US 30 percent withholding and treaty rates — is this a do-it-yourself job?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: valid foreign-status certification, correct income coding on the recipient statement, and a treaty article that actually covers the payment are the three conditions.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Why is 30 percent withheld when the treaty says less?
Because 30 percent is the statutory US rate for payments of this kind to a non-resident, and the treaty rate is a claim the recipient has to make rather than a default the payer applies. Until a valid withholding form is on file, the payer's safe course is the full statutory rate — the payer is liable for any shortfall. Once the form is on file the treaty rate applies going forward, and amounts over-withheld before that are recovered by filing a US return. The rate the treaty actually allows depends on the article and on the treaty in force for your year, which is the part worth confirming before the payment is made.
Who qualifies for US tax treaty benefits?
A resident of the other treaty country, under that treaty's residence article, who is the beneficial owner of the income and who satisfies any limitation-on-benefits test the treaty contains. Nationality is not the test and neither is where the bank is. Note the trap in the other direction: a US citizen living in the treaty country generally cannot use the treaty to reduce US tax, because the saving clause preserves the US claim over its own citizens. See our treaty work.
Can I move my 401(k) or IRA into an RRSP?
In limited circumstances, and rarely without cost. Canada allows a transfer of certain US plan proceeds into an RRSP with additional room for that purpose, but the withdrawal is a taxable distribution on the US side first, with withholding and potentially an additional charge for taking it early. Whether the Canadian credit fully absorbs that US tax is the calculation that decides it. Often leaving the plan where it is and drawing later is the better answer. See RRSP against 401(k) and IRA.
What is a double tax treaty and what does it actually do?
It is an agreement between two countries that divides up the right to tax. Article by article it decides which country taxes employment income, dividends, interest, royalties, pensions, property and business profits — and where both may tax, it caps what the source country can withhold and tells the other to give credit. It also breaks residence ties and opens a government-to-government channel for disputes. What it never does is apply itself: a treaty position is claimed. See our treaty work.
Do you work with trusts and estates as well as returns?
Yes, and they are frequently the same file: a personal position, an entity position and an estate exposure that all move together.
