Key takeaways:

• The W-8BEN form is a form that your contractors will use to establish foreign status for the purpose of taxation.
• The form helps employers determine the amount of tax that needs to be withheld from a contractor (or employees).

What is the W-8BEN form used for?

The W-8BEN form, also known as the Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, is a form used by foreign individuals and entities to claim a reduced rate of withholding tax on certain types of income. If you're hiring a contractor who is a non-resident alien for tax purposes, they may be required to complete a W-8BEN form.

The W-8BEN form is important for employers because it helps to determine the amount of tax that needs to be withheld from the contractor's pay. If the contractor is a foreign individual, they may be entitled to claim a reduced rate of withholding tax based on a tax treaty between their country of residence and the United States.

It's important to note that the requirements for the W-8BEN form can vary depending on the country in which the contractor is located. For example, if the contractor is located in a country that has a tax treaty with the United States, they may be entitled to claim a reduced rate of withholding tax on certain types of income. However, if they're located in a country that doesn't have a tax treaty with the United States, they may be subject to a higher rate of withholding tax.

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