Tax certification | Robinhood

Tax certification

We're required to collect a W-9 tax form or an equivalent from our customers. Customers can certify their tax status directly in the app. Certifying your tax status ensures we appropriately apply any necessary withholding.

Common tax status questions

Why do I need to certify my tax status?

We’re legally required to ensure that all Robinhood customers certify their tax status. For US customers, we’re generally not required to withhold taxes on proceeds, such as from sales, interest, and dividends. If you don’t certify your tax status, you may be subject to backup withholding. Certifying your tax status allows us to avoid unnecessary withholding.

How do I certify my tax status with Robinhood?

You can certify your tax status from your Robinhood app—make sure your app is up-to-date. If you need to make a change to your account before certifying your tax status, such as updating your legal name, contact us for help.

What is a W-8BEN?

A W-8BEN is a tax form certifying that an individual is a non-US person and a beneficial owner for US tax purposes. If you are a non-US person, we’re required to withhold taxes of up to 30% from dividends and interest you receive. The W-8BEN will ask you to certify the foreign country to which you pay taxes, your residential address in that country, your international tax ID number, and whether or not you want to claim US tax treaty benefits to potentially reduce the amount of taxes that we’re required to withhold from dividends and interest that you receive.

If you’re submitting a W-8BEN, you’ll also need to submit a letter of explanation in the app, which provides information on the reason you reside in the US but are claiming to be a non-US person for tax purposes. A foreign passport will also need to be submitted. You can submit your W-8BEN and these documents in the app.

What is a W-9?

A W-9 is a tax form certifying an individual as a US person for US tax purposes. This form will ask you to certify your personal information like your name, address, and social security number. US persons should also report whether they have been instructed by the IRS that they're subject to backup withholding. If you’re a US person for tax purposes, you can submit your W-9 in the app.

How do I know if I’m a US person or non-US person for tax purposes?

To be considered a US person for tax purposes, you must:

  • Be a US citizen, or
  • Pass the permanent resident card test, or
  • Pass the substantial presence test.

If none of the above situations apply to you, you're considered a non-US person for tax purposes.

How do I know if I pass the permanent resident card test?

A non-US citizen will satisfy the permanent resident card test if they’re a lawful permanent resident of the US for at least 1 day during the calendar year. If you’ve been issued a registration card (Form I-551), you likely meet the requirements for the permanent resident card test. If you're unsure of your residency status, we recommend consulting with a legal or tax advisor.

How do I know if I pass the substantial presence test?

A non-US citizen satisfies the substantial presence test if for the calendar year: they’re physically present in the US for at least 31 days during the current year; and physically present in the US for at least 183 days over the past 3 years, counting all of the following:

  • Each day present in the current year
  • ⅓ of the days present in the prior year
  • ⅙ of the days present in the second prior year

There are exceptions where days present in the US don’t count for purposes of the substantial presence test. Days present in the US as an exempt individual don’t count toward the substantial presence test. Common exempt individuals include the following:

  • A student temporarily present in the US under a “F,” “J,” “M,” or “Q” visa
  • A teacher or trainee temporarily present in the US under a “J” or “Q” visa
  • An individual temporarily present in the US as a foreign government-related individual under an “A” or “G” visa

Here are 2 examples to help determine if you meet this test. If you were physically present in the US for 120 days for each year from 2020-2022, you wouldn’t pass the substantial presence test. Your days would be calculated as follows:

  • Present for 120 days in 2022 and these are counted as full days
  • Present for only 40 of these 120 days in 2021 as the days count as ⅓
  • Present for only 20 days in 2020 as the days counts as ⅙

In this scenario, the total number of days you were present is 180 days, which falls just short of the 183 day requirement to pass the test.

If you were physically present in the US as a student on a valid F-1 visa for 180 days each year from 2020-2022, you would not pass the substantial presence test. As a student on a valid “F” visa, you’re considered an exempt individual and your days in the US don’t count for purposes of the substantial presence test.

What treaty rate applies to a non-US person?

We’re generally required to withhold 30% from dividends and interest paid to you if you’re a non-US person. This withholding tax will automatically be deducted from the dividend and interest payments you receive.

You may, however, be eligible for a reduced rate of US withholding tax if your country of permanent residence has an income tax treaty with the US. If you certify in the app that you’re a tax resident of a country that has an applicable income tax treaty with the US, we’ll subject your payments of dividends and interest to the reduced rate of withholding tax provided in that treaty. If you don’t see your country listed, then the US doesn’t have an income tax treaty with your country and you’ll be subject to the general 30% withholding rate.

