Do I still have to file if the payer already withheld US tax?
Sometimes the withholding is the end of it, and sometimes it is only a payment on account. On passive US-source income the payer takes a flat amount from the gross payment, and where the correct rate was applied that can settle the liability without a return. It stops settling anything the moment the rate or the character is wrong — a treaty rate that was available but never applied, residence documentation that had lapsed at the broker, or income that was really connected with a US business and belonged on the net-basis side. In each of those cases the return is the only mechanism that corrects the position, and it is also how over-withheld money comes back. The form's own page sets out what we need to answer that.
What counts as income effectively connected with a US business?
It is the dividing line the whole return is built on. Income effectively connected with a US trade or business is taxed on a net basis at graduated rates, so the costs of earning it come off first. Everything else that is US-source — the passive side — is taxed on the gross amount at a flat statutory rate, with no deductions at all, and only a treaty can reduce it. The two systems run side by side on one return. Which side an item falls on is decided by what you actually did in the United States, not by how the payer coded the payment, and payers get that wrong often enough that it is worth checking before you accept their treatment.
I rent out a property in the United States — do I file?
Rent from US property is US-source, and by default it is taxed on the gross amount, with tax taken from each payment before it reaches you. That takes no account of mortgage interest, property taxes, insurance or repairs, so a mortgaged property can be taxed on its turnover while it makes almost no profit. There is an election that moves the rent onto the net basis, where those expenses and depreciation come off before tax, and the election is made and maintained through the return. So the answer is usually yes, and the reason to file is rarely the tax — it is the arithmetic. We set this out for owners here.
US tax was held back when I sold my property — now what?
The amount held back at closing is calculated on the sale price rather than on your gain, so on a property that has not risen much, or that you are selling at a loss, it routinely exceeds any tax due. It is a deposit against a liability nobody has yet worked out. The non-resident return is where that liability is actually computed — purchase price, improvements, selling costs — and where the difference between the tax and the withholding is claimed back. There is also a route to reduce the withholding before closing, which is worth considerably more than recovering it after the fact, but it has to be started before the money moves.
I moved out of the United States mid-year — which return?
Probably both, as one exercise. Where residence begins or ends part-way through a year, the year splits: the period you were resident is reported on the ordinary individual return and the non-resident period on this one, with the residency date as the join. The trap is that the two halves are governed by different rules — worldwide income on one side of the date, US-source and effectively connected income on the other — so the same receipt can be treated quite differently depending on which side it falls. Establishing the date itself is most of the work, and it is decided on facts rather than chosen.
Does a tax treaty mean I do not have to file?
A treaty changes the tax, not the return. It can cut the rate on passive income, or put a category of income out of US reach altogether, but that is a position, and a position generally has to be claimed on a filed return and, where required, disclosed on it. Leaving the return unfiled because the treaty produces no tax means nothing has been claimed and nothing is on record — a weak place to stand if the payer has reported the income to the IRS and the IRS has no return to match it against. File the return, claim the article, and keep the residence evidence that supports the claim.
What is an ITIN and how do I get one?
An individual taxpayer identification number, for people who have a US filing or reporting reason but cannot obtain a Social Security number — a non-resident claiming a treaty rate or a refund, a foreign spouse on a joint return, a dependant, a foreign seller of US property. You apply on Form W-7 with certified evidence of identity and foreign status, normally submitted with the return that creates the need. It is a tax number only, and it confers no immigration or work status. See ITIN applications.
How do I get back tax withheld in another country?
By the route that country provides, and it is rarely automatic. Where an elective return is available — on rent or pension income, for instance — filing it recomputes the tax on net income and refunds the difference. Where it is not, you file a refund claim with the withholding authority, supported by evidence of your residence and entitlement to the treaty rate. Both take time, which is why fixing the rate before payment is worth more. See withholding refund and recovery.
