So my grandmother died and left me a nice insurance policy. When I went to claim it the insurance company sent me a claim form and a W-7 form and a W-8BEN form.
I am told if I dont apply for an ITIN the insurance company will keep "30% tax with holding" ?
If I apply for the ITIN what are the benefits?
I am so confused and do not understand all this stuff!
Dear h: Insurance money is not taxed in the US. If the policy earned any interest that may be taxable, just like having a savings account at a bank. Since you do not have a social security number the IRS requires you to get an ITIN number. If you chose not to that is OK but then the Life Insurance company will with hold 30% and you will have to file next year to get it back. Your choice!
If the insurance company is referring to the entire pot of money as your "interest" they are incorrectly stating the issue.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent
if the insurance company is telling you this, getting the ITIN # will avoid having the 30% withheld
and since this is insurance and an inheritance it is not taxable in the US
but the insurance companies are obligated to withhold taxes
There are always delays in processing a death claim.
The interest is what is taxable at 30%, not the proceeds.
Just fill ou the form and give it to them.