If you have a US brokerage account like E-Trade or Charles Schwab, as a non resident of the US you will have filled in a W-8BEN to declare your country of residence and any reduced withholding under a tax treaty. However, if the W-8BEN has expired, you may find that the US broker has held a flat 30% withholding tax on US dividends (as well as any capital gains on stock sales made).
Why has this happened?
If there is no valid W-8BEN in place, the broker will hold the highest tax possible to protect themselves from issues with the IRS. Primarily because they are required to hold evidence of you being a non resident and where this has expired or lapsed, they will automatically hold at a higher rate.
Why did they not tell me to renew my W-8BEN form?
Sometimes this happens due to system errors or possibly even a change in contact details meaning any reminder has gone missing or failed to deliver.
I have now received a 1042-S (and / or 1099-B) - how can I get the broker to refund me the overpaid tax?
Unfortunately if you have received a 1042-S or 1099-B it means the broker has already transferred the tax held over to the IRS. The only way to obtain a refund of overpaid US tax is to file a 1040NR US Tax return. Separately, if you do not have a US tax identification number (called an ITIN), you will also need to apply for one at the same time. All US tax returns need either a Social Security Number or ITIN so the tax return can be processed and the refund issued.
Can Just Breve assist with my US tax filing and US tax refund?
Yes Just Breve can assist with your reclaim of overpaid US tax. With any filing you will need to provide certain documents and information for us to be able to prepare the tax return for you.
Once prepared you will have various timing issues to deal with:
- ITIN - if applying for an ITIN - this is processed first and will take up to 4 months due to Covid delays
- the tax return is then forwarded and will take 6 months for the refund to be issued, again due to Covid delays
Get in touch for more details or clarifications - no cost for the enquiry.
Tel: 0208 1444632