I received a W-8 from a Canadian citizen who has both a Canadian Social Insurance number and a U.S. SSN. How do I set him up for payment? 1099-reportable? Non-reportable? Or 1042-S him at year end?


It depends on a number of factors.

A Canadian citizen submitting a W-8 typically should be set up for a 1042-S, not a 1099-MISC, if the payments are subject to withholding and reporting. 1099s are for U.S. persons and resident aliens. However, you did not specify whether the Canadian is a resident alien here, or is in Canada.

Withholding and reporting also depends. If you are buying only merchandise, then the payments are not subject to withholding and reporting. Assuming the Canadian is not a resident alien in the U.S., whether other types of payments are subject to withholding and reporting depend upon the source of the income (which depends on type of payment). Foreign source income is not subject to withholding and reporting. E.g., services performed outside the U.S. are not U.S.-source income and you do not have to withhold or report. Rent depends on where the rental is (or is being used); royalties depend on where the property is used.

If the payments are U.S.-source but the vendor claims the treaty benefit, you would withhold at the lower treaty rate and report on a 1042-S; in the case of Canada, the treaty rate is 0, so you don’t have to withhold, but you must report the payment on a 1042-S.

To better answer your question, it is necessary to know much more detail about the vendor and transactional details.

Follow up: Querent states this individual is a Canadian citizen serving on the board of directors of a U.S. company, and no merchandise is involved, only services.

Yes, payment for director services to a Canadian citizen on your board who is resident in Canada but travels to board meetings in the U.S. would be reported on a 1042-S; it also means withholding 30%, unless he claims treaty privileges, which as an individual receiving compensatory payment, he should do by submitting a Form 8233 rather than a W-8BEN. The treaty between the U.S. & Canada would mean zero withholding, so you should get him to complete that form.  Form 8233 requires a U.S. TIN. (See Instructions for Form 8233.)

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