On Demand Webinar

W-8/1042-S Compliance When Making Payments to Non-U.S. Persons

Webinar Details $219

  • Rated:
  • Webinar Length: 100 Minutes
  • Guest Speaker:   Steven Mercatante
  • Topic:   Taxation and Accounting, Compliance and Regulatory
  • Credit:   CPE 2.0, ATATX 1.5
All Access Membership

The IRS is heavily focusing its nonresident alien tax regulations compliance audits on accounts payable operations. If your organization outsources work to an overseas contractor, if you bring a foreign contractor in for short-term work, or if you are asked to pay a foreign consultant’s invoice, this one-day seminar will help you to make sense of the regulations surrounding payments to foreign vendors.

Agenda:

  • Learn to distinguish a 1042-S reportable non-resident alien payee from a 1099 reportable resident alien or U.S. citizen payee
  • Get tips on recognizing how to handle visas, green cards, and using the IRS substantial presence test to identify when a payment should be 1042-S or 1099 reportable
  • Discover why where the services is performed is so important to determine your 1042-S reporting responsibilities
  • Learn how to use the Forms W-8 and 8233 to validate payee claims for treaty benefits
  • Address rules for 1042-S tax withholding and how to report it

This class if right for you if:

  • You make payments to foreign vendors and are confused as to how to validate Forms W-8 and 1042-S report those payments
  • You are concerned that your organization does not have appropriate policies in place for identifying when W-8 or 1042-S reporting situations arise
  • You have a solid understanding of 1099 reporting rules and want to get to the next level in terms of protecting your organization from an IRS audit

Level: Intermediate
Format: Recorded webcast
Instructional Method: QAS Self Study
NASBA Field of Study: Accounting
Program Prerequisites: None
Advance Preparation: None

  1. Introduction
  2. What’s New 00:01:24
  3. The W-9 00:10:53
  4. W-9/W-8 Data Collection and Validation For 1042/1042-S Filing 00:14:22
  5. W-9/W-8 Data Collection and Validation - Doubting the Documentation 00:25:33
  6. W-9/W-8 Data Collection and Validation Can Flow Together - Presumptions 00:26:44
  7. W-9/W-8 Data Collection and Validation Can Flow Together - Presumptions (cont’d) 00:27:26
  8. Must Have a W-9/W-8 Due Diligence Framework - Payments and Payees 00:
  9.  W-9/W-8 Payee/Payment in Practice 00:29:53
  10. Who is My Payee - Non-U.S. Status Red Flags 00:34:16
  11. Who is My Payee - U.S. or Non-U.S.? 00:37:11
  12. Who is My Payee - Resident Alien Visas - Determining Payee Tax Status 00:39:25
  13. Who is My Payee - Resident Alien and Counting Days 00:44:35
  14. Who is My Payee - Special Entity Rules 00:46:33
  15. Who is My Payee - W-9 vs. W-9 Basic Rules 00:48:37
  16. 1042-S Reportable Income: Purchase Invoices 00:49:54
  17. 1042-S Reportable Income: How Income is Taxed 00:54:19
  18. W-8 Payment Sourcing 00:56:13
  19. W-8’s and Treaty Benefits 01:07:40
  20. Wrap Up of General W-8 Validation Tips 01:16:26
  21. Filing Form 1042/1042-S 01:18:36
  22. Filing Fundamentals  - Extensions 01:23:07
  23. Filing Fundamentals  - Recent Changes to Forms 1042-S Information Returns 01:24:08
  24. Filing Fundamentals  - Recent Changes to Forms 1042-S Information Returns (con’t) 01:26:32
  25. File on Time and Try to Avoid Those Penalties 01:31:44
  26. Protect Yourself 01:34:11
  27. Attendee Questions 01:35:38
  28. Presentation Closing 01:41:41

  • Audit 00:02:43, 00:05:45
  • Backup Withholding 00:09:09. 00:11:29, 00:31:49
  • EIN 00:30:10, 00:34:58, 00:47:57
  • Expatriate 00:40:26
  • FATCA 00:11:48, 01:25:49
  • Federal Insurance Contributions Act (FICA) 00:41:55
  • Form 1042 00:04:23, 00:06:37
  • Form 1042-S 00:03:36, 00:04:23, 00:06:35,  00:18:51, 00:49:59, 01:18:53
  • Form 1099-NEC 01:23:30
  • Form 8233 00:14:22, 01:08:13, 01:14:36
  • Form 945 00:24:05
  • Form W-8 00:04:54, 00:09:05, 00:57:10, 01:13:33
  • Form W-9 00:10:59, 00:18:16, 0:22:42, 01:13:36:
  • ITIN 00:30:09, 00:34:57
  • Nonresident Alien (NRA) 00:22:19, 00:39:34, 00:50:02, 01:15:02
  • Resident Alien 00:36:51, 00:29:32
  • Substantial Presence Test (SPT) 00:44:54
  • Tax Gap 00:01:44
  • TIN 00:11:09, 00:21:51
  • TIN Match Program 00:32:32
  • Vendor 00:08:55
  • W-8BEN 00:14:22
  • W-8BEN-E 00:14:22, 00:16:19
  • W-8ECI 00:14:22
  • W-8EXP 00:14:22
  • W-8IMY 00:14:22, 00:17:15, 00:59:53

Audit: A formal examination of an organization's or individual's accounts or financial situation

Backup Withholding: Backup withholding is the tax that is levied on investment income, at an established tax rate, as the investor withdraws it. Backup withholding helps to ensure that government tax-collecting agencies (such as the IRS or Canada Revenue Agency) will be able to receive income taxes owed to them from investors' earnings. (www.investopedia.com)

EIN: The Employer Identification Number, also known as the Federal Employer Identification Number or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service to business entities operating in the United States for the purposes of identification.

