Paying Overseas Contractors During Tax Season: What To Collect (W-8BEN, W-8BEN-E, W-9) And How To Pay On Time

Key takeaways

• The fastest way to avoid tax-season fire drills is to collect the right tax form and bank details before the first invoice arrives.

• W-9 is for US persons, while W-8BEN and W-8BEN-E document foreign status and can affect withholding and reporting.¹ ² ⁴

• Paying on time is mostly process: standardize onboarding, lock a pay cadence, and reduce last-minute FX and beneficiary changes.

Hiring overseas contractors is often operationally easy until tax season shows up. Then the same questions come back, sometimes all at once: Do we have the right form on file? Are the bank details verified? Can we pay in the contractor’s currency without delaying settlement? Who approves what, and when?

This guide is a practical playbook for US-based businesses paying overseas contractors. It focuses on what to collect upfront, how to keep documentation organized, and how to run payments on time without turning every invoice into a one-off project.

Start With One Decision: Is The Payee A US Person Or A Foreign Person?

Most onboarding confusion comes from skipping this step. Your process should make it impossible to move forward until you’ve classified the payee correctly.

Quick snapshot: which form you request

Important note: This is general information, not tax advice. When facts are complex, your finance team should consult a qualified advisor.

What To Collect Before The First Invoice

If you want fewer delays in March and April, build a short contractor onboarding pack that covers three areas: identity, tax documentation, and payment instructions.

Contractor onboarding checklist

Identity and contracting

• Legal name (match the contract)

• Entity type (individual vs company)

• Country of tax residence

• Contract or statement of work (stored centrally)

Tax documentation

• W-9 or W-8 series form, as applicable¹ ² ⁴

• Any supporting information your compliance team requires (varies by organisation)

Payment instructions

• Payment currency preference

• Beneficiary name exactly as it appears on the bank account

• IBAN (where applicable) and SWIFT/BIC for cross-border payments

• Remittance email for payment confirmations

• A standard payment reference format (Invoice Number + PO if relevant)

This up-front package does two things: it keeps your records clean, and it reduces the odds that you pay before you are ready.

What Each Form Does In Plain English

Form W-9: For US Persons

Form W-9 is used to provide the correct TIN to payers that may need to file information returns.¹ It’s the “US person confirmation” form, and it is typically the right request when the contractor is a US individual or US business.

Common mistake: requesting a W-8 from a US contractor because they live abroad or invoice from overseas. Physical location does not automatically change tax status.

Form W-8BEN: For Foreign Individuals

Form W-8BEN is used by foreign individuals to establish that they are not a US person and, if applicable, claim treaty benefits for certain types of US-source income.²

Also worth knowing: the instructions note that failing to provide a requested W-8BEN may result in withholding at the foreign-person withholding rate of 30%³ (or backup withholding in some cases).³ That does not mean every overseas contractor payment is automatically subject to that rate, but it does explain why payers often insist on having documentation in place.

Form W-8BEN-E: For Foreign Entities

W-8BEN-E is the version used by foreign entities. The IRS describes it as a form used to document foreign entity status for US withholding and reporting purposes under chapters 3 and 4.⁴

Common mistake: collecting W-8BEN from a contractor that invoices through a company. Match the form to the payee type.

Keep Your Forms Current And Easy To Find

Tax season pain is often a filing system problem, not a tax knowledge problem.

How long W-8 forms are generally valid

The IRS instructions state that a Form W-8BEN generally remains in effect from the date signed through the last day of the third succeeding calendar year⁴, unless a change in circumstances makes information incorrect.⁴ A similar rule applies to W-8BEN-E.⁵

Practical meaning: you should track expiry and changes so you’re not scrambling for “new forms” right when invoices stack up.

A simple recordkeeping structure that works

Create a vendor folder that includes:

• Contract and scope

• Latest tax form (with signature date clearly visible)

• Payment instructions (and version history)

• Proof of payment references for prior transfers

If you do nothing else, centralizing this information reduces the “who has it?” back-and-forth that causes late payments.

How To Pay Overseas Contractors On Time

Late contractor payments rarely happen because one person forgot. They happen because the process has too many handoffs.

