Refunds of Withheld Taxes For Non Resident Aliens

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Refunds of Withheld Taxes For Non Resident Aliens
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• If youre a non-resident alien living in the
  states today - or NRA - you will likely face
  significant issues when trying to obtain refunds
  of withheld IRS taxes that are rightfully yours.
  A recent IRS freeze on credits that were claimed
  on Form 104NR (or the Non-Resident Alien Income
  Tax Return), which did not match the data filed
  on forms 1042 by tax withholding agents, is
  responsible for creating many of these issues,
  and the Taxpayer Advocate have been challenging
  this move.
• Who are The Taxpayer Advocate?
• The TAS is an independent organisation that has
  been formed within the

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• IRS, and their role is to help make sure that tax
  payers receive fair and just treatment, and that
  they are fully aware of, and understand, their
  rights as tax payers. They can help you to
  resolve any issues that you might have with your
  taxes and recommend changes that the IRS can
  implement to prevent future issues from
  occurring.
• General information about non-resident aliens and
  their taxes
• NRAs are taxed in a different way to other
  citizens and tax residents of the U.S., and those
  persons of foreign origin of whom the IRS
  considers to being earning an income that is
  effectively connected with a U.S.

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• business or trade often referred to as ECI, or
  effectively connected income - are subjected to
  taxes at a graduated rate on a net basis, unlike
  U.S. tax payers.
• NRAs are also often taxed on U.S source FDAP,
  or fixed, determinable, annual or periodic)
  income, which can encompass such things as rent,
  interest, royalties and dividends. Any income
  derived from this is taxed on a gross basis at a
  rate of 30 by way of withholding at source by
  the U.S. payer, who takes sole responsibility as
  the withholding agent to collect, deposit and
  report the tax to the IRS.

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• Hefty penalties can easily be incurred when this
  process is not strictly adhered to and will apply
  to both the U.S. and foreign person.
• How to claim credit for over withholding as an
  NRA
• It is often possible to reduce the 30
  withholding tax rate mentioned previously on FDAP
  income, such as if the NRA resides in a country
  that has a current tax treaty with the U.S.
  Portfolio income on some U.S. registered bonds
  and bank accounts may also be considered as an
  exception from withholding.

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• For NRAs to be able to benefit from a lower
  withholding tax rate, they must give the
  withholding agent sufficient documentation to
  provide justification for the lower rate, such as
  that which is given on a Form
• W-8BEN. If this is not given or received in time
  by the withholding agent, then they will have no
  choice but to withhold at the standard 30 rate.
  However, NRAs do have the possibility of
  claiming a credit for the over withheld tax when
  they file the Form 104NR, which is the
  Non-Resident Alien Income Tax Return, for the
  year that the FDAP income was earned and
  received.

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• In some circumstances, this can lead to a refund
  for the NRA, provided the form was filed
  correctly and in a timely manner.
• If youre a non-resident alien and are confused
  about the entire tax withholding process, or just
  need general advice about paying your taxes,
  dont try to second guess things, always seek
  professional help to ensure that you get the most
  accurate and up to date information and guidance.
  This will also help you to avoid costly penalties
  should you not follow the correct process.

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• At Heyer Associates, we proactively assist our
  individual and small business clients in meeting
  their goals. Our key area of focus is ensuring
  that our clients remain compliant with federal
  and state tax laws by providing them with high
  quality accounting and tax preparation service
  Coral Gables. If you are looking for tax
  preparation service in Miami, Heyer Associates
  would be a right option.