Michael

Of course you can, the IRS only sent that letter because your HR department withheld FICA taxes and reported your income on a w-2 and because of that, the IRS thinks you owe income taxes. Once the HR department knows your correct status, they should be able to ignore that letter. They may not even have to notify the IRS of your status but just stop withholding FICA and income taxes and not report your income on a w-2 because once that occurs, as far as the IRS is concerned, you are not an employee that should be taxed.

Neither your HR department or the IRS are boggy men. Their computers are doing what they think they should be doing according to the status that is being indicated. A tax attorney can't solve your withholding problem but only your HR department can solve that problem.

nun

Exactly,

You need to remidy this asap. So get the W-8BEN filed with HR and start looking into getting refunds of all US tax withheld. You cann file a 1040NR showing zero tax liability and you should get all tax withheld back as a refund. Unfortunately that will not agree with your W-2 so you will probably need some professional help. You also need to talke to SSA about a FICA tax refund.

You should also be getting your taxes sorted out for wherever you are resident for tax purposes.

nun

The 30% withholding probably came about because the OP hasn't filed a US tax return even though he has a W-2.

Michael

The HR department may not want a W-8BEN since earned income for foreigners working for a US company outside the US is not supposed to be taxed by or reported to the IRS. However in his case because of the muck up, the company may want to have some documentation (possibly see his passport and/or proof of his immigration status in the US) indicating why the company is no longer taxing his income since previously the income was incorrectly reported to the IRS and FICA taxes were withheld.

bealerDSB

Great feedback as always gentlemen. I am holding off engaging with HR, to see what the CPA Person tells me. I don't want to roll a grenade in there without being 110% sure. I have asked point blank should I ask my HR, see what else comes from it.

Updates as & when.
DSB.

Bob

Well yes you should.

Your options are if you want to stay with the same employers, speak to HR or suck it up and lose the money doing nothing.

Getting the tax returned is a separate issue.

Michael

Out of curiosity, why are you hesitant about contacting the HR department? Was the job advertised only for US citizens and you represented yourself as a US citizen?

If that is not the case, I am dumbfounded since the purpose of the HR department to resolve issues such as yours. If I had such a problem, I would immediately be contacting the HR department without a second thought.

nun

HR should be the first place to go. They should be anxious to get this stuff right. As an NRA your situation is pretty simple; no US tax and no FICA. The W-8BEN will establish your NRA status and also zero withholding on any income under the tax treaty.

bealerDSB

I am not hesitant in speaking with HR, just that - all I have to go off is data from 'a forum'. I want to engage one time within the realms of correct information, not hear-say. Not to negate your valued information, but I rather do it right once, as oppose to being slightly incorrect and trying to eat some words or statments thereafter.

Regards as always,
DSB.

Michael

Any update on solving the tax problem?

bealerDSB

Sorry for the slow update, my location kinda rough right now....Anyways;

CPA professional seems to think I am due pretty much everything [ 90%+ ] .

1) 1040NR + 8833 + 8948 to IRS for the Income Tax.
2) 843 to the IRS for the Employment Tax.

Depending on IRS response regarding Emplyment Tax refund we may have to go to Employer for it [ SS / Medicare contributions ] , if IRS say 'not there problem' it was your Employers.

But, for now the above [2] filings are both going to the IRS.

3) W_8BEN Filed to Employer, awaiting response(s)

DSB.

Michael

Is the CPA going to file the return for you or are you going to try to file them yourself?

The 1040 NR is normally pretty simple to fill out but since the income you received from your employer was reported on a w-2, it is supposed to be entered in the field relating to US income but should not be entered there (that field should indicate $0 so that you should get a refund of all US income taxes paid for the year). Unfortunately everything is normally handled by a computer (unless you are audited) and entering $0 as US income may confuse the computer since it doesn't match the w-2.

I'm not sure why the CPA wants to file form 8833 since that is a treaty -based form and you are not basing your withholdings or refund on any treaty but are basing it on the fact that you are not a resident and not a US citizen or green card holder. Maybe he is going to try to use that form to try to explain why taxes shouldn't be withheld and hope that an IRS agent reads that form.

I didn't even know that form 8948 existed and never filed it and usually file a paper return.

Normally form 843 is supposed to be used primarily for one of two reasons. One reason is that you worked for two employers during the year and each withheld FICA taxes and the total FICA tax withheld exceeded the maximum that should have been withheld during the year. This can occur since each employer does not know and doesn't care how much is being withheld by the other employer. The primary second use for the form is when an employer withholds additional FICA tax in error such as withholding FICA tax for 401K contributions (401K contributions shouldn't be considered as income so therefore should not be taxed) or withholding too high of a percentage. Hopefully the computer can figure out why a refund for your FICA tax should be issued.

If the computer cannot figure out why it should issue a FICA refund, it will be hard if not impossible to get a refund from your employer. That is because the employer has already sent the money to the IRS and that money has been recorded in the social security database defining benefits for when you retire. If the company issued you a refund, not only will they be paying you for the mistake but they also have their own problem that they unnecessarily paid an equivalent employer share to the IRS. In your case, the employer's share of FICA should have been $0 since your are a non resident but they paid the same as you as well as your contributions. So if they want their money back from the IRS, they also will have to deal with the IRS to get that money refunded.

The W-8BEN form filled out correctly should stop future withholdings and eliminate future problems.

The biggest problem will probably be that normally the IRS computer makes decisions on refunds or taxes owed and not a IRS agent. IRS agents usually only get involved a year or two later when the computer cross checks the return against forms received from employers and businesses and if things don't match up or possibly another discrepancy is found, that may trigger an audit. It would be nice if there was a form where you could request "manual intervention by an IRS agent" so that he could look at the forms to figure out why a refund should be issued. Maybe you will be lucky and the computer will be so confused or that form 8833 is filed and your return will be immediately sent to an IRS agent for evaluation.

nun

I imagine the 1040NR will show all the W-2 information, but the 1116 show the PAYE tax paid and the OP will get a refund of the US tax withheld.

Michael

I doubt he paid any foreign taxes since he works in a war zone. The same would be true for Americans. So Form 1116 wouldn't be used. When I worked in Kwajalein (US trust territory at the time), I didn't pay either local or US income taxes.

nun

Ah, well then the W-2 need to be corrected asap.

http://www.irs.gov/Help-&-Resources/...ipt,-Omitted-2