- Remittance
- Exchange Rate
- Stock
- Events
- EasyCard
- More
- Download
New investors in U.S. stocks often have a common question: “Do I need to pay taxes to the U.S. on my earnings?”
In fact, there are preferential policies for foreign investors. This article will highlight key points from official tax documents, provide examples, and explain what the W-8BEN form is. Every investor in U.S. stocks should have a detailed understanding of this.
The full name of the W-8BEN is “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting.” It is a form issued by the U.S. Internal Revenue Service ( IRS ) used by non-U.S. residents or non-U.S. companies to prove their foreign beneficial owner status and eligibility for relevant tax treaty benefits when investing in the U.S. or receiving income from the U.S. Simply put, it is a “tax identification form for non-U.S. residents’ income in the U.S.”
Why is it abbreviated as “W-8BEN”? In fact, “W” stands for non-U.S. resident and non-U.S. entity, the number 8 is an internal form type code used by the IRS , and “BEN” stands for “Beneficial.” The image below shows the beginning part of this form.
The W-8BEN form can be found on the IRS official website: https://www.irs.gov/pub/irs-pdf/fw8ben.pdf.
According to the IRS, any income earned in the United States must be reviewed, regardless of whether you are a U.S. citizen. Non-U.S. residents are still required to pay taxes on certain types of income.
The IRS defines two types of income sources:
The tax rules for different types of income vary. Please continue reading for more details.
Capital Gains Tax:
Dividend Tax:
Capital Gains Tax:
Dividend Tax:
Capital Gains Tax:
Dividend Tax:
Capital Gains Tax:
Dividend Tax:
Capital Gains Tax:
Dividend Tax:
The W-8BEN form is crucial for Chinese investors in U.S. stocks, and it should be handled with care. Compared to other regions, mainland Chinese investors benefit from significant tax advantages. Residents of Hong Kong, Macau, and Taiwan are not included in the tax treaty and need to pay a 30% tax. U.S. residents must combine capital gains with their wages for tax purposes.
If you are a Charles Schwab user, you will receive an email notification to renew the W-8BEN form before it expires. The renewal process is as follows:
Click the link in the notification email, which will take you to this page:
Select “Individual” and verify all personal information. Normally, all information should already be filled in.
Confirm personal information and click the W-8BEN form checkbox. You will receive a confirmation code; make sure to record it as you will need it in the final step.
Confirm non-U.S. resident status and provide your tax identification number, usually your ID number unless you have applied for an ITIN.
Enter the confirmation code and click "Submit."
Filling out the form is straightforward. Follow the form’s instructions, and the brokerage platform will typically simplify the process by auto-generating the W-8BEN form through their system. However, there are a few key points to note:
Properly completing the W-8BEN form is essential to enjoy tax benefits, so ensure you handle it carefully.
Since TD Ameritrade was merged into Charles Schwab, many new and existing users have transitioned to the Charles Schwab platform for their U.S. stock operations. As a leading global financial services company, Charles Schwab offers comprehensive investment and financial services, known for its robust platform, extensive product line, and high-quality customer service. Regarding the funding issue that users are concerned about, Charles Schwab provides a bank account during the account opening process, allowing users to fund their accounts directly using the BiyaPay platform without needing to use other Hong Kong bank accounts.