040ez form Liability of agent or qualified substitute. Online 1040ez form Reporting and Paying the Tax Withholding Certificates Tax Treaty TablesTable 1 Table 2 Table 3 How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Online 1040ez form Withholding of Tax In most cases, a foreign person is subject to U. Online 1040ez form S. Online 1040ez form tax on its U. Online 1040ez form S. Online 1040ez form source income. Online 1040ez form Most types of U. Online 1040ez form S. Online 1040ez form source income received by a foreign person are subject to U. Online 1040ez form S. Online 1040ez form tax of 30%. Online 1040ez form 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. Online 1040ez form The tax is generally withheld (NRA withholding) from the payment made to the foreign person. Online 1040ez form 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. Online 1040ez form In most cases, NRA withholding describes the withholding regime that requires withholding on a payment of U. Online 1040ez form S. Online 1040ez form source income. Online 1040ez form Payments to foreign persons, including nonresident alien individuals, foreign entities, and governments, may be subject to NRA withholding. Online 1040ez form NRA withholding does not include withholding under section 1445 of the Code (see U. Online 1040ez form S. Online 1040ez form Real Property Interest, later) or under section 1446 of the Code (see Partnership Withholding on Effectively Connected Income , later). Online 1040ez form A withholding agent (defined next) is the person responsible for withholding on payments made to a foreign person. Online 1040ez form However, a withholding agent that can reliably associate the payment with documentation (discussed later) from a U. Online 1040ez form S. Online 1040ez form person is not required to withhold. Online 1040ez form 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. Online 1040ez form Withholding Agent You are a withholding agent if you are a U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form branch of certain foreign banks and insurance companies. Online 1040ez form 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. Online 1040ez form Although several persons may be withholding agents for a single payment, the full tax is required to be withheld only once. Online 1040ez form In most cases, the U. Online 1040ez form S. Online 1040ez form person who pays an amount subject to NRA withholding is the person responsible for withholding. Online 1040ez form However, other persons may be required to withhold. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Liability for tax. Online 1040ez form   As a withholding agent, you are personally liable for any tax required to be withheld. Online 1040ez form This liability is independent of the tax liability of the foreign person to whom the payment is made. Online 1040ez form If you fail to withhold and the foreign payee fails to satisfy its U. Online 1040ez form S. Online 1040ez form tax liability, then both you and the foreign person are liable for tax, as well as interest and any applicable penalties. Online 1040ez form   The applicable tax will be collected only once. Online 1040ez form If the foreign person satisfies its U. Online 1040ez form S. Online 1040ez form tax liability, you are not liable for the tax but remain liable for any interest and penalties for failure to withhold. Online 1040ez form Determination of amount to withhold. Online 1040ez form   You must withhold on the gross amount subject to NRA withholding. Online 1040ez form You cannot reduce the gross amount by any deductions. Online 1040ez form However, see Scholarships and Fellowship Grants and Pay for Personal Services Performed , later, for when a deduction for a personal exemption may be allowed. Online 1040ez form   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. Online 1040ez form In no case, however, should you withhold more than 30% of the total amount paid. Online 1040ez form Or, you may make a reasonable estimate of the amount from U. Online 1040ez form S. Online 1040ez form sources and put a corresponding part of the amount due in escrow until the amount from U. Online 1040ez form S. Online 1040ez form sources can be determined, at which time withholding becomes due. Online 1040ez form When to withhold. Online 1040ez form   Withholding is required at the time you make a payment of an amount subject to withholding. Online 1040ez form 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. Online 1040ez form A payment is considered made to a person if it is paid for that person's benefit. Online 1040ez form 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. Online 1040ez form A payment also is considered made to a person if it is made to that person's agent. Online 1040ez form   A U. Online 1040ez form S. Online 1040ez form partnership should withhold when any distributions that include amounts subject to withholding are made. Online 1040ez form However, if a foreign partner's distributive share of income subject to withholding is not actually distributed, the U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form If the distributable amount consists of effectively connected income, see Partnership Withholding on Effectively Connected Income , later. Online 1040ez form A U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form To the extent a U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form (See Returns Required , later. Online 1040ez form ) 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. Online 1040ez form Form 1099 reporting and backup withholding. Online 1040ez form    You also may be responsible as a payer for reporting on Form 1099 payments made to a U. Online 1040ez form S. Online 1040ez form person. Online 1040ez form You must withhold 28% (backup withholding rate) from a reportable payment made to a U. Online 1040ez form S. Online 1040ez form person that is subject to Form 1099 reporting if any of the following apply. Online 1040ez form The U. Online 1040ez form S. Online 1040ez form person has not provided its taxpayer identification number (TIN) in the manner required. Online 1040ez form The IRS notifies you that the TIN furnished by the payee is incorrect. Online 1040ez form There has been a notified payee underreporting. Online 1040ez form There has been a payee certification failure. Online 1040ez form In most cases, a TIN must be provided by a U. Online 1040ez form S. Online 1040ez form non-exempt recipient on Form W-9, Request for Taxpayer Identification Number and Certification. Online 1040ez form A payer files a tax return on Form 945, Annual Return of Withheld Federal Income Tax, for backup withholding. