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Old 06-11-2016, 07:03 AM
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Join Date: Apr 2016
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Filling W8ben Form

I reside in India now for last several years and have IRA account in the USA. Opened during my stay in the USA. I hope I can get help with the last and most important piece of information.

I have to re-submit form W8BEN to TD Ameritrade where I hold my IRA account. My question is related to PART II CLAIM OF TAX TREATY BENEFITS. Line 9 I had mentioned INDIA and left line 10 blank. As per TD Ameritrade my submitted W8BEN form is incomplete for treaty rate to be applied and if I fill in correctly, then 0% with holding rate can be applied. I need to fill in three data points. One is article number of the treaty, second is withholding rate (which I think should be 0% based on my conversations including with TD Ameritrade), and third is to specify type of income (and that will be INCOME FROM IRA?). SO PLEASE ADVISE necessary inputs in Line 10, so I can correctly fill and re-submit the W8 form. Primarily article number that need to be mentioned for retirement account income so that 0% will be with held on distributions.

Below please find reply from TD Ameritrade for reference.

_________________________________________________
Thank you for submitting your Internal Revenue Service (IRS) Form W-8BEN.
If we had been given the proper documentation with the treaty portion properly completed on the W-8BEN, you would have been eligible for the 0% withholding on your distribution. Since the account did not have this, we had to use the defualt rate of 30%.
However, the form we received was incomplete in regards to your request for a tax treaty rate. We have accepted your submitted form and have applied it to your account without treaty benefits being applied. For retirement accounts line 10 needs to be complete on the W-8BEN form in order for us to be able to apply the treaty rate to any distributions made from the account. We would be willing to apply the treaty rate to the 2014 distribution provided the resubmitted W-8BEN form has both lines 9 and 10 completed and the affidavit of unchanged status is also submitted. Please note since this is an IRA account you will need to complete section 9 and section 10 for the treaty rate to be applied.

WHAT WAS MISSING?
Line 10 in Part II of the form was not completed. In order for us to apply a tax treaty rate to your account and apply a reduced rate of withholding to your income, we need this information to be filled out completely.

HERE'S WHAT TO DO NOW:
To take advantage of the treaty benefits, please complete and submit a new IRS Form W-8BEN, paying special attention to fill in the appropriate answer for Line 9 and Line 10 for which country you're claiming for tax treaty purposes.

____________________________________________



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Old 06-12-2016, 04:59 PM
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Join Date: Oct 2010
Posts: 4,835
As said previously, In particular, Question #10 is of concern. you know India/USA have a tax treaty, but the issue is under what article the withholding is defined, and what explanation you can offer for eligibility under the treaty article;u need to go and check article appropriate for your situation . for instance in case of Canada,say you are a Canadian citizen, then the treaty entitles a Canadian citizen to withholding rates of

15% on dividends (Article X)
10% on interest (Article XI)
0% on capital gains (Article XIII)

so yopu, as a Canadian citizen is entitled to those rates because, under the definitions made in Articles III and IV, you are a person resident in Canada.
on line 10, the line must be used only if you are claiming treaty benefits requiring that you meet conditions not covered by the representations you make in lines 9a through 9e. I mean these lines are used if India has a tax treaty with the US that limits the tax rate on your IRA distributions income.So unless India has a treaty with the US,so filling out lines 9a-9e in Part II may be sufficient.



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