If you live outside the U.S. and are about to receive your first distribution from a U.S. trust, congratulations — but before you can receive funds, you need to handle a few important tax steps.
Because the income comes from U.S. sources (like dividends, interest, or capital gains), the U.S. trustee must comply with strict IRS reporting and withholding rules.
If you don’t have a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), you should apply for an ITIN as soon as possible.
A U.S. trust (acting as a withholding agent) is required to issue Form 1042-S to report income paid to you — but it cannot complete that form properly without your ITIN.
Although you can temporarily submit Form W-8BEN without an ITIN (see below), the trustee will still require one to meet its reporting obligations.
That means beneficiaries should treat obtaining an ITIN as their first step, not an afterthought.
To apply, file Form W-7 with supporting documents under Exception 1(d) of the IRS instructions — these exceptions allow non-U.S. individuals who will receive U.S.-source passive income (such as dividends, interest, or trust distributions) to obtain an ITIN without attaching a tax return, as long as the trustee provides a letter confirming that the ITIN is needed for Form 1042-S reporting.
Your ITIN application must include:
Form W-7 (signed and checking box "a" or "h", and reference Exception 1(d) in the explanation.
A letter from the trustee stating that you are a foreign beneficiary who will receive income reported on Form 1042-S, and
Proof of identity and foreign status, usually your passport (original or certified copy).
You can apply:
By mail to the IRS ITIN Operation (Austin, TX) or apply through an Acceptance Agent or IRS Taxpayer Assistance Center.
⏱️ Processing time: The IRS currently estimates around 7 weeks, but applications from abroad or during busy season (January–April) may take 9–11 weeks or longer.
Applying early helps ensure your trust can meet its filing deadlines.
Different parts of your trust distribution are taxed differently for non-resident aliens (NRAs):
Dividends (U.S. companies): Generally subject to 30% withholding unless a tax treaty provides a lower rate (which does not apply in your case). Make sure you check your tax treaty.
Interest: Some types, such as portfolio interest or bank deposit interest, may be exempt from U.S. withholding. Others are taxed at 30%. Make sure you check the provisions of your tax treaty.
Capital gains (non-real-estate): Usually not taxed in the U.S. for non-residents unless you were physically present in the U.S. for 183 days or more during the tax year.
For more details, see IRS Publication 515 and Publication 519.
Before the trustee can send you any distributions, you must complete Form W-8BEN.
This form certifies your non-U.S. status and allows the trust to apply the correct withholding rate.
💡 Can you submit W-8BEN without an ITIN?
Yes — if you are not claiming treaty benefits, you can submit Form W-8BEN without an ITIN.
However, the trustee will still require your ITIN later to issue Form 1042-S, so apply for it right away.
Once you obtain your ITIN:
Provide it to the trustee immediately,
The trustee will use it to prepare Form 1042-S (due to you by March 15 of the following year), showing the amounts paid and any tax withheld.
Keep this form for your records and for your home-country tax reporting.
If the trust withheld the full required tax (generally 30%) and you have no other U.S. income, you usually don’t need to file a U.S. tax return. Please note that you may receive reduced withholding rate under a treaty.
However, if too much tax was withheld, or if you want to claim a refund, you may file Form 1040-NR.
If you haven’t obtained an ITIN by then, you can submit Form W-7 together with your return, but since the trust needs your ITIN earlier, it’s better to apply before distributions start under the exception.
| Step | What to Do | When |
|---|---|---|
| 1 | Apply for ITIN (Form W-7) with trustee letter (Exception 1d/1e) | As soon as possible |
| 2 | Submit W-8BEN to the trustee | Before first distribution |
| 3 | Receive ITIN (7–11 weeks typical) | Before Form 1042-S filing |
| 4 | Trustee issues Form 1042-S | By March 15 following year |
| 5 | File Form 1040-NR (optional, if refund or other reason) | By June 15 following year |
✅ Apply for your ITIN under Exception 1(d) (don’t wait until later).
✅ Provide the trustee’s letter of need with your Form W-7.
✅ Submit W-8BEN even if your ITIN is pending.
✅ Expect about 7–11 weeks for ITIN processing.
✅ Keep your Form 1042-S for future filing or local tax use.
✅ File Form 1040-NR only if needed (e.g., to claim a refund).
This article is for general informational purposes only and does not constitute tax or legal advice.
U.S. tax treatment varies depending on your trust’s structure, your residency, and your personal circumstances.
Always consult a qualified U.S. tax advisor experienced with non-resident trust beneficiaries before taking action.