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I run a small online gaming company (sole proprietor LLC) and I frequently commission artists from both the US (whom I issue 1099s to, and will start to collect W9s from), but ALSO contract some work from freelance artists and writers who work in other countries such as Ukraine, Poland, Australia, Canada, and others.

NONE of them perform ANY work within the US, so to my understanding they are not subject to any US tax withholding.

It is my understanding that I should be collecting W8BEN forms from them in the case of an IRS audit.

So my questions are:

  1. What parts of the W8Ben do I need my non-US artists and writers to fill out and submit to me? Only Part 1 and 3, and leave all of Part 2 blank? Do I need to fill out anything special to let the IRS know no work was performed in the US?

  2. I understand the W8BEN forms are for me to hang on to and they are not submitted to the IRS (unless requested). Are there are any forms I should be submitting, similar to how I submit the 1096 for my US-based contractors by the end of January annually?

Thanks in advance; every time I think I learn something about taxes I read two other things that make me question what I think I knew.

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  • To be clear -- they work and reside in other countries and are not US expats? US taxes its own citizens or LPRs even when they reside and work elsewhere (although some earned income can be excluded, and if they are also treated as resident by the other country and taxed on income, they can get a credit against their US income tax); it is the only major country to do so, and requires a special clause in all tax treaties to which US is a party. May 13, 2022 at 8:46
  • Correct; they are not US residents past or current. Aug 4, 2022 at 17:25

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What parts of the W8Ben do I need my non-US artists and writers to fill out and submit to me? Only Part 1 and 3, and leave all of Part 2 blank? Do I need to fill out anything special to let the IRS know no work was performed in the US?

They should fill the parts relevant to them. If Part II is relevant for them (i.e.: they want to claim treaty benefits), then they should fill it and you should act on it.

I understand the W8BEN forms are for me to hang on to and they are not submitted to the IRS (unless requested). Are there are any forms I should be submitting, similar to how I submit the 1096 for my US-based contractors by the end of January annually?

If you withhold anything (e.g.: if they claim treaty benefits with a specific withholding rate), then you'll submit form 1042 to the IRS.

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  • If I withhold 0% as they perform no work in the US, is there ever a need to fill out Part II, then? May 12, 2022 at 17:53
  • @poster9182737 the other way around. If they fill Part II with the specific withholding rate then you withhold at that rate. Who decides what to fill is not you, it's them.
    – littleadv
    May 12, 2022 at 17:57

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