Here’s a workflow that finance teams use because it is boring and repeatable.

Step 1: Lock a pay cadence and cutoffs internally

Set a predictable payment rhythm (weekly, biweekly, or aligned to invoice terms). Then set internal cutoffs for:

• invoice submission

• approval

• payment release

The goal is simple: invoices should not reach “payment due” before approvals are done.

If you need predictable execution, scheduled payments can help you align payment release with your approval cycle.

Step 2: Reduce FX surprises before they become deadlines

FX risk shows up when your team converts currency at the last minute. A practical operating approach is:

• separate “conversion decision” from “payment due date”

• stage larger conversions when timing is flexible

• keep forecasts flexible when invoices vary

For teams paying contractors across multiple countries, multi-currency accounts can support working balances so you are not forced into same-day conversions.

Step 3: Standardize payment references so reconciliation stays clean

A payment can arrive and still create admin pain if it can’t be matched to an invoice quickly.

Use a simple, consistent reference format like:

• INV-12345 | Contractor Name | Month

This helps both your team and your contractor.

Step 4: Use batch runs when volume grows

If you’re paying multiple contractors each cycle, batching reduces repeated manual work and the risk of copy-paste errors. Batch payments can help streamline higher-volume contractor runs.

Avoid Returned Or Delayed Payments With A “Bank Details” Control

Tax season is when fraud attempts often rise and when legitimate detail changes appear. A simple control protects you from both errors and fraud.

What to do when a contractor changes bank details

• Treat it as a formal change request, not an email instruction

• Verify via a second channel (a known phone number or verified portal contact)

• Require two-person approval before updating the payee record

For risk and process guidance, security and fraud can support internal controls your team can actually follow.

Common Tax-Season Pitfalls

A quick table you can share with AP, payroll, and procurement.

FAQ

Do we need both a tax form and bank details before we pay?

In most teams, yes. It keeps payments and recordkeeping consistent. Your specific legal and tax requirements depend on facts and jurisdiction, so confirm internally.

If a contractor is overseas, do we always use a W-8 form?

Not automatically. The form depends on whether the payee is a US person or a foreign person, not simply where they live or work.

How do we keep payments on time during busy periods?

Make payments predictable: lock a pay cadence, set approval cutoffs, and reduce last-minute conversions. The goal is to remove “hero moments” from the process.

What if the contractor wants to be paid in EUR, GBP, or another currency?

That can be workable, but it requires planning so FX is not handled on the due date. Many teams manage this by holding working balances or staging conversions, depending on volume and policy.

Where can we find the official forms and guidance?

The IRS provides official information pages and instructions for W-9, W-8BEN, and W-8BEN-E.¹ ² ⁴

Conclusion

Paying overseas contractors during tax season gets easier when you treat onboarding and payments as one workflow. Collect the right form upfront, store it where your team can find it, track when it needs to be refreshed, and run payments on a predictable cadence. That is how you prevent late payments and tax-season scrambling.

How Xe Helps

Xe is not a bank, but many businesses pair Xe with their primary business bank account to manage cross-border contractor payments more smoothly. Xe Business can help you send international payments, make pay cycles predictable with scheduled payments, streamline payouts with batch payments, and support operational controls through security and fraud guidance.

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The content within this blog post is for informational purposes only and is not intended to constitute financial, legal, or tax advice. All figures and data are based on publicly available sources at the time of writing and are subject to change. Actual conditions may vary depending on location, timing, and personal circumstances. We recommend consulting official government resources or a licensed professional for the most up-to-date and personalized guidance.

Citations

¹ Internal Revenue Service — About Form W-9 — (2026)
² Internal Revenue Service — Instructions for Form W-8BEN — (2026)
³ Internal Revenue Service — Instructions for Form W-8BEN (withholding note) — (2026)
⁴ Internal Revenue Service — Instructions for Form W-8BEN (validity period) — (2026)
⁵ Internal Revenue Service — Instructions for Form W-8BEN-E (validity period) — (2026)

Information from these sources was taken on January 23, 2026.