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I have been a non-resident alien for a while with my residence now being in India. Previously, it was the USA. I understand that I am required to submit W-8BEN to my broker. Right now, I don't see any federal tax withholding on my 1099. When the W-8BEN goes to my broker will they stop sending 1099 to the IRS? If yes, what action will they perform instead? Also, I am not sure what I should fill out in the following section of W-8BEN. Can someone help?

Special rates and conditions (if applicable—see instructions): The beneficial owner is claiming the provisions of Article and paragraph of the treaty identified on line 9 above to claim a _____ % rate of withholding on (specify type of income):

. Explain the additional conditions in the Article and paragraph the beneficial owner meets to be eligible for the rate of withholding:

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After you complete W-8BEN, you will not receive 1099. You will receive 1042-S with Non-resident Alien Withholding. 1042-S can be optionally used in 1040-NR to recover some withholding.

If by "Broker", you mean stock broker (including ETF), then you can claim Article 10 of https://www.irs.gov/pub/irs-trty/india.pdf "tax so charged shall not exceed 25 percent of the gross amount of the dividends paid by a United States person"

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  • Thank you. What about capital gains? What forms will be sent to the IRS apart from 1042-S? And will anything be sent to the Indian tax authorities?
    – user2371765
    May 25, 2020 at 2:44
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    Under Common Reporting Standard (CRS), of which India is a participant, there is Automatic Exchange Of Information (AEOI). So Capital Gains "figure" will be reported to Indian tax authorities. However, NRA tax withholding BY THE USA only withholds Dividends, but not Capital Gains. All types of forms (or its NRA equivalent, e.g. 1099=1042-S) that you usually receive when you were a resident will be sent to IRS. As your question was focused on Broker, my answer ends here.
    – base64
    May 25, 2020 at 2:59
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    The AEOI is achieved using Line 6 of W-8BEN "Foreign tax identifying number", which is your India tax number.
    – base64
    May 25, 2020 at 3:02
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    @user2371765 I have deleted "which is a Regulated Investment Company" and "Bonds", after reading the treaty again. Both RIC and non-RIC can benefit from Article 10. Bonds is Article 11. "If you receive more than one type of income from a single withholding agent for which you claim different benefits, the withholding agent may, at its option, require you to submit a Form W-8BEN for each different type of income. Generally, a separate Form W-8BEN must be given to each withholding agent."
    – base64
    May 25, 2020 at 3:19
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    @user2371765 When you said "2018 return" do you mean India return? AEOI is only for tax authorities to cross-reference and verify whether what YOU FILLED is true. If India allows carryover of Capital Gain/Loss, then you fill in your form and support it with other documents (e.g. past 1099/1040).
    – base64
    May 25, 2020 at 4:02

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