"We first selected Gary Bode because of his familiarity with a creative financing scheme for our new small business. During our time with Gary, his insights have helped us better structure our small businesses, save money, and learn to be better small business managers. When it comes to small business accounting, a little hand-holding goes a long way."—Justin and Joelle LeBlancExpat CPAs are buzzing about the “new” IRS Form W-8IMY, Certificate of Foreign Intermediary, Foreign Flow-Through Entity, or Certain U.S. Branches for United States Tax Withholding. Of course Form W-8IMY isn’t new, it’s just revised in 2012, for 2013, to facilitate FATCA compliance. Form W-8IMY is one of several 2013 tax exemption forms that include Form 8-ECI, Form 8EXP and Form-8BEN.
Generally you, the taxpayer, supply one of these forms to any institution that requests one. In the case of Form W-8IMY that would be a foreign intermediary, a foreign branch of a US bank or foreign flow through entity. In other words any institution that pays you money during the year. Otherwise that institution has to with hold 31% of the payment (this rate is for 2012 and 2013) for IRS taxes. Form W-8IMY prevents that, but the institution still sends a document to you and the IRS stating what income was paid during the tax year along with your identification information.
Should you provide Form W-8IMY?
Discuss that with your Expat CPA. Your marginal tax rate may be less than 31%, so allowing them to hold your 31% may result in a refund. Also, investors sometimes can use that 31% to make money in the interim. Finally many folks hate to pre-pay taxes.
I’m an expat CPA with a virtual office to serve my international and long distance clients. For a free phone consult call (910) 399-2705.