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person. Online 1040ez form For example, you are required to report income paid to a foreign intermediary or flow-through entity that collects for a U. Online 1040ez form S. Online 1040ez form person subject to Form 1099 reporting. Online 1040ez form See Identifying the Payee , later, for more information. Online 1040ez form Also see Section S. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Wages paid to employees. Online 1040ez form   If you are the employer of a nonresident alien, you generally must withhold taxes at graduated rates. Online 1040ez form See Pay for Personal Services Performed , later. Online 1040ez form Effectively connected income by partnerships. Online 1040ez form   A withholding agent that is a partnership (whether U. Online 1040ez form S. Online 1040ez form or foreign) is also responsible for withholding on its income effectively connected with a U. Online 1040ez form S. Online 1040ez form trade or business that is allocable to foreign partners. Online 1040ez form See Partnership Withholding on Effectively Connected Income , later, for more information. Online 1040ez form U. Online 1040ez form S. Online 1040ez form real property interest. Online 1040ez form   A withholding agent also may be responsible for withholding if a foreign person transfers a U. Online 1040ez form S. Online 1040ez form real property interest to the agent, or if it is a corporation, partnership, trust, or estate that distributes a U. Online 1040ez form S. Online 1040ez form real property interest to a shareholder, partner, or beneficiary that is a foreign person. Online 1040ez form See U. Online 1040ez form S. Online 1040ez form Real Property Interest , later. Online 1040ez form Persons Subject to NRA Withholding NRA withholding applies only to payments made to a payee that is a foreign person. Online 1040ez form It does not apply to payments made to U. Online 1040ez form S. Online 1040ez form persons. Online 1040ez form Usually, you determine the payee's status as a U. Online 1040ez form S. Online 1040ez form or foreign person based on the documentation that person provides. Online 1040ez form See Documentation , later. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form However, there are situations in which the payee is a person other than the one to whom you actually make a payment. Online 1040ez form U. Online 1040ez form S. Online 1040ez form agent of foreign person. Online 1040ez form   If you make a payment to a U. Online 1040ez form S. Online 1040ez form person and you have actual knowledge that the U. Online 1040ez form S. Online 1040ez form person is receiving the payment as an agent of a foreign person, you must treat the payment as made to the foreign person. Online 1040ez form However, if the U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form S. Online 1040ez form person and not as a payment to a foreign person. Online 1040ez form You may be required to report the payment on Form 1099 and, if applicable, backup withhold. Online 1040ez form Disregarded entities. Online 1040ez form   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. Online 1040ez form The payee of a payment made to a disregarded entity is the owner of the entity. Online 1040ez form   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. Online 1040ez form   If the owner is a U. Online 1040ez form S. Online 1040ez form person, you do not apply NRA withholding. Online 1040ez form However, you may be required to report the payment on Form 1099 and, if applicable, backup withhold. Online 1040ez form 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. Online 1040ez form Flow-Through Entities The payees of payments (other than income effectively connected with a U. Online 1040ez form S. Online 1040ez form trade or business) made to a foreign flow-through entity are the owners or beneficiaries of the flow-through entity. Online 1040ez form This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Online 1040ez form Income that is, or is deemed to be, effectively connected with the conduct of a U. Online 1040ez form S. Online 1040ez form trade or business of a flow-through entity is treated as paid to the entity. Online 1040ez form All of the following are flow-through entities. Online 1040ez form A foreign partnership (other than a withholding foreign partnership). Online 1040ez form A foreign simple or foreign grantor trust (other than a withholding foreign trust). Online 1040ez form A fiscally transparent entity receiving income for which treaty benefits are claimed. Online 1040ez form See Fiscally transparent entity , later. Online 1040ez form 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. Online 1040ez form You also may be required to treat the entity as a flow-through entity under the presumption rules, discussed later. Online 1040ez form You must determine whether the owners or beneficiaries of a flow-through entity are U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form See Documentation and Presumption Rules , later. Online 1040ez form Withholding foreign partnerships and withholding foreign trusts are not flow-through entities. Online 1040ez form Foreign partnerships. Online 1040ez form    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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Example 1. Online 1040ez form A nonwithholding foreign partnership has three partners: a nonresident alien individual; a foreign corporation; and a U. Online 1040ez form S. Online 1040ez form citizen. Online 1040ez form You make a payment of U. Online 1040ez form S. Online 1040ez form source interest to the partnership. