What is a W-8BEN form?

The United States Internal Revenue Service (IRS) issues W-8BEN forms to help Canadians avoid paying income tax to both the US and Canadian governments on passive income—like positive returns on US stocks. Keep reading to learn what the Form W-8BEN is, who should use it and how it can help you save on tax obligations.

What is a W-8BEN form?

If you earn passive income from US sources, Form W-8BEN is used to inform the IRS that you’re legally exempt from paying US income tax or that you qualify for a reduced tax rate.

This form applies only to fixed, determinable, annual or periodical (FDAP) income, such as dividends, interest, rent, royalties and annuities—not income from effectively connected income (ECI), which is taxed differently.

The form ensures the US withholds the correct amount while you report the income to the Canada Revenue Agency (CRA). Without a filed W-8BEN, you could face the full 30% withholding tax rate and potential double taxation by both the IRS and CRA.

Who should use a Form W-8BEN?

Anyone who earns US-sourced income but isn’t a US citizen or resident should use Form W-8BEN for tax purposes. The form certifies your foreign status and, if applicable, claims reduced withholding tax under the Canada-United States Income Tax Convention.

When do Canadians have to submit a W-8BEN form?

As a Canadian investing in US securities, you must provide a W-8BEN form to your brokerage or any US payer whenever you earn US-source income. Here’s when the form is required:

1. When opening a non-registered brokerage account

If you open a non-registered investment account (like, cash, margin or USD-denominated investment accounts) at a Canadian brokerage, you’ll typically be required to submit a W-8BEN form. The reason being that these types of accounts can hold US stocks, ETFs or bonds that may pay US-source dividends or interest.

2. When holding US securities in a registered account

If you buy or hold US investments inside a registered account—like a TFSA, RRSP, RESP or RRIF—your brokerage may also require an up-to-date W-8BEN to ensure the correct US withholding tax rate is applied.

Note that TFSA and RESP income from US dividends may still be subject to withholding tax even if you have a W-8BEN form filed.

3. Before receiving any US-source income

You must have a valid W-8BEN on file when receiving income such as:

• Stock or ETF dividends from US sources
• US bond interest
• Royalties from US sources
• Certain fixed or determinable payments from US payers

4. When your personal information changes

You must update your W-8BEN if information on it becomes outdated—for example if you move to another country, change your legal name or change your tax residency.

What US tax rates apply after I submit a W-8BEN form?

Here’s an overview of some of the reduced tax rates you can take advantage of by submitting a W-8BEN form compared to the standard US withholding tax rate of 30%:

How often do I need to fill out a W-8BEN form?

A W-8BEN form needs to be resubmitted every three years, even if there are no changes to your personal information. Once signed, the form remains valid for the remainder of that calendar year, plus the next two full calendar years. For example, if you submit a form in June 2024, it will remain valid through December 31, 2026, not June 2027.

Many brokers will send reminders when it’s time to update the form, but it’s ultimately your responsibility to keep it current. Otherwise, any US source income you receive could be subject to the full 30% withholding tax.

Who do I submit a W-8BEN form to?

If you use more than one broker or receive US-source income from multiple payers, you must submit a separate W-8BEN form for each account or income source. The W-8BEN is tied to the specific broker or payer who will be reporting your income and withholding taxes to the IRS, so a single form cannot cover multiple accounts or organizations.

What does the broker do with the form after I submit it?

When you submit a W-8BEN form to your broker, they use it to verify your foreign status and apply the correct US withholding tax on interest income and dividends from your US stocks. If you qualify for a reduced treaty rate, the broker will withhold at that lower rate instead of the default 30%.

You don’t need to send the form directly to the IRS. Your broker or US payer typically keeps the form, applies the correct withholding tax on your US-source income and reports the payments and withholding to the IRS on your behalf. However, you still need to declare this income to the CRA on your next tax return and pay income tax in Canada.

Will my broker take care of the W-8BEN form for me?

Some brokers will assist in the completion of your W-8BEN form, while others expect you to fill it out and submit it yourself. Many brokers let you complete and submit W-8BEN forms online, making the process fairly simple and painless.

Where can I find the W-8BEN form online?

You can find Form W-8BEN (as well as instructions for filling out the form) on the IRS’s website. You Canadian brokerage might also provide a link to access the W-8BEN form through their platform.

Frequently asked questions

• Do I have to be in the US to earn US-taxable income?

  No. You can earn US-taxable income from anywhere. For example, trading stocks on US exchanges is considered a US-based activity for tax purposes, even if you trade online while living in Canada.

• What is a Tax Identifying Number (TIN)?

  For Canadians, your Tax Identifying Number is your Social Insurance Number (SIN), which you'll need to fill out your W-8BEN form.

• What is the difference between W-8BEN and W-8BEN-E?

  The W-8BEN form is for individuals, while the W-8BEN-E form is for entities, such as corporations, partnerships or trusts. It's used for the same purposes, but it's longer and includes additional information about the entity's classification and FATCA status.

• Who should not use a W-8BEN form?

  US citizens and residents, green card holders and anyone with income connected to a US trade or business shouldn't use a W-8BEN form.

• What happens if I don't submit a W-8BEN form?

  The IRS will automatically withhold 30% on your US-sourced income. You may be able to reclaim this overpaid tax later, but this adds extra paperwork.

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Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio

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