Caution: This page (and its links) has not been updated to include all Chapter 4 (FATCA) withholding matters. For Chapter 3 and Chapter 4 withholding obligations, please refer to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. The publication is available in PDF and HTML (internet) formats. The HTML format includes related topics listed in the hyperlinked table of contents on the left column of the page. Prior year versions of Publication 515 are also available.
Withholding On Payments of U.S. Source Income to Foreign Persons IRC 1441 to 1443 (Form 1042)
Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%. A reduced rate, including exemption, may apply if an Internal Revenue Code Section provides for a lower rate, or there is a tax treaty between the foreign person's country of residence and the United States. The tax is generally withheld (NRA withholding) from the payment made to the foreign person.
The term NRA withholding is used in this area descriptively to refer to withholding required under sections 1441, 1442, and 1443 of the Internal Revenue Code. Generally, NRA withholding describes the withholding regime that requires 30% withholding on a payment of U.S. source income and the filing of Form 1042 and related Form 1042-S. Payments to all foreign persons, including nonresident alien individuals, foreign entities and governments, may be subject to NRA withholding
In referring to NRA withholding in this area, it does not include withholding done under section 1445 of the Internal Revenue Code, dealing with Withholding of Tax on Dispositions of U.S. Real Property Interests (FIRPTA), or under section 1446 of the Internal Revenue Code, dealing with Withholding Tax on Foreign Partners’ Share of Effectively Connected Income (Partnership Withholding).
- Withholding of Tax
- Persons Subject to NRA Withholding
- Income Subject to NRA Withholding
- Foreign Governments and Certain Other Foreign Organizations
- U.S. Taxpayer Identification Number (TIN) Requirement
- Depositing Withheld Taxes, When Deposits Are Required, and Adjustment for Overwithholding in Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- Returns Required
Forms To Be Used
The form to use depends on the type of certification being made. As used in this discussion of NRA withholding, the term "Form W-8" refers to the appropriate document. Refer to Beneficial Owners and Documentation for more information.
- Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding
- Form W-8BEN-E, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities)
- Form W-8ECI, 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
- Form W-8EXP, Certificate of Foreign Government or Other Foreign Organization for United States Tax Withholding.
- Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding
- Tax Withholding on Foreign Persons
- Publication 15, Circular E, Employer's Tax Guide
- Publication 15-A, Employer's Supplemental Tax Guide
- Publication 15B, Employer's Tax Guide to Fringe Benefits
- Publication 51, Circular A, Agricultural Employer's Tax Guide
- Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- Publication 519, U.S. Tax Guide for Aliens
- Publication 901, U.S. Tax Treaties
- Form SS-4, Application for Employer Identification Number
- Form W-2, Wage and Tax Statement
- Form W-4, Employee's Withholding Allowance Certificate
- Form W-4P, Withholding Certificate for Pension or Annuity Payments
- Form W-7, Application for IRS Individual Taxpayer Identification Number
- Form 941, Employer's Quarterly Federal Tax Return
Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.