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form citizen. Online 1040ez form The partnership also gives you a complete withholding statement that enables you to associate a part of the interest payment to each partner. Online 1040ez form You must treat all three partners as the payees of the interest payment as if the payment were made directly to them. Online 1040ez form Report the payment to the nonresident alien and the foreign corporation on Forms 1042-S. Online 1040ez form Report the payment to the U. Online 1040ez form S. Online 1040ez form citizen on Form 1099-INT. Online 1040ez form Example 2. Online 1040ez form A nonwithholding foreign partnership has two partners: a foreign corporation and a nonwithholding foreign partnership. Online 1040ez form The second partnership has two partners, both nonresident alien individuals. Online 1040ez form You make a payment of U. Online 1040ez form S. Online 1040ez form source interest to the first partnership. Online 1040ez form 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. Online 1040ez form In addition, Forms W-8BEN from the partners are associated with the Form W-8IMY from the second partnership. Online 1040ez form The Forms W-8IMY from the partnerships have complete withholding statements associated with them. Online 1040ez form 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. Online 1040ez form Example 3. Online 1040ez form You make a payment of U. Online 1040ez form S. Online 1040ez form source dividends to a withholding foreign partnership. Online 1040ez form The partnership has two partners, both foreign corporations. Online 1040ez form 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. Online 1040ez form You must treat the partnership as the payee of the dividends. Online 1040ez form Foreign simple and grantor trust. Online 1040ez form   A trust is foreign unless it meets both of the following tests. Online 1040ez form A court within the United States is able to exercise primary supervision over the administration of the trust. Online 1040ez form One or more U. Online 1040ez form S. Online 1040ez form persons have the authority to control all substantial decisions of the trust. Online 1040ez form   In most cases, a foreign simple trust is a foreign trust that is required to distribute all of its income annually. Online 1040ez form A foreign grantor trust is a foreign trust that is treated as a grantor trust under sections 671 through 679 of the Code. Online 1040ez form   The payees of a payment made to a foreign simple trust are the beneficiaries of the trust. Online 1040ez form The payees of a payment made to a foreign grantor trust are the owners of the trust. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Example. Online 1040ez form A foreign simple trust has three beneficiaries: two nonresident alien individuals and a U. Online 1040ez form S. Online 1040ez form citizen. Online 1040ez form You make a payment of interest to the foreign trust. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form citizen. Online 1040ez form 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. Online 1040ez form You must treat all three beneficiaries as the payees of the interest payment as if the payment were made directly to them. Online 1040ez form Report the payment to the nonresident aliens on Forms 1042-S. Online 1040ez form Report the payment to the U. Online 1040ez form S. Online 1040ez form citizen on Form 1099-INT. Online 1040ez form Fiscally transparent entity. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form ). Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form   The payees of a payment made to a fiscally transparent entity are the interest holders of the entity. Online 1040ez form Example. Online 1040ez form 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. Online 1040ez form A has two interest holders, B and C. Online 1040ez form B is a corporation organized under the laws of country Y. Online 1040ez form C is a corporation organized under the laws of country Z. Online 1040ez form Both countries Y and Z have an income tax treaty in force with the United States. Online 1040ez form A receives royalty income from U. Online 1040ez form S. Online 1040ez form sources that is not effectively connected with the conduct of a trade or business in the United States. Online 1040ez form For U. Online 1040ez form S. Online 1040ez form income tax purposes, A is treated as a partnership. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Accordingly, A is fiscally transparent in its jurisdiction, country X. Online 1040ez form B and C are not fiscally transparent under the laws of their respective countries of incorporation. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form source royalty income for purposes of the U. Online 1040ez form S. Online 1040ez form -Y income tax treaty. Online 1040ez form 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. Online 1040ez form Therefore, A is not treated as fiscally transparent under the laws of country Z. Online 1040ez form Accordingly, C is not treated as deriving its share of the U. Online 1040ez form S. Online 1040ez form source royalty income for purposes of the U. Online 1040ez form S. Online 1040ez form -Z income tax treaty. Online 1040ez form 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. Online 1040ez form This rule applies for purposes of NRA withholding and for Form 1099 reporting and backup withholding. Online 1040ez form 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. Online 1040ez form An intermediary is a custodian, broker, nominee, or any other person that acts as an agent for another person. Online 1040ez form A foreign intermediary is either a qualified intermediary or a nonqualified intermediary. Online 1040ez form 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. Online 1040ez form You must determine whether the customers or account holders of a foreign intermediary are U. Online 1040ez form S. Online 1040ez form or foreign persons and, if the account holder or customer is foreign, whether a reduced rate of NRA withholding applies. Online 1040ez form You make these determinations based on the foreign intermediary's Form W-8IMY and associated information and documentation. Online 1040ez form 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. Online 1040ez form See Documentation and Presumption Rules , later. Online 1040ez form Nonqualified intermediary. Online 1040ez form   A nonqualified intermediary (NQI) is any intermediary that is a foreign person and that is not a qualified intermediary. Online 1040ez form The payees of a payment made to an NQI are the customers or account holders on whose behalf the NQI is acting. Online 1040ez form Example. Online 1040ez form You make a payment of interest to a foreign bank that is a nonqualified intermediary. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person for whom the bank is collecting the payments. Online 1040ez form 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. Online 1040ez form The account holders are the payees of the interest payment. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person on Form 1099-INT. Online 1040ez form Qualified intermediary. Online 1040ez form   A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U. Online 1040ez form S. Online 1040ez form intermediary) that has entered into a qualified intermediary withholding agreement (discussed later) with the IRS. Online 1040ez form 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. Online 1040ez form In this situation, the QI is required to withhold the tax. Online 1040ez form You can determine whether a QI has assumed responsibility from the Form W-8IMY provided by the QI. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person. Online 1040ez form Branches of financial institutions. Online 1040ez form   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. Online 1040ez form The countries with approved KYC rules are listed on IRS. Online 1040ez form gov. Online 1040ez form QI withholding agreement. Online 1040ez form   Foreign financial institutions and foreign branches of U. Online 1040ez form S. Online 1040ez form financial institutions can enter into an agreement with the IRS to be a qualified intermediary. Online 1040ez form   A QI is entitled to certain simplified withholding and reporting rules. Online 1040ez form In general, there are three major areas whereby intermediaries with QI status are afforded such simplified treatment. Online 1040ez form   To apply for QI status, complete Form 14345, Qualified Intermediary Application, and Form SS-4, Application for Employer Identification Number. Online 1040ez form These forms, and the procedures required to obtain a QI withholding agreement are available at www. Online 1040ez form irs. Online 1040ez form gov/Businesses/Corporations/Qualified-Intermediaries-(QI). Online 1040ez form Documentation. Online 1040ez form   A QI is not required to forward documentation obtained from foreign account holders to the U. Online 1040ez form S. Online 1040ez form withholding agent from whom the QI receives a payment of U. Online 1040ez form S. Online 1040ez form source income. Online 1040ez form The QI maintains such documentation at its location and provides the U. Online 1040ez form S. Online 1040ez form withholding agent with withholding rate pools. Online 1040ez form A withholding rate pool is a payment of a single type of income that is subject to a single rate of withholding. Online 1040ez form   A QI is required to provide the U. Online 1040ez form S. Online 1040ez form withholding agent with information regarding U. Online 1040ez form S. Online 1040ez form persons subject to Form 1099 information reporting unless the QI assumes the primary obligation to do Form 1099 reporting and backup withholding. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form Form 1042-S reporting. Online 1040ez form   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. Online 1040ez form Pooled basis reporting is not available for payments to certain account holders, such as a nonqualified intermediary or a flow-through entity (discussed earlier). Online 1040ez form Collective refund procedures. Online 1040ez form   A QI may seek a refund on behalf of its direct account holders. Online 1040ez form 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. Online 1040ez form U. Online 1040ez form S. Online 1040ez form branches of foreign banks and foreign insurance companies. Online 1040ez form   Special rules apply to a U. Online 1040ez form S. Online 1040ez form branch of a foreign bank subject to Federal Reserve Board supervision or a foreign insurance company subject to state regulatory supervision. Online 1040ez form If you agree to treat the branch as a U. Online 1040ez form S. Online 1040ez form person, you may treat the branch as a U. Online 1040ez form S. Online 1040ez form payee for a payment subject to NRA withholding provided you receive a Form W-8IMY from the U. Online 1040ez form S. Online 1040ez form branch on which the agreement is evidenced. Online 1040ez form If you treat the branch as a U. Online 1040ez form S. Online 1040ez form payee, you are not required to withhold. Online 1040ez form Even though you agree to treat the branch as a U. Online 1040ez form S. Online 1040ez form person, you must report the payment on Form 1042-S. Online 1040ez form   A financial institution organized in a U. Online 1040ez form S. Online 1040ez form possession is treated as a U. Online 1040ez form S. Online 1040ez form branch. Online 1040ez form The special rules discussed in this section apply to a possessions financial institution. Online 1040ez form   If you are paying a U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person for amounts subject to NRA withholding. Online 1040ez form Consequently, amounts not subject to NRA withholding that are paid to a U. Online 1040ez form S. Online 1040ez form branch are not subject to Form 1099 reporting or backup withholding. Online 1040ez form   Alternatively, a U. Online 1040ez form S. Online 1040ez form branch may provide you with a Form W-8IMY with which it associates the documentation of the persons on whose behalf it acts. Online 1040ez form 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. Online 1040ez form See Nonqualified Intermediaries under  Documentation, later. Online 1040ez form   If the U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form Withholding foreign partnership and foreign trust. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form A WP or WT acting in that capacity must assume NRA withholding responsibility for these amounts. Online 1040ez form 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. Online 1040ez form WP and WT withholding agreements. Online 1040ez form   The WP and WT withholding agreements and the application procedures for the agreements are in Revenue Procedure 2003-64. Online 1040ez form Also see the following items. Online 1040ez form Revenue Procedure 2004-21. Online 1040ez form Revenue Procedure 2005-77. Online 1040ez form Employer identification number (EIN). Online 1040ez form   A completed Form SS-4 must be submitted with the application for being a WP or WT. Online 1040ez form The WP or WT will be assigned a WP-EIN or WT-EIN to be used only when acting in that capacity. Online 1040ez form Documentation. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form The Form W-8IMY must contain the WP-EIN or WT-EIN. Online 1040ez form Foreign Persons A payee is subject to NRA withholding only if it is a foreign person. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person. Online 1040ez form It also includes a foreign branch of a U. Online 1040ez form S. Online 1040ez form financial institution if the foreign branch is a qualified intermediary. Online 1040ez form In most cases, the U. Online 1040ez form S. Online 1040ez form branch of a foreign corporation or partnership is treated as a foreign person. Online 1040ez form Nonresident alien. Online 1040ez form   A nonresident alien is an individual who is not a U. Online 1040ez form S. Online 1040ez form citizen or a resident alien. Online 1040ez form A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding. Online 1040ez form Married to U. Online 1040ez form S. Online 1040ez form citizen or resident alien. Online 1040ez form   Nonresident alien individuals married to U. Online 1040ez form S. Online 1040ez form citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes. Online 1040ez form However, these individuals are still subject to the NRA withholding rules that apply to nonresident aliens for all income except wages. Online 1040ez form Wages paid to these individuals are subject to graduated withholding. Online 1040ez form See Wages Paid to Employees—Graduated Withholding . Online 1040ez form Resident alien. Online 1040ez form   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. Online 1040ez form Green card test. Online 1040ez form 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. Online 1040ez form This is known as the green card test because these aliens hold immigrant visas (also known as green cards). Online 1040ez form Substantial presence test. Online 1040ez form An alien is considered a resident alien if the individual meets the substantial presence test for the calendar year. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form This exception is for a limited period of time. Online 1040ez form   For more information on resident and nonresident status, the tests for residence, and the exceptions to them, see Publication 519. Online 1040ez form Note. Online 1040ez form   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. Online 1040ez form For more information on making adjustments, see chapter 13 of Publication 15 (Circular E). Online 1040ez form Resident of a U. Online 1040ez form S. Online 1040ez form possession. Online 1040ez form   A bona fide resident of Puerto Rico, the U. Online 1040ez form S. Online 1040ez form Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands (CNMI), or American Samoa who is not a U. Online 1040ez form S. Online 1040ez form citizen or a U. Online 1040ez form S. Online 1040ez form national is treated as a nonresident alien for the withholding rules explained here. Online 1040ez form 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. Online 1040ez form   For more information, see Publication 570, Tax Guide for Individuals With Income From U. Online 1040ez form S. Online 1040ez form Possessions. Online 1040ez form Foreign corporations. Online 1040ez form   A foreign corporation is one that does not fit the definition of a domestic corporation. Online 1040ez form 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. Online 1040ez form Guam or Northern Mariana Islands corporations. Online 1040ez form   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). Online 1040ez form Note. Online 1040ez form   The provisions discussed below under U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form U. Online 1040ez form S. Online 1040ez form Virgin Islands and American Samoa corporations. Online 1040ez form   A corporation created or organized in, or under the laws of, the U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form Virgin Islands, American Samoa, Guam, the CNMI, or the United States. Online 1040ez form Foreign private foundations. Online 1040ez form   A private foundation that was created or organized under the laws of a foreign country is a foreign private foundation. Online 1040ez form 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. Online 1040ez form Other foreign organizations, associations, and charitable institutions. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form   Payments to these organizations, however, must be reported on Form 1042-S, even though no tax is withheld. Online 1040ez form   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. Online 1040ez form U. Online 1040ez form S. Online 1040ez form branches of foreign persons. Online 1040ez form   In most cases, a payment to a U. Online 1040ez form S. Online 1040ez form branch of a foreign person is a payment made to the foreign person. Online 1040ez form However, you may treat payments to U. Online 1040ez form S. Online 1040ez form branches of foreign banks and foreign insurance companies (discussed earlier) that are subject to U. Online 1040ez form S. Online 1040ez form regulatory supervision as payments made to a U. Online 1040ez form S. Online 1040ez form person, if you and the U. Online 1040ez form S. Online 1040ez form branch have agreed to do so, and if their agreement is evidenced by a withholding certificate, Form W-8IMY. Online 1040ez form For this purpose, a financial institution organized under the laws of a U. Online 1040ez form S. Online 1040ez form possession is treated as a U. Online 1040ez form S. Online 1040ez form branch. Online 1040ez form 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. Online 1040ez form The payee is a U. Online 1040ez form S. Online 1040ez form person. Online 1040ez form The payee is a foreign person that is the beneficial owner of the income and is entitled to a reduced rate of withholding. Online 1040ez form In most cases, you must get the documentation before you make the payment. Online 1040ez form The documentation is not valid if you know, or have reason to know, that it is unreliable or incorrect. Online 1040ez form See Standards of Knowledge , later. Online 1040ez form If you cannot reliably associate a payment with valid documentation, you must use the presumption rules discussed later. Online 1040ez form 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. Online 1040ez form The specific types of documentation are discussed in this section. Online 1040ez form However, see Withholding on Specific Income , later, as well as the instructions to the particular forms. Online 1040ez form 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. Online 1040ez form Section 1446 withholding. Online 1040ez form   Under section 1446 of the Code, a partnership must withhold tax on its effectively connected income allocable to a foreign partner. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form Joint owners. Online 1040ez form    If you make a payment to joint owners, you need to get documentation from each owner. Online 1040ez form Form W-9. Online 1040ez form   In most cases, you can treat the payee as a U. Online 1040ez form S. Online 1040ez form person if the payee gives you a Form W-9. Online 1040ez form The Form W-9 can be used only by a U. Online 1040ez form S. Online 1040ez form person and must contain the payee's taxpayer identification number (TIN). Online 1040ez form If there is more than one owner, you may treat the total amount as paid to a U. Online 1040ez form S. Online 1040ez form person if any one of the owners gives you a Form W-9. Online 1040ez form See U. Online 1040ez form S. Online 1040ez form Taxpayer Identification Numbers , later. Online 1040ez form U. Online 1040ez form S. Online 1040ez form persons are not subject to NRA withholding, but may be subject to Form 1099 reporting and backup withholding. Online 1040ez form Form W-8. Online 1040ez form   In most cases, a foreign payee of the income should give you a form in the Form W-8 series. Online 1040ez form Until further notice, you can rely upon Forms W-8 that contain a P. Online 1040ez form O. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form person and that a street address is available. Online 1040ez form You may rely on Forms W-8 for which there is a U. Online 1040ez form S. Online 1040ez form mailing address provided you received the form prior to December 31, 2001. Online 1040ez form   If certain requirements are met, the foreign person can give you documentary evidence, rather than a Form W-8. Online 1040ez form You can rely on documentary evidence in lieu of a Form W-8 for a payment made in a U. Online 1040ez form S. Online 1040ez form possession. Online 1040ez form Other documentation. Online 1040ez form   Other documentation may be required to claim an exemption from, or a reduced rate of, withholding on pay for personal services. Online 1040ez form 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. Online 1040ez form These forms are discussed in Pay for Personal Services Performed under Withholding on Specific Income. Online 1040ez form 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. Online 1040ez form Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding. Online 1040ez form   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. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form Claiming treaty benefits. Online 1040ez form   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. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form   An entity derives income for which it is claiming treaty benefits only if the entity is not treated as fiscally transparent for that income. Online 1040ez form See Fiscally transparent entity discussed earlier under Flow-Through Entities. Online 1040ez form   Limitations on benefits provisions generally prohibit third country residents from obtaining treaty benefits. Online 1040ez form 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. Online 1040ez form   The exemptions from, or reduced rates of, U. Online 1040ez form S. Online 1040ez form tax vary under each treaty. Online 1040ez form You must check the provisions of the tax treaty that apply. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form Exceptions to TIN requirement. Online 1040ez form   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. Online 1040ez form Income from marketable securities (discussed next). Online 1040ez form Unexpected payments to an individual (discussed under U. Online 1040ez form S. Online 1040ez form Taxpayer Identification Numbers ). Online 1040ez form Marketable securities. Online 1040ez form   A Form W-8BEN provided to claim treaty benefits does not need a U. Online 1040ez form S. Online 1040ez form TIN if the foreign beneficial owner is claiming the benefits on income from marketable securities. Online 1040ez form For this purpose, income from a marketable security consists of the following items. Online 1040ez form Dividends and interest from stocks and debt obligations that are actively traded. Online 1040ez form Dividends from any redeemable security issued by an investment company registered under the Investment Company Act of 1940 (mutual fund). Online 1040ez form 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. Online 1040ez form Income related to loans of any of the above securities. Online 1040ez form Offshore accounts. Online 1040ez form   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. