Filling out a tax certification form is required to open an IB account. The forms confirm your tax status in relation to the United States. Information provided by you may lower or exempt the U.S. tax withholding on your account.
This article will help you to:
►Choose the correct certification form ►Find your tax treaty benefits
►Fill out and submit your form online ►Answer tax certification questions
Which Form Do You Pick?
Tax Treaty Benefits
Management of account activity differs for each account type. IB is a U.S. broker and must follow U.S. guidelines. 3 simple questions help you choose the right form
Some countries have a tax treaty with the U.S. Find out if you benefit from a lower tax-withholding rate. Tax Treaty Benefit Info
Filling Out The Form
Tax Certification – FAQ’s
|The certification form is direct. Supply basic account information on the true owner of the assets or entity. Select W-9 Instructions or W-8 Instructions for help.||Seek professional advice for tax questions. These common questions and answers may help you make an informed decision. Tax Certification - Frequently Asked Questions|
Disclaimer: IB does not provide tax advice. 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 international, federal, state, local or other tax statutes or regulations, and do not resolve any tax issues in your favor. We recommend that you consult a qualified tax advisor or refer to the U.S. Internal Revenue Service.
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This information is for general educational purposes only. Individuals should consult with their financial adviser or legal counsel to determine how rollover regulations affect their unique situations.
Generally, an investor changing jobs or leaving the workforce may utilize either a Direct Rollover election to continue their retirement savings outside of their employer-sponsored retirement plan. Assets distributed directly to your IRA from the retirement plan may qualify as a Direct Rollover.
What is a Direct Rollover?
The Direct Rollover is a tax-free distribution to you of cash or other assets from one retirement plan that you contribute to another retirement plan, including an IRA. The contribution to the IRA is called a rollover contribution. The Direct Rollover method transfers the assets directly from the retirement plan (and not to the IRA owner) into the investor's IRA, avoiding the 20% mandatory IRS withholding. This option to transfer retirement assets has no age limitations.
Eligible retirement plans include:
Who do you contact first?
Contact your retirement plan administrator or the human resources office for eligibility and requirements. The plan administrator is required to provide a reasonable direct method of asset transfer. Completion of an IRA Rollover Form provided by the administrator may be required, in some cases. In other cases, the plan accepts an IRA Rollover Form supplied by your IRA's broker. Therefore, it is important to check with the plan administrator.
Initiating your Direct Rollover through IB
For those transfers that require a broker-supplied IRA Rollover Form, Interactive Brokers provides a convenient IRA Rollover Form. Interactive Brokers will forward the request to the plan administrator or broker for processing. Funds may be transferred by either wire transfer or check directly to Interactive Brokers.
Before accepting an IRA rollover transaction into an IRA, we require that you review your eligibility for the rollover and certify your understanding of the rollover rules and conditions. The IRA Rollover Form includes the Rollover Form and an IRA Rollover Certification Form.
The Fund Transfers page within the Account Management lets you notify IB of an IRA Rollover deposit of funds into your account. Select the Funding tab in the header link and choose Deposit Funds in the Transaction list. In the Method list, select Direct Rollover. Complete, sign, and return both forms to the Interactive Brokers address on the form.
Contact Customer Service with any additional questions.
In compliance with Treasury Department Circular 230, unless stated to the contrary, any information contained in this article 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.
All applicants are required to specify their country of legal residency during the initial stage of the application process. Based upon the response provided, the applicant will automatically be provided with the appropriate application forms, agreements and disclosures specific to the IB entity through which the account will be maintained upon approval (e.g., IB LLC, IB Canada, IB UK, IB India, IB Japan).
It's important to note that the IB entity to which an account is assigned is not subject to client discretion but rather determined by regulation and is a function of an individual's stated country of legal residency or, in the case of an entity, its country of formation.
Per Indian regulations, trading access to the Indian financial markets for individuals residing outside India is currently restricted to "Non-Resident Indians" ("NRIs") and "Financial Institution Intermediaries" ("FIIs") only.
NRIs are defined in the Indian Foreign Exchange Management Act of 1999 and the Indian Foreign Exchange Management Deposit Regulations of 2000.
In short, to qualify for NRI status you must:
a. Reside outside of India for more than 182 days per year, and;
b. Hold Indian citizenship, or;
c. Be a Person of Indian Origin as defined in the Indian Foreign Exchange Management Deposit Regulations of 2000.
Please note that applicants must satisfy criteria (a) and criteria (b) or (c) and will be prompted to review the aforementioned legislation and confirm their status at the point of application. To trade Indian products as a NRI, new or existing customers may apply for an account through the IB website.
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IB's intent with respect to the minimum is for account holders to maintain at least USD 10,000, or equivalent, although it's understood and accepted that equity may fall below that level due to trading losses and/or fees. Account holders are not, however, allowed to fund an account at a level sufficient to meet the minimum threshold and subsequently withdraw funds in an effort to circumvent the minimum.
In the case of an account requesting 'Cash' trading permissions the minimum age requirement is 18 (for joint accounts, both parties must be at least 18 years of age).
In the case of an account requesting 'Margin' trading permissions the minimum age requirement is 21 (for joint accounts, the primary account holder, at a minimum must be at least 21 years of age. The secondary joint account owner must be at least 18 years of age).
An individual or entity who would like to manage an account for a minor may do so using the UGMA/UTMA account structure.
IB, itself, does not provide advisory services to customers, but we do clear for a rather large number of Financial Advisors who do carry and clear their customer accounts with IB. As we are not in a position to provide personal recommendations as to Financial Advisors, you would need to research for an advisor on your own and if they are not already affiliated with IB, request that they open an account on your behalf with IB.
You may also wish to review the website of a US industry regulator such as FINRA (www.finra.org) which provides information regarding selecting investment professionals along with a tool referred to as FINRA BrokerCheck which allows investors to check the professional background of individual brokers.
IB does offer a paper trading account which allows one to use the full range of IB trading facilities in a simulated environment using real market conditions. This account, however, is made available only after the regular trading account has been approved and funded. Until that time, we recommend that you try the online demos made available to prospective customers through our website to get an overview of system functionality. A demo of both the TraderWorkstation or WebTrader trading platforms may be found by visiting our website at www.interactivebrokers.com and selecting the Individuals page. There you will be presented with a series of links including one titled 'Demos'.