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OnDemand Course

Withholding of Taxes on Payments to Foreign Persons and Entities

Learn to navigate the myriad of W-8s available for documenting a payee as a foreign person.

Most organizations have procedures in place to correctly and efficiently report certain payments to U.S. persons on Form 1099. However, far fewer organizations are as familiar with the process of reporting certain payments to foreign persons on Form 1042-S. The complexity involved in reporting payments to foreign persons is far greater. While a U.S. person would provide the same W-9 regardless of entity or payment type, a foreign person could provide one of several W-8s (e.g., W-8BEN, W-8BEN-E, W-8ECI) or even a Form 8233. In addition, the type of payments reportable may depend upon sourcing (foreign or U.S.), and the determination to withhold may depend upon an income tax treaty. Lack of adequate documentation and analysis can result in the payer of income being held liable for the 30% withholding tax in addition to penalties and interest. This course will help those responsible for payments to foreign persons navigate the myriad of W-8s available for documenting a payee as a foreign person. In addition, the material will help identify the types of payments reportable on Form 1042-S, including a broad overview of the sourcing rules which determine if a payment is a U.S. or foreign source. This course will also provide guidance on determining if the payee should withhold the payment and, if so, what is the proper withholding rate. This includes the role of income tax treaties. Finally, the material will discuss filing deadlines related to Form 1042-S, withholding tax deposit requirements, and any penalties and interest related to lack of compliance.

101 minutes
Course Exam
Certificate of Completion
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Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Agenda

Imposition of Withholding on FDAP Income

  • 881 Discussion
  • Brief Discussion of 882 ECI and Differences From FDAP
  • 1441 and 1442 Discussion
  • Status of Income Recipient (Resident vs. Non-Resident; Individual vs. Entity, Substantial Presence Test)

Sourcing of FDAP Income

  • Interest
  • Dividends
  • Royalties
  • Compensation for Services
  • Other Income and Payments

Treaties

  • Requirements to Qualify and Residence
  • Beneficial Rates on FDAP Income
  • LOB Provisions

Special Rules for Partnership Withholding

  • General Withholding of FDAP Income
  • Lag Method Reporting Requirement (Distributive Share of FDAP Withholding When K-1 Provided vs. Due Date)
  • Withholding of ECI From Foreign Partners of Domestic Partnerships
  • Foreign Partnerships - Withholding Agent/Withholding Statement Issues
  • Forms 8804, 8805, and 8813

Forms (Generally)

  • 1042 and 1042-S
  • W-8 Forms
  • E-File Requirements

Penalties

  • Failure to File
  • Late Filing

Questions and Answers

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Why Lorman?

Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Credits

OnDemand Course

This course was last revised on May 25, 2022.

Call 1-866-352-9540 for further credit information.

This program does NOT qualify, nor meet the National Standard for NASBA accreditation.

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Why Lorman?

Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

Faculty

Michael Campbell, CPA

Michael Campbell, CPA

Crowe LLP

  • Senior Manager at Crowe LLP
  • U.S. international tax and tax technology specialist
  • Head of Crowe International Tax Services Technology Pillar
  • Implemented electronic filing system for 1042-S forms
  • Worked in Fortune 500 tax department
  • Experience working with clients in a variety of industries
  • Can be contacted at [email protected] or 404-442-1674
Brandon Harrell

Brandon Harrell

Crowe LLP

  • Manager at Crowe LLP
  • An international tax specialist
  • Experience in both U.S. inbound and outbound taxation and associated tax planning
  • Experience with GILTI, FDII, and BEAT tax regimes
  • Experience with U.S. international reporting, including Forms 5471, 1118, 8891, 8992, and 8993
  • Licensed member of the Florida Bar
  • Graduate, Florida State University College of Law
  • Can be contacted at [email protected] or 404-495-7068
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Why Lorman?

Over 37 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.

All of your training, right here at Lorman

All of your training, right here at Lorman.

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Product ID: 409784
Published 2022
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