If you have a US brokerage account and are a non resident of the US, you will need to ensure you have a valid W-8BEN in place.
If none is in place or it has expired (after 3 years), you may have US tax deducted at source on BOTH dividends and capital gains.
How can I reclaim for US taxes charged on a single sale of US shares at a time after my W-8BEN expired and my US broker held the tax?
If tax has been held you only have one option and that is to file a 1040NR for the year of sale to reclaim the tax held. Now if the sale happened in January 2022, you will have to wait till January 2023 to file the tax return. This is because the US tax year in January to December and you cannot claim until the tax year has closed!
Separately as a non resident of the US, the tax withholding document (which needs to be attached to the 1040NR) is normally issued in March or April the following year. In the case above, this is March or April 2023!
Once the return is prepared and submitted, the refund will take up to 6 months to be issued (based on ongoing Covid delays at the IRS).
So almost 2 years if you sold in the early part of the US tax year. Very annoying!
Can I ask my broker to refund me if I give them a new W-8BEN?
Possibly yes, if they have not already transferred the tax to the IRS, but in most cases the answer is no, and tough luck. Large brokers are highly systemised in their way of doing things. So if the tax has been held, even if it's only been a few days, they will transfer the funds to the IRS. This covers them if they ever get audited by the IRS, and no one wants that.
So, I have to pay tax on the capital gains in my home country - what now?
If there is a long delay (like in the example above), it simply means you will have a timing issue.
You will need to hold enough tax back to pay the home country and then file as soon as possible for the US tax refund. This is just purely timing of two different tax authorities. It means you will need to manage the cashflow from the sale of US stocks or dividends where tax has been held. Don't spend it all! Else you will have an issue in your local home country.
Separately, if you have no US bank details, you will receive a USD cheque for the refund. So bear in mind bank clearing times as well! 6 to 8 week as a minimum. As well as movements in FX rates.
Can Just Breve assist with my US tax reclaim?
Yes of course, we do so regularly. You will need to provide the US tax withholding documents issued by the US broker. Once received we can start the reclaim process. Separately, if you do not have a US tax number, you will also need to apply for an ITIN as the tax return will not be processed without it. Just Breve is a certifying acceptance agent (CAA) for ITIN applications, so we can assist here too.
I need to talk to someone, how do I do so and is there a fee?
No fees for asking questions in relation to your individual claim. You call us 8am to 7pm on weekdays and 8am to 2pm on a Saturday.
The telephone number for Just Breve is 0208 1444632
or email your contact details to info@justbreve.com
Once we confirm what needs to happen, we will advise fees and what documents you need to provide. Fixed fees only, no hidden costs with us.
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