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by kw
Feb 22 20201 min read1 answer 0

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Hello, this is specifically asking for assistance for a group of EAs that have received travel grant funding however it may be generally useful to those who receive funding from US based organisations and need to fill in a W-8BEN form.

Essentially, in order to accept some travel grant funds we need to complete this form (https://www.irs.gov/forms-pubs/about-form-w-8-ben ). We are from Australia and New Zealand. However section 2 of the form around treatys for tax exemption appears to require some degree of expert knowledge in this area. So my question is whether others have encountered this before and may be able to assist us and/or other future recipients of grants with correctly completing this form?

As an additional thought, if this is a common time sink for those receiving grants perhaps it would be worthwhile writing up a guide (assuming such a resource doesn't already exist).

Thanks,

Kyle

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anonfornow

Feb 22, 2022

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I have no legal background or expertise, but I recently filled out a W-8BEN form, found the process confusing and time consuming (partially because my tax situation is complicated for personal, idiosyncratic reasons), and felt that sharing my experience may be of some value in future.

I am receiving a grant for self-study. The grant is from an EA organisation based in the US and I am a resident of Ireland. Without the W8-Ben form, the US government would charge a 30% 'withholding' tax on the money that you receive. This would be in addition to tax in your home country. The purpose of the form is to clarify the kind of income that you're receiving and why/how it should not be subject to this withholding tax.

You'll want to find the double taxation that your country has with the US government (on your own government's website, the Irish one is here: https://www.revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/U/usa.aspx). The purpose of this treaty is to prevent you from being taxed in both countries.

If you read through the treaty, it will have different Articles that correspond to types of income. Clarify that you're resident of your home country for tax purposes (this information will be near the start of the document) and determine what kind of income you're receiving.

I had initially thought that I might be able to claim that I'm a student/trainee (Article 20 in the Irish Double Tax Treaty). However, this requires one to have just moved to the other country (the US in this case) for the purpose of training/education at a higher institute. It seems to me that the most relevant category was Article 14 (Independent Personal Services - 'other activities of an independent character'). As these activities will not be conducted in the US, I can claim exemption from the withholding tax.

So, in Section 2 of the W-8BEN form, I can then specify the Article, Paragraph and type of income that I'm claiming, and specify the withholding rate that I'm subject to (I said 0%).

I would then declare this income with the Irish tax authorities and be subject to regular income tax on the grant money.

I just submitted the form before typing this up, so it's possible that this is mistaken (in which case I'll correct it later), but hopefully this will be somewhat helpful to future grant recipients who have to fill out the W-8BEN form.

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