If you have a child who plays esports games regularly they may have entered an online gaming competition (like Fortnite World Cup or Call of Duty League) and won a major prize.
The initial excitement may have waned slightly once you realized that 30% of the winnings were reduced by US tax. This is because your child is a non resident of the US and the US payor (e.g. Epic Games or Twitch) have held the flat 30% required by the IRS.
This can be reclaimed in full if there is a tax treaty between the US and your home country (e.g. United Kingdom or Denmark or France etc).
The process for reclaiming:
- wait until you receive Form 1042-S from the US payor
- complete Form 1040NR - US tax return (including a treaty claim as applicable)
- apply for an ITIN using Form W-7
- send all paperwork for processing
- wait up to a year or a year and a half due to Covid delays at the IRS (in normal times it would be 6 months)
- wait another 4 to 6 weeks for the cheque to be mailed to you
- wait 6 to 8 weeks for the cheque to clear
Repeat the process above each year this happens (excluding the ITIN - this is a one off!)
If the US payor is low risk, you will find you have to file every year a win occurs to reclaim any excess withholding. Obviously delays in processing may mean you are double taxed in the short term (i.e. your home country) but this will be offset when the refund finally arrives.
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Just Breve can assist both UK based players or anyone based in a treaty based country who wishes to reclaim overpaid US tax.
E: info@justbreve.com
T: 0208 1444632
www.justbreve.com
We offer video call based services for identity verification for any ITIN applications. As part of the process your original documents need to be mailed to us before the call.
Fixed fee services and full transparency on timings of both preparation of paperwork and updates on your case (even during Covid times).