Withheld on the gross, until you say otherwise.
US income paid to a non-resident is withheld at a flat statutory rate on the gross amount, with nothing deducted against it. How that income is classified decides whether that is the end of the story or the start of a very different calculation.
Fixed and determinable passive income
Dividends, interest, rents and royalties received passively. Tax is taken at source on the gross figure, with no deduction for costs, and withholding is generally the final settlement unless a treaty reduces it.
Effectively connected income
Income connected with a US trade or business. Taxed like a resident’s business income — on the net profit after expenses, at graduated rates, and reported on a return you file yourself.
Gross withholding is the default, not the answer
Four things that decide what you actually keep.
Three stages, followed down both sides
Almost all of the value sits in the first stage. Once money has been paid at the wrong rate, everything afterwards is recovery rather than planning.
Before you are paid
Give the payer a valid W-8 claiming any treaty rate you are entitled to. Without it they must withhold at the full statutory rate, and correcting that later is slow.
Establish the position up front so the payer does not withhold as though the income were passive. The certificate you provide is different in this case.
Through the year
The payer withholds and remits on your behalf. You should receive a statement showing what was paid and what was taken.
Nothing may be withheld at all, which means estimated payments through the year rather than a single settlement at the end.
After year end
Often no return is required. One is still worth filing where too much was withheld, because that is the only route to getting it back.
A return is required. Expenses come off, the graduated rates apply, and any tax already withheld is credited against the result.
Most of it is money left behind
Withholding at the full statutory rate on every payment, when a treaty might have reduced it substantially.
Gross-basis withholding on receipts, with none of your costs recognised against them.
Over-withheld tax is only recovered by filing, and the window to do it does not stay open indefinitely.
Federal treaties do not bind individual states, which set their own rules on non-resident income.
What non-residents ask first
Tax was already withheld. Do I need to file at all?
For genuinely passive income, withholding is often the final settlement and no return is required. It is still worth filing where too much was taken, because a return is the only route to recovering the difference. For effectively connected income a return is required regardless of what was withheld.
My country has a treaty with the US. Does the lower rate apply automatically?
No. Your payer withholds at the statutory rate unless a valid certificate is on file claiming the treaty rate, and relief varies by type of income rather than applying uniformly. Getting the paperwork in before payment is far easier than reclaiming afterwards.
How do I know whether my income is effectively connected?
It turns on whether you are carrying on a US trade or business and whether the income is connected to it. Regular commercial activity, people working for you in the US, or a fixed place of business all point one way; a passive holding generally points the other. It is a judgement on the facts rather than a checkbox.
How is this priced?
A fixed fee, scoped from your income types, your country of residence and whether a refund claim is involved. Quoted in writing before any work begins, and never billed by the hour.
Tell us what you are paid, and by whom.
The type of income and the country you live in decide almost everything here. Send us those two things and we will tell you what should have been withheld, and whether filing recovers anything.
Start scoping