The W-8BEN form is essential for foreign individuals to certify their non-U.S. status and claim any applicable tax treaty benefits. Submitting this form is crucial to avoid higher tax withholding rates on income such as dividends and interest. It must be filed by non-resident aliens who receive income from U.S. sources, including dividends, interest, royalties, and other types of income.

Form 1042-S is typically issued by March 15th following the close of the previous tax year. This form reports U.S. source income paid to non-resident aliens and details the amount of tax that has been withheld. Certain securities, such as American Depository Receipts (ADRs), are not reportable on the 1042-S. Recipients can use the information on Form 1042-S to report their U.S. income or claim a refund if excessive tax has been withheld.

Income reclassification happens when a company reclassifies payments made throughout the year to a different type of income, such as Return of Capital. Reclassification may result in either a refund or a reduced amount of tax withholding for certain securities. This commonly occurs on mutual funds, ETFs, and Real Estate Investment Trusts (REITs). Securities that undergo such reclassifications with over-withheld amounts will be refunded to the customer’s accounts when our clearing firm, Apex Clearing Corporation, receives payment from the IRS. This process may take 3 to 6 months after the 1042-S is available. The 1042-S will reflect the correct withholding amounts along with the reclassification adjustments. Recipients should rely primarily on the information provided on Form 1042-S to file a claim with the IRS for refund requests.

Consolidated 1099 is typically issued by February 15th following the close of the tax year. Recipients of this tax document may use it to request a refund from the IRS when filing their taxes, if applicable.