Guide to Form W-8BEN for Singapore Freelancers
Don't want US clients to withhold your freelance income? Then you'll need to submit the Form W-8BEN.
You’ve just completed a freelance project for a new US client. You submit your invoice for US$1,000, feeling pretty good about yourself.
To your horror, however, the client pays you only US$700. Their reply when you frantically ask what’s up?
“Sorry, gotta withhold a part of your payment for US government tax purposes.”
This rule may seem incredibly painful, especially if you’re already paying taxes on your freelance income to your own government.
Fortunately, there’s a way to legally avoid such withholding—and it’s by submitting a tax form known as the Form W-8BEN.
Understanding the Form W-8BEN involves learning a few technical tax concepts, which took me quite a few hours of reading the IRS website to figure out.
So to save you from going through the same hassle, I’ve put together this guide to explain the relevant Form W-8BEN concepts as simply as possible.
I’ve written this guide with Singapore freelancers in mind, but it may also be relevant to you as long as you are a freelancer who is:
- NOT a US citizen,
- NOT a US resident, AND
- NOT providing services from the US (even if you have US-based clients).
If you want a copy of the guide for future reference, leave your email address and I’ll email it to you:
Also: please note that I am not a US tax expert or attorney.
While I’ve done my best to explain the relevant concepts, this guide is not a substitute for tax or legal advice. If you need specialised advice on your tax situation, do consult a US tax expert!
Let’s get into it.
- What Is the Form W-8BEN?
- What Is the Form W-8BEN Used For?
- Are Non-US Freelancers Subject to IRS Tax Withholding?
- When Do Non-US Freelancers Need to Fill In the Form W-8BEN?
- How to Complete the Form W-8BEN
- Submitting Your Completed Form W-8BEN
- How Long Is the Form W-8BEN Valid For?
- If You’re a Freelancer, the Form W-8BEN Is Your Friend
What Is the Form W-8BEN?
The Form W-8BEN is a form provided by the Internal Revenue Service (IRS), to be filled in to certify that you are a foreign person who is the beneficial owner of income earned from a US source.
This is because income earned from US sources may be subject to withholding. Accordingly, you’ll need to declare your status as a foreign person so your income can be:
- Withheld as needed, or
- NOT withheld if this is not needed.
But that first sentence is quite a mouthful, so let’s unpack the statement a bit.
Alternatively, if you want to skip directly to how the Form W-8BEN helps you avoid having your income withheld, then check out the next section of this guide.
A “foreign person” is a person who is not a US person
Persons who are considered a “US person” include US citizens and residents. Foreign persons include “nonresident alien individuals”, i.e. people who are not resident in the US, and are not US citizens.
If you’re reading this post, you’re likely considered a nonresident alien individual. 👽🛸
(Yes, they call us aliens. But try not to get too worked up about that)
A “beneficial owner” of income
This is a person who is entitled to enjoy the income even if, from a legal point of view, someone else officially owns that income.
In most non-complex situations, the person who legally owns the income, and the person who beneficially owns it, are the same person. So generally, this isn’t something that you need to worry about.
Income earned from a US source
Not all income that you obtain from the US is considered US source income. The source depends on the type of income that was earned.
In the case of nonresident alien individuals, dividend income is considered US source income if it is earned from a US corporation.
On the other hand, the source of business income earned from personal services will be the location where the services were performed.
What Is the Form W-8BEN Used For?
The Form W-8BEN is used to certify your status as a foreign person, so that the income you earn can be withheld for tax purposes as needed.
For example, a 30% withholding tax applies to US source income that is “not effectively connected” to the conduct of a trade or business in the US. However, if the country that you’re in has a tax treaty with the US, you may be able to claim a reduced withholding rate.
What is “effectively connected income”?
Income is considered effectively connected income if it is earned from engaging in a trade or business in the US. This can include providing personal services while based in the US, for example.
US source income that is “effectively connected” with the conduct of a trade or business in the US is NOT subject to withholding.
However, effectively connected income will likely still need to be reported to the IRS for tax purposes. So it isn’t as if you can get away with not paying tax on effectively connected income altogether.
Are Non-US Freelancers Subject to IRS Tax Withholding?
That’s because only income earned by a foreign person from US sources is subject to withholding. And, as mentioned above, the source of income earned from personal services is determined by where the services are performed.
Therefore, if you are a freelancer who is:
- NOT a US citizen,
- NOT a US resident, AND
- NOT providing services from the US, and therefore your income is NOT US source income (even if your clients are based in the US),
Then the freelance income you earn is NOT subject to IRS tax withholding.
This makes sense, because if your income is already being taxed in your country of residence (such as Singapore), then why should it be subject to a second round of taxation by the US?
(Reminder: do consult a US tax expert if you need customised advice on your situation!)
When Do Non-US Freelancers Need to Fill In the Form W-8BEN?
As you freelance for US clients, your clients may ask you to provide a completed Form W-8BEN.
This is so that they don’t have to withhold a part of your earnings for giving to the IRS. (Which means less work for them too.)
