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Old 04-28-2016, 10:41 AM
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Join Date: Apr 2016
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IRA and W8BEN

Hi. I have IRA account in USA. I am currently residing in India.
I was asked to fill out W8BEN form for foreign tax status.

I had done a withdrawal from my Roth IRA. Now what I withdrew ($350) was penalty free because I have contributed more. So it was like distribution of contribution. I saw a withholding tax rate of 30% applied ($150 on $500, with $350 given to me).
So I am wondering why again a withholding on a post tax account (because this is already after tax money). Also as a foreign tax status, indian resident, should I not be exempt from withholding from a IRA account.

I need help to see if I filled out the W8BEN form correctly and to avoid withholding tax as much as possible.



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Old 04-29-2016, 06:00 AM
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Quote:
Originally Posted by rnilesh99 View Post
Hi. I have IRA account in USA. I am currently residing in India.
I was asked to fill out W8BEN form for foreign tax status.

I had done a withdrawal from my Roth IRA. Now what I withdrew ($350) was penalty free because I have contributed more. So it was like distribution of contribution. I saw a withholding tax rate of 30% applied ($150 on $500, with $350 given to me).
So I am wondering why again a withholding on a post tax account (because this is already after tax money). Also as a foreign tax status, indian resident, should I not be exempt from withholding from a IRA account.

I need help to see if I filled out the W8BEN form correctly and to avoid withholding tax as much as possible.
Thank you for your reply. I still have questions to clarify. To give you my status. I am residing in India now, and do not have any US income for the last more than 5 years or so and there is no contribution during that period, only one withdrawal from a Roth IRA account. This withdrawal amount is less than the amount contributed to the Roth IRA account and was contributed more than 5 years before withdrawing. So its a penalty and tax free withdrawal. My only financial assets are my retirement accounts. I filled up W8-BEN form and have submitted to TD Ameritrade where I hold my Roth and Traditional IRA accounts. I have not mentioned India treaty article number as I could not find that information. I know there is a USA-India tax treaty but don't know the article that needs to be mentioned on W8-BEN form. So now my question is what I should be filling in W8Ben form. I have filled in my name, India address and India PAN (SS/TIN equivalent), DOB, and account num. Should I fill in anything in Part II section CLAIM of TAX TREATY BENEFITS. If yes then what treaty and article number do I need to mention.
If I do not fill in this details, I simply file 1040NR to claim tax refund? Is there a way to reduce the withholding and then file 1040NR to claim refund of amount withheld? Please advise on W8BEN form keeping in mind my status and background details provided.



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Old 04-29-2016, 05:30 PM
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Quote:
Originally Posted by rnilesh99 View Post
Thank you for your reply. I still have questions to clarify. To give you my status. I am residing in India now, and do not have any US income for the last more than 5 years or so and there is no contribution during that period, only one withdrawal from a Roth IRA account. This withdrawal amount is less than the amount contributed to the Roth IRA account and was contributed more than 5 years before withdrawing. So its a penalty and tax free withdrawal. My only financial assets are my retirement accounts. I filled up W8-BEN form and have submitted to TD Ameritrade where I hold my Roth and Traditional IRA accounts. I have not mentioned India treaty article number as I could not find that information. I know there is a USA-India tax treaty but don't know the article that needs to be mentioned on W8-BEN form. So now my question is what I should be filling in W8Ben form. I have filled in my name, India address and India PAN (SS/TIN equivalent), DOB, and account num. Should I fill in anything in Part II section CLAIM of TAX TREATY BENEFITS. If yes then what treaty and article number do I need to mention.
If I do not fill in this details, I simply file 1040NR to claim tax refund? Is there a way to reduce the withholding and then file 1040NR to claim refund of amount withheld? Please advise on W8BEN form keeping in mind my status and background details provided.
Thank you for your reply. I still have questions to clarify. To give you my status. I am residing in India now, and do not have any US income for the last more than 5 years or so and there is no contribution during that period, only one withdrawal from a Roth IRA account. This withdrawal amount is less than the amount contributed to the Roth IRA account and was contributed more than 5 years before withdrawing.==>basically I should tell you that when it comes to early retirement account withdrawals, the rules are the same for both U.S.residents and nonresident aliens. According to the IRS, Your withdrawals from a R-IRA are tax free as long as you are 59 ? or older and your account is at least 5 years old.however, you need to file for W8BEN; as a Nonresident alien, you must provide form W-8BEN and a
U.S. taxpayer ID number to claim any tax treaty benefits between US and india.Since you are not making withdrawals from more than r- IRA,
you do not need to complete a separate form for each account.





So its a penalty and tax free withdrawal. My only financial assets are my retirement accounts. I filled up W8-BEN form and have submitted to TD Ameritrade where I hold my Roth and Traditional IRA accounts. I have not mentioned India treaty article number as I could not find that information. I know there is a USA-India tax treaty but don't know the article that needs to be mentioned on W8-BEN form. So now my question is what I should be filling in W8Ben form. I have filled in my name, India address and India PAN (SS/TIN equivalent), DOB, and account num. Should I fill in anything in Part II section CLAIM of TAX TREATY BENEFITS. If yes then what treaty and article number do I need to mention. =====> In part 1 of the form, you need to complete the first section, which is for identification purposes, and to establish that you are a foreign person. Line 1 is for your name and Line 2 for your country of citizenship. Line 3 is for your permanent address, Line 4 for other mailing address if applicable. Line 5 is for a U.S. tax identification number, itin or etc if you hAVEand Line 6 for a foreign tax ID number. You do not need this if you have itin. Line 7 is for your own reference number, if you're using one r-ira accct, yo just put in 1 and Line 8 for your date of birth. YOU ALSO NEED TO Complete part 2, which allows you to claim benefits from a reciprocal tax treaty. Line 9 identifies the country(you need to identify india where you claim to be a resident for income tax treaty purposes )and Line 10is not for you since you meet conditions not covered by the representations you make on line 9 and Part III. .


If I do not fill in this details, I simply file 1040NR to claim tax refund?=>Correct; as said, you need to file 1040NR just for refund. The tax is withheld at source by the payor of the income,a ?withholding agent since he has responsibility for withholding the required tax and paying it over to the IRS. In the event withholding is required and the withholding agent fails in its duties, the agent can be held personally liable for the tax. The Form W-8 BEN must be kept up-to-date. If it is not, you may find that the agent has wrongfully withheld tax on the income. It is quite time-consuming, costly and cumbersome to get wrongfully withheld amounts refunded from the IRS.
Generally, a Form W-8BEN provided without a US individualTaxpayer Identification Number will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2015, remains valid through December 31, 2018.


Is there a way to reduce the withholding and then file 1040NR to claim refund of amount withheld?====>as said the only way to reduce w/h is to file W8BEN for the withholding agent in US in your case, TD Ameritrade



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Old 05-01-2016, 01:35 AM
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Join Date: Apr 2016
Posts: 12
Thank you again for your reply. So to make sure, in PART II - CLAIM OF TAX TREATY BENEFITS, I only fill in line 9 (resident of India). I don't need to fill in line 10 at all? with any treaty article number, right? Please confirm.

And if I need to fill in line 10 then I need to fill in treaty article num, withholding rate, specify income type, and reasons to indicate I meet the terms of the article. What would all these be if I need to fill them?

I have a social security number, so just fill that in W8BEN form, and no need to fill India PAN number I guess?

Will submitting form W8-BEN US social security number, with foreign status identification and India resident for treaty purpose, reduce the withholding or eliminate it all together to 0%?

And if anything is withheld, I can always file form 1040NR to claim tax refund as long as it is contribution? I understand before 591/2 if its not contribution, I will have to pay US taxes, is that right?

