Non-US Persons and Entities: If I am a non-US person, may I complete a Form W-9?
US residency status for tax purposes determines the appropriate tax certification that applies to your account. US citizens and legal residents (Green Card holders) are required to complete Form W-9 regardless of residence. All US formed entities and US operations of foreign entities complete Form W-9. If you hold a permanent work Visa and reside in the US you may also complete a W-9.
All others are considered to be non-US persons (also known as nonresident aliens) and will be required to complete a Form W-8. Foreign students and teachers living in the US who maintain residency in their home countries are required to complete Form W-8.
The rules are complex in this area. Refer to IRS Publication 519, US Tax Guide for Aliens, for more information.
Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.
Non-US Persons and Entities: If I do not complete a Form W-8, what will happen?
If IB does not have a valid Form W-8 on file, you are presumed to be a US person without a proper tax certification and IB is required to backup withhold at a rate of 28% on interest, dividends and payments in lieu, as well as gross proceeds.
Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.
Tax: Non-US Persons and Entities: Forms W-8 and 1099
All non-US persons and entities are required to complete an IRS Form W-8 to certify their country of tax residence. If you complete Form W-8 you will not receive Form 1099. However, you may receive Form 1042-S which reports interest payments, dividends, and substitute payments in lieu and applicable US tax withholding, thereon, from US securities paid to foreign investors. Refer to IRS Publication 519, US Tax Guide for Aliens, for more information.
Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.
Non-US Persons and Entities: How do I determine whether for tax purposes I am a nonresident alien?
Generally, if you are not a US citizen you are considered a nonresident alien by the IRS unless you meet one of the following criteria:
Green card test: You are a lawful permanent resident as determined by Immigration, that is, you have been issued a resident alien registration card (“Green Card”) by US Immigration Services, or
Substantial presence test: You are an individual with a valid nonimmigrant visa who resides in the US for a certain required period of time.
The rules are complex in this area. An exception may apply if you are a student, researcher or teacher or you hold a nonimmigrant Visa. Refer to IRS Publication 519, US Tax Guide for Aliens, for more information and consult your tax advisor.
Circular 230 Notice: These statements are provided for information purposes only, are not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor.
Tax: Capital Gains and Losses: K-1 Information on Form 1099
You may receive information reporting on Form 1099 which is also reported on the K-1. For example, if you hold publicly traded units in a partnership, and the partnership does not pay out dividends but instead pays a quarterly cash distribution which is classified as return of capital and not dividend income, the amount will also be reported on Form 1099-DIV. Distributions from Canadian income or royalty trusts may be reported on Form 1099 or if treated as a partnership on the K-1.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Tax Reporting: Schedule K-1
If you hold shares or units in a publicly traded partnership such as a master limited partnership or a royalty trust, you will receive Schedule K-1 directly from the general partner or trust.
The K-1 reports your pro rata share of the partnership’s taxable income, gain, loss and deductions. This information is required to be reported on a Schedule K-1 by the partnership. Any income or expense, as well as distribution, from the partnership will adjust the cost basis of your holding.
Contact Investor Relations associated with the fund directly or access the fund’s website for more information or to obtain the K-1 tax information on-line.
You are advised to keep Schedule K-1 for your records; you are not required to file it with your tax return. Refer to IRS Publication 541, Partnerships, for more information and consult your tax advisor.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Tax: Capital Gains and Losses - The Wash Sale Rule
The IRS defines a wash sale as a sale of stock or securities at a loss within 30 days before or after you buy or acquire in a fully taxable trade, or acquire a contract or option to buy, substantially identical stock or securities.
A wash sale occurs if you realize a loss on the sale of the security, and then buy a "substantially identical" replacement stock within the 61-day period, and the loss is deferred until the replacement shares are sold.
Commodity futures contracts are not considered stock or securities and are not covered by the wash sale rule; however, any straddle position acquired after June 23, 1981 is subject to the rule.
For further information on the wash sale rule, refer to IRS Publication 550, Investment Income and Expenses, the instructions to Schedule D (Form 1040), and consult your tax advisor.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Tax Reporting: Single Stock Futures
Transactions involving single stock futures are not required to be reported on Form 1099. Refer to IRS Publication 550, Investment Income and Expenses for further discussion, and consult your tax advisor.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Tax: Capital Gains and Losses: Mutual Fund Capital Gains Distributions
Mutual fund distributions may be in the form of long-term capital gains or ordinary income distributions (which includes any short-term capital gain).
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
Capital Gains and Losses: The Difference Between Short-term and Long-term Capital Gains
Short-term capital gains are capital gains earned on the sale of securities and mutual fund shares held for one year or less. If you hold an investment for more than one year, any gain on the sale of the asset is considered long-term and is taxed at a more favorable capital gains tax rate. The date a security is acquired is the trade date +1 and the date of sale is the trade date.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this FAQ was not intended or written to be used and cannot be used for the purpose of avoiding tax penalties that may be imposed on any taxpayer.