The client also doesn’t need to submit your Form W-8BEN to the IRS. They’ll just hold on to the form in case they get audited, and need to prove that they don’t need to withhold a portion of their payment to you.
Related: If you invest in US stocks, you may also be asked to complete a Form W-8BEN to certify that you’re a foreign person.
That’s because the dividends you earn from these stocks are considered US source income, and WILL be subject to 30% withholding. Sorry.
How to Complete the Form W-8BEN
There are generally two ways:
Method 1: Submission through a custom-built form
If you’re using a freelancing platform, it may have built an online form for you to make the necessary Form W-8BEN declarations.
Here’s how this online form looks like on the Upwork freelancing platform, for example:
Filling in and saving this online form is really convenient for meeting your Form W-8BEN declarations.
Not all clients offer such a feature, though. So in this case, you’ll need to complete a PDF of the Form W-8BEN and give it to your client—which is what we’ll go through next:
Method 2: Filling in a PDF of the Form W-8BEN
First, go to the IRS website and download the latest version of the Form W-8BEN.
DON’T reuse any copy of the Form W-8BEN that you’ve downloaded or filled in previously. The form’s format and contents change from time to time, so you’ll want to make sure that you’re using the most updated version.
And don’t download the Form W-8BEN off any random website either.
For this guide, I’m going to refer to the October 2021 version of the Form W-8BEN.
If you have doubts (especially if the Form W-8BEN has been drastically updated since its October 2021 version), check out the IRS’ official instructions on filling in the Form W-8BEN. Alternatively, consult a US tax expert.
Here we go!
1. Check that you’re filling in the right form
The IRS has many different W-8 forms for foreign persons to use to declare their foreign status, and the Form W-8BEN is just one of them. So you’ll need to check that you’re filling in the right form.
At the top of the Form W-8BEN, it’ll state who should NOT be filling in this form:
The form will also helpfully tell you which form you should be filling in instead if you fall into any one of these categories of people.
If you’re a freelancer:
- Operating as an individual (this includes sole proprietorships, but NOT companies—companies are considered entities and should fill in Form W-8BEN-E instead),
- Who is not a US citizen, and
- Who is providing services from Singapore or some other country that is not the US (i.e. you’re a “nonresident alien individual” and you aren’t providing services from the US),
Then Form W-8BEN should be the correct form to fill in.
2. Fill in Part I of the Form W-8BEN
Part I relates to the identification of the “beneficial owner” of your freelance income.
For our purposes, the beneficial owner of your freelance income is likely to be you. So fill in your personal details in Part I.
If you’re a Singapore citizen or Permanent Resident, then provide your NRIC number in the section asking for your foreign tax identification number (TIN).
3. Fill in Part II of the Form W-8BEN
Next up is Part II: Claim of Tax Treaty Benefits.
Singapore doesn’t have any tax treaty in the US that entitles you to reduced US income tax withholding rates.
But this doesn’t matter!
Because if you’re a freelancer providing services outside of the US, then the income you earn from US clients doesn’t need to be withheld for US tax purposes anyway (as explained above).
So you can leave this whole Part II blank. 😜
(If you aren’t from Singapore, you can check whether your country has a tax treaty with the US. Though this ultimately shouldn’t matter if your income doesn’t need to be withheld in the first place.)
4. Sign Part III of the Form W-8BEN
Finally, read through the Part III: Certification section and confirm that all the information you’ve provided in the Form W-8BEN is accurate.
In particular, double-check that you meet all the requirements for submitting a Form W-8BEN.
If everything looks good, digitally sign the form and fill in the remaining details such as your name and date.
Submitting Your Completed Form W-8BEN
If you’ve filled in a custom Form W-8BEN online form (as per Method 1 above), then follow the steps provided to submit it.
On the other hand, if you’ve filled in a PDF Form W-8BEN (as per Method 2), then submit it to the client that had requested it. DON’T submit it to the IRS.
And that’s it! You’re done and don’t need to do anything else for now.
How Long Is the Form W-8BEN Valid For?
The Form W-8BEN is generally valid from its date of signing until 31 December of the third subsequent year.
For example, if you signed the Form W-8BEN on 1 June 2022, then it will be valid until 31 December 2025.
This is unless your situation changes such that your Form W-8BEN becomes outdated.
In this case, you will need to submit an updated Form W-8BEN within 30 days of your previous form becoming incorrect.
If You’re a Freelancer, the Form W-8BEN Is Your Friend
So that’s the Form W-8BEN explained.
In a nutshell, if you’re a freelancer from Singapore (or any non-US country, basically), then you’ll want to submit this form so that you don’t get any of your earnings from US clients withheld.
Always download the latest copy of the Form W-BEN from the IRS website. Then, follow the steps above for filling it in.
The form itself isn’t too difficult to fill in, but you’ll want to make sure that:
- You’re filling in the right form for your situation, and that
- You understand the implications of filling in the Form W-8BEN.
Accordingly, if you have doubts, do consult a US tax expert.
I hope you’ve found this guide useful! If you want a copy of it for the next time you need to fill in a Form W-8BEN, provide your email address below and I’ll send it to you: