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to ask how to get withholding tax back from US inland revenue nearly 2 years after the work was completed? Boring but I need advice!

(10 Posts)
Xxmmaass2015 Fri 18-Dec-15 23:27:46

My husband (UK taxpayer) did some freelance work for an American university in February 2014, and the Inland Revenue Service deducted 30 % of his fee as withholding tax. HMRC in the UK assumed it would be refunded so he paid tax on the full sum in the UK, instead of on the 70 % he actually received.

IRS have been dragging their heels on refunding it, but when he spoke to them in Feb 2015, they said he would probably be given his money back by October 2015. October came but nothing happened, and every time he tried calling America he always ended up on hold for about an hour then would give up.

He just received a letter saying IRS needs another 6 months before they decide what action to take (i.e. in May 2016 he will get a decision on whether he even gets his refund, on money that was deducted from his earnings in February 2014).

He was counting on getting this sum of money in order to pay his upcoming tax bill by 31st January. What can we do?

SummerNights1986 Fri 18-Dec-15 23:41:04

Complain. Write letters to the IRS and the Commissioner and the Commissioners deputies. Google any name related to auditing of the IRS (which does happen - not sure by who though) and write to them all.

Shout and shout until somebody listens and gives you a good reason why it's taking so long.

Xxmmaass2015 Fri 18-Dec-15 23:45:22

Thank you, we will try that. It is so frustrating, as it is the equivalent of more than £1000 and they are just sitting on the money.

Mistigri Sat 19-Dec-15 06:17:27

I think you might Google first to see if anyone anywhere has had this problem ... I'd be cautious about getting too assertive with a foreign revenue service if you have no leverage (I assume he is not a US citizen?) as it could lead to some jobsworth delaying your case further. (Note: I've got not specific knowledge about this but it's well known that the US IRS can be "aggressive" in its pursuit of tax revenues from overseas).

I think you should talk to HMRC to see what can be done at this end, perhaps it may be possible to defer the payment somehow.

How did the tax come to be withheld? Was it withheld by the university, at source? I'm curious because my self-employed husband's main client is US based and he does a lot of business with them with payment in dollars direct from the US - so I am wondering whether we might have to worry about this at some stage.

emsyj Sat 19-Dec-15 09:10:48

I would write to HMRC and say you want a refund of some of the tax paid in the UK on the basis that it had already been taxed in the US. You'll have more chance of getting a response from a UK authority on this I think. If the money was already taxed he may have been entitled to double taxation relief in the UK. Write in and explain that you're claiming overpayment relief and set out all the amounts received and deducted, plus include proof if you have it of the tax paid in both the US and the UK.

Noofly Sat 19-Dec-15 09:19:28

Did he fill out a 1040nr back in 2015? If so, and if he hasn't filled out a 1040x I'd try starting from scratch and going down that route. I've received various refunds fairly quickly (well, within 3-4 months). I don't know anything about reporting withholding tax though so might be talking rubbish!

Noofly Sat 19-Dec-15 09:20:27

Sorry, I mean filling out a 1040x now not the 1040NR.

TheLambShankRedemption Sat 19-Dec-15 10:03:37

Contact a US tax advisor and get them to provide a quote to help you fix this.

TheLambShankRedemption Sat 19-Dec-15 10:06:30

There is a US/UK double tax treaty so you may get some refund from HMRC in the interim, though it would have to be repaid if the IRS pay you.

Xxmmaass2015 Sat 19-Dec-15 10:41:41

Thanks; some really helpful advice. We will pass it on to his accountant.

In answer to queries, that tax was withheld at source by the university finance department in 2014, but by 2015 they had sorted themselves out, and he was paid gross by the university. He will be going back next year and I think it's all fine, the problem occurred in 2014 as it was his first visit.

He will receive his pay for his 2016 work there before he receives a refund for the 2014 work!

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