Expatriate: An expatriate (often shortened to expat) is a person residing in a country other than their native country. ... However, the term 'expatriate' is also used for retirees and others who have chosen to live outside their native country. Historically, it has also referred to exiles.

FATCA: FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. (www.treasury.gov). FACTA (Fair and Accurate Credit Transactions Act) is an amendment to FCRA (Fair Credit Reporting Act ) that was added, primarily, to protect consumers from identity theft. The Act stipulates requirements for information privacy, accuracy and disposal and limits the ways consumer information can be shared.

Federal Insurance Contributions Act (FICA): The Federal Insurance Contributions Act is a United States federal payroll contribution directed towards both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.

Form 1042: Form 1042, also "Annual Withholding Tax Return for U.S. Source Income of Foreign Persons", is used to report tax withheld on certain income of foreign persons.

Form 1042-S: Form 1042-S is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported.

Form 1099-NEC: In the context of 1099 tax filing, NEC stands for “Nonemployee Compensation” (the first letters of the three words None, Employee and Compensation). Most tax payers recognize NEC as box 7 on Form 1099-MISC. NEC is used to report income paid to independent-contractors / the-self-employed (referred to as 1099 employees for simplification purposes). So, while employers report income that gets paid to employees on Box 1 (Wages, tips, other compensation) of the W2 form, payers report income that gets paid to none-employees on Box 7 (NEC) of the 1099-MISC form. As an individual, if you received form 1099-MISC instead of Form W-2 then the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax.

Form 8832: Form 8832 is the Entity Classification Election form from the IRS. It is filed to elect a tax status other than the default status for your entity. For example, an LLC can elect to be taxed as a C Corporation.

Form 945: IRS Form 945 is titled Annual Return of Withheld Federal Income Tax. Form 945 is used to report withheld federal income tax from nonpayroll payments, including distributions from qualified retirement plans.

Form W-8: Form W-8 is filled out by foreign entities (citizens and corporations) in order to claim exempt status from certain tax withholdings. The form is used to declare an entity's status as non-resident alien or foreign national who works outside of the United States.

Form W-9: Form W-9 (officially, the "Request for Taxpayer Identification Number and Certification") is used in the United States income tax system by a third party who must file an information return with the Internal Revenue Service (IRS). It requests the name, address, and taxpayer identification information of a taxpayer (in the form of a Social Security Number or Employer Identification Number). - Wikipedia (https://en.m.wikipedia.org/)

ITIN : An Individual Taxpayer Identification Number is a United States tax processing number issued by the Internal Revenue Service. It is a nine-digit number that begins with the number 9, and the 4th and 5th digits, also known as second section, range from 70 to 88, 90 to 92 and 94 to 99.

Nonresident Alien (NRA): This income is taxed at a flat 30% rate, unless a tax treaty specifies a lower rate. Nonresident aliens must file and pay any tax due using Form 1040NR, U.S. Nonresident Alien Income Tax Return or Form 1040NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.

Resident Alien : A resident alien is a foreign person who is a permanent resident of the country in which he or she resides but does not have citizenship. To fall under this classification in the United States, a person needs to either have a current green card or have had one in the previous calendar year.

Substantial Presence Test (SPT) : The Substantial Presence Test (SPT) is a criterion used by the Internal Revenue Service (IRS) in the United States to determine whether an individual who is not a citizen or lawful permanent resident in the recent past qualifies as a "resident for tax purposes" or a "nonresident for tax purposes"; it is a form of physical presence test. The SPT should be used in conjunction with the Green Card Test (the criterion that the individual possessed a valid Green Card at any time of the year). An individual who satisfies either one or both of these tests is treated as a resident for tax purposes.

TIN: A Taxpayer Identification Number is an identifying number used for tax purposes in the United States and in other countries under the Common Reporting Standard. In the United States, it is also known as a Tax Identification Number or Federal Taxpayer Identification Number.

TIN Match Program: TIN Matching is part of a suite of Internet-based pre-filing e-services that allows “authorized payers” the opportunity to match 1099 payee information against IRS records prior to filing information returns.

Tax Gap: The gross tax gap is the difference between true tax liability for a given tax year and the amount that is paid on time. It is comprised of the nonfiling gap, the underreporting gap, and the underpayment (or remittance) gap.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

W-8BEN: Form W8-BEN, Certificate of Foreign Status of Beneficial Owner for U.S. Tax Withholding, is used by a foreign person to establish both foreign status and beneficial ownership, and to claim income tax treaty benefits with respect to income other than compensation for personal services. Give Form W-8 BEN to the withholding agent or payer if you are a foreign person and you are the beneficial owner of an amount subject to withholding. Submit Form W-8 BEN when requested by the withholding agent or payer whether or not you are claiming a reduced rate of, or exemption from, withholding.

W-8BEN-E: 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).

W-8ECI: Form W-8ECI is the Certificate of Foreign Person's Claim for Exemption From Withholding on Income Effectively Connected With the Conduct of a Trade or Business in the United States. You must give Form W-8 ECI to the withholding agent or payer if you are a foreign person and you are the beneficial owner of U.S. source income that is (or is deemed to be) effectively connected with the conduct of a trade or business within the United States.

W-8EXP: A foreign government must provide Form W-8EXP to establish eligibility for exemption from withholding for payments exempt from tax under section 892 or for purposes of establishing its status as an exempt beneficial owner.

W-8IMY: This form may serve to establish foreign status for purposes of sections 1441, 1442, and 1446. The W-8IMY is used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow-through entity.


Guest Speaker

  • Steven Mercatante

CPE Credit

Continuing Professional Education

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ATATX Credit

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