2023 Marcum Year-End Tax Guide

THE MARCUM YEAR-END TAX GUIDE 2023 55

• W-8BEN: The Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals). This form is tailored for non-resident alien individuals and allows them to claim tax reductions if their country of residence maintains a tax treaty with the United States. • W-8BEN-E: The Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities). This form caters to foreign entities, enabling them to claim tax reductions if their country of incorporation is a party to a tax treaty with the United States. This Form also identifies an entity’s classification type under the Foreign Account Tax Compliance Act (“FATCA”). Determining an entity’s FATCA classification is complex and beyond the scope of this article. Failure to provide a Form W-8BEN-E once requested can result in the application of incorrect withholding tax rates or the non-receipt of payment. • W-8ECI: The Certificate of Foreign Person’s Claim That Income Is Effectively Connected with the Conduct of a Trade or Business in the United States. This form serves as the instrument for a foreign entity or individual to certify or claim that income sourced in the United States should be treated as

Effectively Connected with the Conduct of a Trade or Business in the United States (ECI). ECI is not subject to the uniform 30% withholding that applies to FDAP income discussed above. ECI is subject to US taxation at graduated rates instead of a flat rate. • W-8EXP: The Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding governments, foreign private foundations, and foreign tax exempt organizations, among others, including governments of US possessions and foreign central banks of issue, facilitating exceptions from tax withholding. • W-8IMY: The Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain US Branches for United States Tax Withholding and Reporting. This form is intended for intermediaries, including withholding foreign flow through entities such as foreign partnerships or foreign trusts that themselves have foreign partners or beneficiaries. This form assists the foreign partnership or trust in identifying the appropriate level of withholding that applies to its partners or beneficiaries and requires the partnership or trust to obtain a Form W-8BEN or W-8 BENE. and Reporting. This form accommodates foreign

Form 1042 Series: This encompassing series includes Form 1042, Form 1042-S, and Form 1042 T, each of which plays a pivotal role in reporting and withholding tax on payments made to foreign individuals or entities. Form 1042: The Annual Withholding Tax Return for US Source Income of Foreign Persons, primarily focused on determining the extent of income subject to withholding for tax purposes. • Form 1042-S: The Foreign Person’s US Source Income Subject to Withholding, a form used when making payments to foreign individuals, foreign corporations, foreign partnerships, certain foreign fiduciaries, estates, and trusts. It serves as the medium for reporting amounts withheld under Chapter 3 or Chapter 4, typically related to royalties, scholarships, dividends from American corporations, income from real estate, pension income, gambling winnings, interest on deposits, compensation for personal services conducted within the US, and insurance premiums. Form 1042-S must be filed in conjunction with Form 1042-T.