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We are required by law to withhold tax from certain bonus payments depending on the residency of each recipient distributor. This is an attempt to explain these often complex and confusing rules. U.S. Source Bonuses: U.S. Residents - We must withhold backup withholding from each bonus payment unless we receive a valid U.S. social security number. This number can be certified to us with the completion of a W-9. Once we have received a valid U.S. social security number, withholding will cease unless we are specifically notified by the I.R.S. to begin withholding. The backup withholding rate is currently 28% (subject to change by government). Foreign Residents - Once a foreign distributor certifies foreign status using a Form W- 8BEN, a mandatory 30% withholding applies to all U.S. source bonuses unless one of the following withholding exemptions or reductions apply: a. You qualify for a reduced withholding rate due to a tax treaty provision (specific to bonus income); b. You are a resident alien claiming residence in the U.S. or; c. The bonus income is effectively connected with a trade or business in the U.S. (i.e. you have a U.S. office or other U.S. assets that produce the subject income and you are filing U.S. tax returns relating to this business.) If you think you may qualify for an exemption or reduced withholding, please go to www.irs.gov for more information and to determine the proper forms needed. Form W-8BEN to certify foreign status has a limited validity period beginning on the date of signature and ending on the last day of the third succeeding calendar year. For example: if you prepared and signed the form on September 30, 2009, the form will expire on December 31, 2012. A new Form W-8BEN is then required to be re-submitted for the 30% withholding to apply for the next three years. It is the distributor’s responsibility to re-file and update this form once their validity period expires. Canadian Source Bonuses: Canadian Residents - We need your Social Insurance number. If we do not have your SIN, please fill out a change of status form (available in Downloads), sign it and forward to the Home Office. Non-Canadians - We are required to withhold Canadian tax on Canadian bonuses paid to non-residents of Canada. The current rate is 15% (subject to change by government). Based on the above explanation, please see below for a W-9 and W-8BEN for your use as required. Print, prepare, sign and return by email ([email protected] ) or mail. If you need a Change of Status form, they are available in the Downloads section. Each individual income tax situation is different and every Country has complex tax laws, therefore, we recommend you consult with a tax advisor regarding your own personal situation or if you need any assistance with filling out the proper forms.