And If I do not make any further distribution withdrawals, and make withdrawal only after 59.5 age (when my account will be like more than 25 years old), nothing will be withheld by TD Ameritrade as I will be eligible for tax free withdrawals then. Is that right?

So whenever there is a withdrawal, all TD Ameritrade thinks is there is a distribution and will withheld tax, and then I need to file 1040NR to IRS and explain that is withdrawal against contribution and so please refund. Is that right?



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  #5 (permalink)  
Old 05-01-2016, 01:36 AM
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Join Date: Apr 2016
Posts: 12
Thank you again for your reply. So to make sure, in PART II - CLAIM OF TAX TREATY BENEFITS, I only fill in line 9 (resident of India). I don't need to fill in line 10 at all? with any treaty article number, right? Please confirm.

And if I need to fill in line 10 then I need to fill in treaty article num, withholding rate, specify income type, and reasons to indicate I meet the terms of the article. What would all these be if I need to fill them?

I have a social security number, so just fill that in W8BEN form, and no need to fill India PAN number I guess?

Will submitting form W8-BEN US social security number, with foreign status identification and India resident for treaty purpose, reduce the withholding or eliminate it all together to 0%?

And if anything is withheld, I can always file form 1040NR to claim tax refund as long as it is contribution? I understand before 591/2 if its not contribution, I will have to pay US taxes, is that right?

And If I do not make any further distribution withdrawals, and make withdrawal only after 59.5 age (when my account will be like more than 25 years old), nothing will be withheld by TD Ameritrade as I will be eligible for tax free withdrawals then. Is that right?

So whenever there is a withdrawal, all TD Ameritrade thinks is there is a distribution and will withheld tax, and then I need to file 1040NR to IRS and explain that is withdrawal against contribution and so please refund. Is that right?



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Old 05-01-2016, 01:39 AM
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Join Date: Apr 2016
Posts: 12
Quote:
Originally Posted by Wnhough View Post
Thank you for your reply. I still have questions to clarify. To give you my status. I am residing in India now, and do not have any US income for the last more than 5 years or so and there is no contribution during that period, only one withdrawal from a Roth IRA account. This withdrawal amount is less than the amount contributed to the Roth IRA account and was contributed more than 5 years before withdrawing.==>basically I should tell you that when it comes to early retirement account withdrawals, the rules are the same for both U.S.residents and nonresident aliens. According to the IRS, Your withdrawals from a R-IRA are tax free as long as you are 59 ? or older and your account is at least 5 years old.however, you need to file for W8BEN; as a Nonresident alien, you must provide form W-8BEN and a
U.S. taxpayer ID number to claim any tax treaty benefits between US and india.Since you are not making withdrawals from more than r- IRA,
you do not need to complete a separate form for each account.





So its a penalty and tax free withdrawal. My only financial assets are my retirement accounts. I filled up W8-BEN form and have submitted to TD Ameritrade where I hold my Roth and Traditional IRA accounts. I have not mentioned India treaty article number as I could not find that information. I know there is a USA-India tax treaty but don't know the article that needs to be mentioned on W8-BEN form. So now my question is what I should be filling in W8Ben form. I have filled in my name, India address and India PAN (SS/TIN equivalent), DOB, and account num. Should I fill in anything in Part II section CLAIM of TAX TREATY BENEFITS. If yes then what treaty and article number do I need to mention. =====> In part 1 of the form, you need to complete the first section, which is for identification purposes, and to establish that you are a foreign person. Line 1 is for your name and Line 2 for your country of citizenship. Line 3 is for your permanent address, Line 4 for other mailing address if applicable. Line 5 is for a U.S. tax identification number, itin or etc if you hAVEand Line 6 for a foreign tax ID number. You do not need this if you have itin. Line 7 is for your own reference number, if you're using one r-ira accct, yo just put in 1 and Line 8 for your date of birth. YOU ALSO NEED TO Complete part 2, which allows you to claim benefits from a reciprocal tax treaty. Line 9 identifies the country(you need to identify india where you claim to be a resident for income tax treaty purposes )and Line 10is not for you since you meet conditions not covered by the representations you make on line 9 and Part III. .