How do I fill out my W-9?

To submit your W-9 information within the Robinhood app:

  1. Go to tax certification
  2. Select Start
  3. Select Yes if you’re a US resident for tax purposes
  4. Select Agree
How do I fill out my W-8BEN?

To submit your W-8BEN information in your Robinhood app:

  1. Go to Tax certification
  2. Select StartNo if you aren’t a US resident for tax purposes
  3. Select the country you pay taxes to, and then select Continue
  4. Enter your residential address in the country, and then select Continue
  5. Enter your international tax ID, and then select Continue
  6. If your country is eligible to claim US tax treaty benefits, select Yes or No to opt in or out at this reduced rate
  7. Select the reason you’re in the US
  8. Review the W-8BEN
  9. Select ReviewSubmitDone

If you don’t have an international address or an international tax ID, follow the on-screen prompts for further instructions.

What if I don’t have an international tax ID or international address?

If you aren’t considered a US person for tax purposes, don’t have an international tax ID or address, contact support for help.

What is backup withholding?

Backup withholding is federal tax that financial institutions, like Robinhood, are required to withhold for individuals with the following situations:

  • Certification failure: The account holder doesn’t provide their name and tax identification number and certify that the information is correct in the manner required by the IRS prior to receiving reportable payments including dividends, interest, and gross proceeds from sale transactions.

    Robinhood requires customers to certify their tax information at account opening in order to avoid having to charge backup withholding. Robinhood will also notify customers if there’s an issue with their certification that requires attention.

  • B-Notice: The IRS identifies that the name and tax identification number (TIN) combination reported on a Form 1099 isn’t correct for a specific account and sends the payer a B-Notice. Upon receipt of a B-Notice from the IRS, Robinhood will notify the customer and request either a new W9 or other documentation, such as a copy of a social security card to update the incorrect information. Backup withholding is required until the customer provides the additional certification or documentation.

  • C-Notice: The taxpayer was notified by the IRS that they either underreported dividends and/or interest or failed to file a return where required. Robinhood can be notified of this issue by a customer in their W-9 certification or directly by the IRS.

Backup withholding is currently required to be withheld at a rate of 24%. Backup withholding will be reported on a 1099 Form as federal tax withheld. Once backup withholding starts, it can’t be reversed. However, providing your tax certification or additional documentation required after receiving a B-Notice or C-Notice will effectively stop and prevent future withholding. In addition, customers who are charged backup withholding can use the withheld amounts as a credit of federal income tax withheld on their tax return.

Disclosures

Robinhood does not provide tax advice. For specific questions, you should consult a tax professional.

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Crypto markets are highly volatile, and trading or holding crypto can lead to loss of your assets. Crypto is not legal tender, and is not backed by any government or covered by any government compensation scheme.

Cryptocurrency services are offered for eligible EU customers through an account with Robinhood Europe, UAB (company number 306377915), with its registered address at Mėsinių 5, LT-01133 Vilnius, Lithuania (“RHEC”). RHEC is registered according to the regulatory requirements of the Republic of Lithuania as a virtual currency exchange and virtual currency depository wallet operator. RHEC is supervised by the Lithuanian Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania. RHEC is registered under the applicable Polish law as a virtual assets service provider (VASP) in the Register of Virtual Currency Activities maintained by the Director of the Tax Administration Chamber.

© 2024 Robinhood. All rights reserved.
Follow us on

Crypto markets are highly volatile, and trading or holding crypto can lead to loss of your assets. Crypto is not legal tender, and is not backed by any government or covered by any government compensation scheme.

Cryptocurrency services are offered for eligible EU customers through an account with Robinhood Europe, UAB (company number 306377915), with its registered address at Mėsinių 5, LT-01133 Vilnius, Lithuania (“RHEC”). RHEC is registered according to the regulatory requirements of the Republic of Lithuania as a virtual currency exchange and virtual currency depository wallet operator. RHEC is supervised by the Lithuanian Financial Crime Investigation Service under the Ministry of the Interior of the Republic of Lithuania. RHEC is registered under the applicable Polish law as a virtual assets service provider (VASP) in the Register of Virtual Currency Activities maintained by the Director of the Tax Administration Chamber.

© 2024 Robinhood. All rights reserved.