Do I need to file a 1040NR US tax return?
If you have US source income, you may be required to file:
- if you have had too much tax withheld -> 30% is the flat rate of withholding for non residents of the US. However, this does not mean that is the correct rate of tax you should have paid.
- if you have underpaid US tax and are required to file to pay across the relevant amount to the IRS.
I paid 30% US tax - can I claim all of this back?
In some cases, if your country of residence has a treaty with the US, you may actually owe zero tax to the US and will be able to claim all of this back.
Under other circumstances, you may get a partial refund of tax. This can only be determined by reviewing your individual situation and circumstances as well as the treaty details with your country of residence.
Case Study examples of 1040NR US tax return filings:
1. UK singer visiting the US for 2 weeks to perform, had 30% tax withheld (on a 1042-S). The amount they received was over the tax free treaty exemption amount (UK/US treaty) and so they filed as a self employed individual (and claimed certain expenses relating to the performance) and we were able to reclaim 76% of the tax paid as a refund.
2. UK resident had sold shares held on a US stock market via his US brokerage account. Tax held was $16,500 (30% on dividends and 30% on capital gains). Per the treaty dividends are taxed by the US at a reduced rate of 15% and as the shares were listed on a recognized US market, the tax is zero. We were able to reclaim $14,750 of the taxes withheld.
3. A UK performer attended a US convention and was paid a fixed fee with 30% tax withheld. Taxes amounted to $12,000 (on a 1042-S) and we were able to claim back 60% of the withheld amount. The fees were classed as a performance fee. Again as they exceeded the US/UK tax treaty exemption threshold, the full amount became taxable at graduated US income tax rates. These rates are significantly less than the 30% flat amount.
4. A UK resident visited Las Vegas and won a significant amount of money at a local casino. A flat 30% was withheld on the amount and as a result they were out of pocket by $48,000. Per the US/UK treaty the gambling winnings are tax free. We were able to reclaim the full $48,000 by filing a 1040NR US tax return.
For all 1040NR US tax return filings a US tax identification number is required. As a non resident an ITIN is required to be applied for simultaneously as filing the tax return using a Form W-7 application. Just Breve as a certified acceptance agent for ITIN purposes, obtained ITINs in all cases. Tax returns with no ITINs are not processed and refunds become delayed until this is obtained.
Can I claim US tax back in the UK?
Absolutely! Just Breve is a US tax accountant. 1040NR tax refund claims are our specialty. We offer fixed fees only and initial calls are free, so ask as many questions as required.
Contact us today if you need to file a 1040NR US tax return to reclaim overpaid US taxes or to pay across any tax you may owe the IRS (we also assist with any US state tax return filings you may have):
t: 0208 1444632
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