If I do not fill in this details, I simply file 1040NR to claim tax refund?=>Correct; as said, you need to file 1040NR just for refund. The tax is withheld at source by the payor of the income,a ?withholding agent since he has responsibility for withholding the required tax and paying it over to the IRS. In the event withholding is required and the withholding agent fails in its duties, the agent can be held personally liable for the tax. The Form W-8 BEN must be kept up-to-date. If it is not, you may find that the agent has wrongfully withheld tax on the income. It is quite time-consuming, costly and cumbersome to get wrongfully withheld amounts refunded from the IRS.
Generally, a Form W-8BEN provided without a US individualTaxpayer Identification Number will remain in effect for a period starting on the date the form is signed and ending on the last day of the third succeeding calendar year, unless a change in circumstances makes any information on the form incorrect. For example, a Form W-8BEN signed on September 30, 2015, remains valid through December 31, 2018.


Is there a way to reduce the withholding and then file 1040NR to claim refund of amount withheld?====>as said the only way to reduce w/h is to file W8BEN for the withholding agent in US in your case, TD Ameritrade
Thank you again for your reply. So to make sure, in PART II - CLAIM OF TAX TREATY BENEFITS, I only fill in line 9 (resident of India). I don't need to fill in line 10 at all? with any treaty article number, right? Please confirm.

And if I need to fill in line 10 then I need to fill in treaty article num, withholding rate, specify income type, and reasons to indicate I meet the terms of the article. What would all these be if I need to fill them?

I have a social security number, so just fill that in W8BEN form, and no need to fill India PAN number I guess?

Will submitting form W8-BEN US social security number, with foreign status identification and India resident for treaty purpose, reduce the withholding or eliminate it all together to 0%?

And if anything is withheld, I can always file form 1040NR to claim tax refund as long as it is contribution? I understand before 591/2 if its not contribution, I will have to pay US taxes, is that right?

And If I do not make any further distribution withdrawals, and make withdrawal only after 59.5 age (when my account will be like more than 25 years old), nothing will be withheld by TD Ameritrade as I will be eligible for tax free withdrawals then. Is that right?

So whenever there is a withdrawal, all TD Ameritrade thinks is there is a distribution and will withheld tax, and then I need to file 1040NR to IRS and explain that is withdrawal against contribution and so please refund. Is that right?



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  #7 (permalink)  
Old 05-01-2016, 01:45 AM
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Join Date: Apr 2016
Posts: 12
Thank you again for your reply. So to make sure, in PART II - CLAIM OF TAX TREATY BENEFITS, I only fill in line 9 (resident of India). I don't need to fill in line 10 at all? with any treaty article number, right? Please confirm.

And if I need to fill in line 10 then I need to fill in treaty article num, withholding rate, specify income type, and reasons to indicate I meet the terms of the article. What would all these be if I need to fill them?

I have a social security number, so just fill that in W8BEN form, and no need to fill India PAN number I guess?

Will submitting form W8-BEN US social security number, with foreign status identification and India resident for treaty purpose, reduce the withholding or eliminate it all together to 0%?

And if anything is withheld, I can always file form 1040NR to claim tax refund as long as it is contribution? I understand before 591/2 if its not contribution, I will have to pay US taxes, is that right?

And If I do not make any further distribution withdrawals, and make withdrawal only after 59.5 age (when my account will be like more than 25 years old), nothing will be withheld by TD Ameritrade as I will be eligible for tax free withdrawals then. Is that right?

So whenever there is a withdrawal, all TD Ameritrade thinks is there is a distribution and will withheld tax, and then I need to file 1040NR to IRS and explain that is withdrawal against contribution and so please refund. Is that right?



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