How to Change the Status of a Non-Resident Investment Account
Changing the status of a non-resident investment account can initially prove to be a daunting task. Although many investors believe that the IRS (Internal Revenue Service) and INS (Immigration and Naturalization Service) work hand-in-hand on all tax and immigration matters, some basic research will reveal that, although one's official status with INS can impact investments, the IRS has different rules in place for non-resident and resident aliens. The variance in rules can require a person to change the status of non-resident investments depending on how many years he has worked or resided in the United States, as well as for how many calendar days of the past year he has resided on U.S. soil. IRS Form W-8BEN is the applicable form to change the status of any non-resident investment account in the U.S.
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Instructions
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Download IRS Tax from W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) from the IRS website (follow the final link in Resources); or obtain a copy from your accountant or investment company. The primary purpose of the W-8BEN form is for non-resident aliens to certify foreign tax status and the country of tax residency.
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Enter personal data on Lines 1 through 3, listing your individual or organization information and permanent address on Line 4. If the mailing address is different than the permanent address entered on Line 4, make the entry on Line 5.
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Enter the taxpayer-identification or Social Security number on the next lines of the form. If the investor does not have a taxpayer-identification number, consult an accountant to find out if she should request a number from the IRS or use a foreign tax-identifying number in lieu of the taxpayer ID.
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Input the country of primary tax residence on Line 9a and check other applicable boxes on lines 9b through 9e to change tax-treaty benefits that were previously entered. Dependent on the individual's tax situation, he may be required to provide tax explanations on Line 10 of the form. Line 10 is commonly used to annotate the reasons behind changes in status for withholding status. Sign and send the form to the investment broker or company managing the investment fund. An additional statement may be required depending on the complicity of the investment. For the average mutual fund or stock investment by an individual, the statement is generally not required.
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Provide an updated W-8BEN and initial W-4 (IRS Tax Witholding) form to the investment broker or manager if the status is being changed from U.S. non-resident to U.S. resident for tax purposes.
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Tips & Warnings
Did you know that the U.S. Social Security Administration now allows immigrants to apply for a Social Security number when submitting visa applications? It is worth doing to save time if planning to potentially immigrate permanently to the U.S. If you are changing the investment status from U.S. non-resident to resident alien, an updated W-8BEN and W-4 (U.S. Tax Withholding) form should be submitted to the investment company. Tax laws for non-resident aliens can vary depending on the number of days the investor spends in the United States during the calendar year. If you were on U.S. soil for less than 183 days, consult an accountant to determine if you are entitled to a different tax rate.
If you are in doubt as to how much tax you owe the IRS, see a professional accountant or look for answers to your questions on the IRS website.
Resources
- Photo Credit INS Logo from Wikipedia Commons
