Claim Back Overpaid US Tax - 30% US tax withholding
Where US source income is concerned, you'll find US payors are being increasingly more strict before making payments to you. All payors of US source income are required to ensure the correct rate of US withholding tax is applied before releasing funds. Why may you ask, do they care? Well, the IRS are cracking down on tax withholding's made to non residents and where a payor has not deducted the correct amount of tax, the payor is then liable for the error! as the IRS cannot come after the non resident.
For non residents the flat rate is 30% US tax withholding. This can be reduced by way of a tax treaty exemption. Form W-8BEN is completed by individuals to declare their residence status as well as declare the treaty article relating to the type of income being exempted or reduced to a lower treaty rate.
The payor will then apply the correct rate before paying. The W-8BEN is kept on file by the payor, in case of audit by the IRS, to prove they checked the correct details with the recipient.
Some payors, however, will just apply the full 30% without asking for a W-8BEN (or in some cases a Form 8233 for personal services), because it's easier for them to just apply the flat 30% US tax withholding. Where this occurs, the recipient of the income will need to file a 1040NR US tax return to claim back overpaid US tax. In some instances, where services were performed in the US, you may also have to file a state tax return (where tax was over or under paid).
How can you help?
Just Breve file 1040NR tax returns for clients for a multitude of reasons. However, the primary reason in most cases, is because 30% US tax withholding has occurred.
Just Breve has both an Enrolled Agent license as well as a Certified Acceptance Agent license. This means we can prepare US tax returns and simultaneously apply for an ITIN. An ITIN (Individual Taxpayer Identification Number) is required to file the tax return. It is similar to a UTR in the UK.
What sort of tax refunds have you claimed?
Examples are many, but we have claimed back overpaid US tax in the following types of cases:
- Royalty income for book publishing - multi year filing
- Gambling Winnings from a US casino
- Capital gains tax withheld on sale of US stocks held via a US broker (due to an expired W-8BEN)
- Dividend tax withheld at 30% instead of 15% due to an expired W-8BEN
- US pension income - multi year filing
- US wage income for services performed in the US - including the appropriate state filings for NY, CA and GA
- US income for attending a US convention
- US income for participating in a US game show
- US income for performing at a concert/music venue
- Inheritance from a US relative where tax was withheld at 30% but was due only at graduated income tax rates
- US income for services performed outside the US
We can assist in many types of cases where the flat 30% US tax withholding has occurred or where services performed in the US resulted in a W-2 being issued with no ITIN or SSN and tax was withheld at a higher rate than required.
What do your clients say about you?
We always love feedback. Our testimonials page contains reviews from all prior clients who have wanted to leave a comment to pass on to others wanting to use our service.
Just Breve is a Certifying Acceptance agent and can assist with all 1040NR tax return filing requirements and ITIN applications.
We help applicants on a daily basis for both new ITIN applications and for ITIN renewals. We charge fixed fees (including up to 2 hours travel time to you).
You also have the choice of visiting us at our office near Heathrow airport (J4b off the M4).
Get in touch today and we will happily assist and answer your questions:
Phone: 0208 1444632