W8BEN WTF
September 27, 2013 1:57 PM Subscribe
A friend in Mexico does some consulting for a US company. He has an account in a US bank, where he receives payment for that work.
The bank just sent him a W-8BEN form and we are not sure how to fill it.
He's a Mexican citizen and he lives and works in Mexico. We know Mexico has an income tax treaty with the US. And that's all we know.
This statement in the form is a bit confusing:
"The income to which this form relates is not effectively connected with the conduct of a trade or business in the United States".
As he is not physically working in the US, this is true, right?
Should we just send the documentation, claim Tax Treaty Benefits and let the IRS sort it out? Or should we look for an accountant in the US?
We know you're not our accountant or lawyer. Thanks!
He's a Mexican citizen and he lives and works in Mexico. We know Mexico has an income tax treaty with the US. And that's all we know.
This statement in the form is a bit confusing:
"The income to which this form relates is not effectively connected with the conduct of a trade or business in the United States".
As he is not physically working in the US, this is true, right?
Should we just send the documentation, claim Tax Treaty Benefits and let the IRS sort it out? Or should we look for an accountant in the US?
We know you're not our accountant or lawyer. Thanks!
I parse the language of that item to mean the following:
"We see that you are receiving income in a US bank account. We would like to know whether you are being paid for work done inside the US or not."
The only part your friend needs to worry about is the "effectively" part. There are some types of work that can be performed outside a jurisdiction, but that is effectively inside it. If it is physical labor done on physical things inside Mexico, that's probably fine. But it if is remote work where the work product goes directly back to the US, like a graphic designer or programmer, that can be more nebulous. That's where you need something like a tax adviser to figure out whether the work can be considered effectively in the US.
posted by gjc at 12:12 PM on September 28, 2013
"We see that you are receiving income in a US bank account. We would like to know whether you are being paid for work done inside the US or not."
The only part your friend needs to worry about is the "effectively" part. There are some types of work that can be performed outside a jurisdiction, but that is effectively inside it. If it is physical labor done on physical things inside Mexico, that's probably fine. But it if is remote work where the work product goes directly back to the US, like a graphic designer or programmer, that can be more nebulous. That's where you need something like a tax adviser to figure out whether the work can be considered effectively in the US.
posted by gjc at 12:12 PM on September 28, 2013
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posted by jpe at 3:10 PM on September 27, 2013