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form An offshore account is an account maintained at an office or branch of a U. Online 1040ez form S. Online 1040ez form or foreign bank or other financial institution at any location outside the United States. Online 1040ez form   You may rely on documentary evidence given to you by a nonqualified intermediary or a flow-through entity with its Form W-8IMY. Online 1040ez form This rule applies even though you make the payment to a nonqualified intermediary or flow-through entity in the United States. Online 1040ez form 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. Online 1040ez form Documentary evidence. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form (See Effectively Connected Income , later. Online 1040ez form )   Effectively connected income for which a valid Form W-8ECI has been provided is generally not subject to NRA withholding. Online 1040ez form   If a partner submits this form to a partnership, the income claimed to be effectively connected with the conduct of a U. Online 1040ez form S. Online 1040ez form trade or business is subject to withholding under section 1446. Online 1040ez form 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. Online 1040ez form    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. Online 1040ez form Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding. Online 1040ez form   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. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form   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. Online 1040ez form   See Foreign Governments and Certain Other Foreign Organizations , later. Online 1040ez form 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. Online 1040ez form 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. Online 1040ez form The additional information required depends on the type of intermediary or flow-through entity and the extent of the withholding responsibilities it assumes. Online 1040ez form Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U. Online 1040ez form S. Online 1040ez form Branches for United States Tax Withholding. Online 1040ez form   This form is used by foreign intermediaries and foreign flow-through entities, as well as certain U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form branch of a foreign bank or insurance company and either is agreeing to be treated as a U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form For information on qualifying as an upper-tier foreign partnership, see Regulations section 1. Online 1040ez form 1446-5. Online 1040ez form Qualified Intermediaries In most cases, a QI is any foreign intermediary that has entered into a QI withholding agreement (discussed earlier) with the IRS. Online 1040ez form 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. Online 1040ez form The intermediary can claim that it is a QI until the IRS revokes its QI-EIN. Online 1040ez form 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. Online 1040ez form Responsibilities. Online 1040ez form   Payments made to a QI that does not assume NRA withholding responsibility are treated as paid to its account holders and customers. Online 1040ez form However, a QI is not required to provide you with documentation it obtains from its foreign account holders and customers. Online 1040ez form Instead, it provides you with a withholding statement that contains withholding rate pool information. Online 1040ez form 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. Online 1040ez form A qualified intermediary is required to provide you with information regarding U. Online 1040ez form S. Online 1040ez form persons subject to Form 1099 reporting and to provide you withholding rate pool information separately for each such U. Online 1040ez form S. Online 1040ez form person unless it has assumed Form 1099 reporting and backup withholding responsibility. Online 1040ez form For the alternative procedure for providing rate pool information for U. Online 1040ez form S. Online 1040ez form non-exempt persons, see the Form W-8IMY instructions. Online 1040ez form   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. Online 1040ez form   The extent to which you must have withholding rate pool information depends on the withholding and reporting obligations assumed by the QI. Online 1040ez form Primary responsibility not assumed. Online 1040ez form   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. Online 1040ez form Unless the alternative procedure applies, the qualified intermediary must provide you with a separate withholding rate pool for each U. Online 1040ez form S. Online 1040ez form person subject to Form 1099 reporting and/or backup withholding. Online 1040ez form 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. Online 1040ez form Primary NRA withholding responsibility assumed. Online 1040ez form   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. Online 1040ez form S. Online 1040ez form person, unless the alternative procedure applies, subject to Form 1099 reporting and/or backup withholding. Online 1040ez form 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. Online 1040ez form Primary NRA and Form 1099 responsibility assumed. Online 1040ez form   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. Online 1040ez form It is not necessary to associate the payment with withholding rate pools. Online 1040ez form Example. Online 1040ez form You make a payment of dividends to a QI. