US Tax Forms for Non-US Entrepreneurs

Scope & Method

This entry explains the US tax forms most commonly encountered by non-US entrepreneurs who receive payments from or through US sources. It covers the W-8 series (for establishing foreign status), Form W-9 (for US persons and entities), the 1099 series (for information reporting), and the withholding framework under 26 U.S.C. § 1441. It also addresses the US–Turkey income tax treaty where relevant.

This entry does not cover FATCA reporting requirements in detail, state-level tax obligations, or tax return preparation. The interaction between US tax obligations and the entrepreneur's home-country tax system requires professional analysis specific to the individual's circumstances.

Key Takeaways

• The W-8 series (W-8BEN for individuals, W-8BEN-E for entities) certifies that a payee is not a "United States person" as defined under 26 U.S.C. § 7701(a)(30). The W-9 certifies US person status.
• A US LLC is treated as a domestic entity for tax form purposes. Its owner provides a W-9 (with the LLC's EIN), not a W-8, regardless of the owner's nationality or residence.
• US payers are generally required to withhold 30% of payments to foreign persons under 26 U.S.C. § 1441, unless a reduced rate applies under an applicable tax treaty. The W-8BEN establishes eligibility for treaty benefits.
• The 1099-NEC reports nonemployee compensation of $600 or more paid during a tax year. It is an information return filed by the payer, not a tax bill — but the income reported on it must be included in the recipient's tax filings.

W-8 Series: Establishing Foreign Status

W-8BEN

Form W-8BEN ("Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting") is provided by a non-US individual to a US payer. It serves two functions: it certifies that the payee is not a US person (and therefore is not subject to standard US income tax reporting), and it allows the payee to claim reduced withholding rates under an applicable income tax treaty.

The form requires the payee's country of citizenship, permanent address, and — if claiming treaty benefits — the specific treaty article and rate being claimed. A W-8BEN is valid for three years from the date of signing, after which it must be renewed.

W-8BEN-E

Form W-8BEN-E serves the same function as W-8BEN but is used by foreign entities (corporations, partnerships, and other non-individual organizations). It is substantially more complex than the individual version, requiring detailed information about the entity's classification, FATCA status, and beneficial ownership structure.

W-9: Certification of US Person Status

Form W-9 ("Request for Taxpayer Identification Number and Certification") is provided by US persons — including US citizens, residents, and domestic entities such as US-formed LLCs — to a requesting payer. The form provides the payee's taxpayer identification number (SSN, ITIN, or EIN) and certifies US person status.

A non-US entrepreneur who has formed a US LLC provides a W-9 on behalf of the LLC, not a W-8. The LLC is a domestic entity regardless of its owner's nationality. This is a common point of confusion: the relevant factor is the entity's formation jurisdiction, not the owner's residence or citizenship.

1099 Series: Information Reporting

The 1099 series comprises information returns filed by payers to report various types of payments to the IRS. The form most relevant to entrepreneurs is the 1099-NEC (Nonemployee Compensation), which reports payments of $600 or more made to independent contractors and other non-employees during a tax year (26 U.S.C. § 6041).

The 1099-MISC (Miscellaneous Information) covers other payment types including rents, royalties, and prizes. Receiving a 1099 does not itself create a tax liability — it is an information document. However, the income reported on it must be accounted for in the recipient's tax filings in the applicable jurisdictions.

Withholding on Payments to Foreign Persons

Under 26 U.S.C. § 1441, US payers making payments of US-source income to non-US persons are generally required to withhold 30% of the gross payment and remit it to the IRS. This applies to fixed, determinable, annual, or periodical (FDAP) income — which includes service fees, royalties, and other compensation types common in cross-border business relationships.

Tax treaties between the US and other countries may reduce or eliminate this withholding for specific income types. The US–Turkey Income Tax Treaty (TIAS 10205, in force since 1996) provides reduced rates for certain categories of income, including dividends, interest, and royalties. Treaty benefits are claimed by completing the relevant W-8 form with the treaty article and rate.

The application of treaty benefits to specific payments depends on the nature of the income, the residency of the payee, and the specific treaty provisions — all of which require professional evaluation for a given transaction.

Common Failure Modes

Providing the wrong form. A non-US individual who provides a W-9 instead of a W-8BEN misrepresents their tax status, which can create withholding errors, reporting complications, and potential penalties. Conversely, a US LLC owner who provides a W-8 instead of a W-9 delays payment processing and may trigger additional compliance inquiries from the payer.

Failing to claim applicable treaty benefits. A Turkish national who submits a W-8BEN without completing the treaty claim section (Part II) may be subject to the full 30% withholding rate on payments that would otherwise qualify for a reduced rate under the US–Turkey treaty. The excess withholding can sometimes be recovered through a US tax return filing, but this creates additional administrative burden.

Neglecting to renew expired W-8 forms. W-8BEN forms expire three years after signing. When a form expires, the US payer is required to apply backup withholding at the statutory rate until a new form is received. Maintaining current forms with US business partners avoids payment interruptions and unnecessary withholding.