Beneficial Owner: The person who actually owns and benefits from the income — not an agent, nominee, or intermediary acting on someone else's behalf.

Chapter 3 Withholding: The part of U.S. tax law (sections 1441-1464) that requires withholding tax on payments to foreign persons. The default rate is 30%.

Chapter 4 (FATCA): The Foreign Account Tax Compliance Act — requires foreign financial institutions to report information about accounts held by U.S. persons.

Disregarded Entity: A business entity with a single owner that the IRS ignores for tax purposes. The owner (not the entity) reports the income.

FDAP Income: Fixed or Determinable Annual or Periodical income — includes dividends, interest, rents, royalties, and similar payments. This is what's typically subject to withholding.

FFI (Foreign Financial Institution): A non-U.S. bank, brokerage, or other financial institution.

FTIN (Foreign Tax Identifying Number): Your tax ID number from your home country.

ITIN (Individual Taxpayer Identification Number): A U.S. tax ID for people who need to file U.S. taxes but aren't eligible for a Social Security Number.

Nonresident Alien: An individual who is neither a U.S. citizen nor a U.S. resident alien — i.e., a foreign person for tax purposes.

Substantial Presence Test: An IRS formula to determine if someone has been in the U.S. long enough to be treated as a resident for tax purposes.

Tax Treaty: An agreement between the U.S. and another country that reduces or eliminates tax on certain types of income to prevent double taxation.

Withholding Agent: Any person or entity responsible for withholding tax from payments to foreign persons and remitting it to the IRS.

W-8BEN Form

Glossary of Terms

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