Tax Hub

W-8BEN-E is an important tax document which allows businesses operating outside of the U.S. to claim tax exemption on U.S.-sourced income.  The official document title is Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities).

The difference between IRS Form 1099-NEC and Form 1099-MISC information returns is that Form 1099-NEC is used by payers to report nonemployee compensation and follow backup withholding rules. Form 1099-MISC is used by payers to report information on other types of miscellaneous nonemployee payments.

IRS Form 1042-S is always a required document for reporting money paid to foreign persons (or those who are presumed to be foreign) by a U.S.-based business or institution.

Payers are required to track payments with adequate bookkeeping during the year to later prepare information returns 1099-NEC and 1099-MISC. They should get W-9 forms from U.S. business service providers and Form W-8BEN certifications or other required forms from foreigners that are exempt from a 1099 form.

The purpose of a W-8ECI form is to allow an eligible foreign person to get an exemption from tax withholding on income effectively connected with conducting a trade or business in the United States. A foreign person submitting Form W-8ECI to a withholding agent (not the IRS) must file an annual U.S. income tax return to report income connected with a U.S. trade or business.

As the payer of specific types of trade or business-related miscellaneous income for recipients and provider of other information, use the revised Form 1099-MISC information return, starting with tax year 2020 payments. The IRS Form 1099-MISC changes result from the use of a separate IRS Form 1099-NEC to report $600+ of nonemployee compensation (NEC) paid