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form individual who provides it with a Form W-9. Online 1040ez form Each customer is entitled to 20% of the dividend payment. Online 1040ez form The QI does not assume any primary withholding responsibility. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form individual. Online 1040ez form 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. Online 1040ez form The part of the payment allocable to the U. Online 1040ez form S. Online 1040ez form individual (20%) is reportable on Form 1099-DIV. Online 1040ez form Smaller partnerships and trusts. Online 1040ez form   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. Online 1040ez form It is a foreign partnership or foreign simple or grantor trust. Online 1040ez form It is a direct account holder of the QI. Online 1040ez form It does not have any partner, beneficiary, or owner that is a U. Online 1040ez form S. Online 1040ez form person or a pass- through partner, beneficiary, or owner. Online 1040ez form   For information on these rules, see section 4A. Online 1040ez form 01 of the QI agreement. Online 1040ez form This is found in Appendix 3 of Revenue Procedure 2003-64. Online 1040ez form Also see Revenue Procedure 2004-21. Online 1040ez form Related partnerships and trusts. Online 1040ez form    A QI may apply special rules to a related partnership or trust only if the partnership or trust meets the following conditions. Online 1040ez form It is a foreign partnership or foreign simple or grantor trust. Online 1040ez form 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. Online 1040ez form For information on these rules, see section 4A. Online 1040ez form 02 of the QI agreement. Online 1040ez form This is found in Appendix 3 of Revenue Procedure 2003-64. Online 1040ez form Also see Revenue Procedure 2005-77. Online 1040ez form Nonqualified Intermediaries If you are making a payment to an NQI, foreign flow-through entity, or U. Online 1040ez form S. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form branch), and You have sufficient information to report the payment on Form 1042-S or Form 1099, if reporting is required. Online 1040ez form The NQI, flow-through entity, or U. Online 1040ez form S. Online 1040ez form branch must give you certain information on a withholding statement that is associated with the Form W-8IMY. Online 1040ez form A withholding statement must be updated to keep the information accurate prior to each payment. Online 1040ez form Withholding statement. Online 1040ez form   In most cases, a withholding statement must contain the following information. Online 1040ez form The name, address, and TIN (if any, or if required) of each person for whom documentation is provided. Online 1040ez form The type of documentation (documentary evidence, Form W-8, or Form W-9) for every person for whom documentation has been provided. Online 1040ez form The status of the person for whom the documentation has been provided, such as whether the person is a U. Online 1040ez form S. Online 1040ez form exempt recipient (U. Online 1040ez form S. Online 1040ez form person exempt from Form 1099 reporting), U. Online 1040ez form S. Online 1040ez form non-exempt recipient (U. Online 1040ez form S. Online 1040ez form person subject to Form 1099 reporting), or a foreign person. Online 1040ez form 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. Online 1040ez form S. Online 1040ez form branch. Online 1040ez form The type of recipient the person is, based on the recipient codes used on Form 1042-S. Online 1040ez form Information allocating each payment, by income type, to each payee (including U. Online 1040ez form S. Online 1040ez form exempt and U. Online 1040ez form S. Online 1040ez form non-exempt recipients) for whom documentation has been provided. Online 1040ez form The rate of withholding that applies to each foreign person to whom a payment is allocated. Online 1040ez form A foreign payee's country of residence. Online 1040ez form If a reduced rate of withholding is claimed, the basis for a reduced rate of withholding (for example, portfolio interest, treaty benefit, etc. Online 1040ez form ). Online 1040ez form 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. Online 1040ez form The name, address, and TIN (if any) of any other NQI, flow-through entity, or U. Online 1040ez form S. Online 1040ez form branch from which the payee will directly receive a payment. Online 1040ez form Any other information a withholding agent requests to fulfill its reporting and withholding obligations. Online 1040ez form Alternative procedure. Online 1040ez form   Under this alternative procedure the NQI can give you the information that allocates each payment to each foreign and U. Online 1040ez form S. Online 1040ez form exempt recipient by January 31 following the calendar year of payment, rather than prior to the payment being made as otherwise required. Online 1040ez form 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. Online 1040ez form You must receive the withholding statement with all the required information (other than item 5) prior to making the payment. Online 1040ez form    This alternative procedure cannot be used for payments to U. Online 1040ez form S. Online 1040ez form non-exempt recipients. Online 1040ez form Therefore, an NQI must always provide you with allocation information for all U. Online 1040ez form S. Online 1040ez form non-exempt recipients prior to a payment being made. Online 1040ez form Pooled withholding information. Online 1040ez form   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. Online 1040ez form 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. Online 1040ez form 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). Online 1040ez form 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. Online 1040ez form Failure to provide allocation information. Online 1040ez form   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. Online 1040ez form You must treat the payees as undocumented and apply the presumption rules, discussed later in Presumption Rules . Online 1040ez form An NQI is deemed to have f