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Lev
Lev, Tax Advisor
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Im a Brit living in France where one of the companies I worked

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I'm a Brit living in France where one of the companies I worked for in Paris was a US stockbroker's which set up a retirement fund. I have now been retired for five years
and have since been receiving a monthly check for USD97.94. I opened a USdollar a/c
at my French bank which has subsequently been docking me around USD22.°° in charges
on every check!! I have now received a check for December for the usual USD97.94,
only to find that the emitting US bank has dedecuted USD29.38 under the heading "NRATX-FR"... Would that be a one-off payment for the year or can I expect to be deducted a similar amount each month to add to the charges my French bank already deducts monthly, if so then I am being royally screwed!! Is there anyway I can sidestep
these excessive charges as for one thing, I have no links to the USA whatsoever and
I have already complained to my French bank that I find their charges outrageous?
After all, it's only a piddling small complimentary pension...
Thanks for any advice.
Submitted: 3 years ago.
Category: Tax
Expert:  Lev replied 3 years ago.

Hi and welcome to Just Answer!

According to the current tax law - all payment to nonresident alien are subject of 30% mandatory withholding.

NRATX - means Non-Resident Alien TaX withholding and FR means that you are a resident of France.


Nonresidents aliens are subject of tax only on income from US sources. There are complex rules to determine the source of income. For retirement income - the source is where services were performed to earn that retirement. Seems as your retirement fund was set as if you worked in the US. You need to contact the administrator of your retirement fund and inform that no work were performed in the US - asking to stop withholding.

 

Please be aware that your actual tax liability is not determined at the time of withholding. You would need to file a tax return to calculate your tax liability and - if withholding is more than your tax liability - you will request a refund.

Here is the form you should use - www.irs.gov/pub/irs-pdf/f1040nr.pdf

Let me know if any clarification needed.

Customer: replied 3 years ago.

Thanks Lev,

Answer seems clear enough, except can you clarify if this "NRATX-FR" tax will be deducted on every monthly check I receive or is it a just one-off annual tax deduction? Seems a bit strange that I should start being deducted this tax after I have been receiving these retirement checks for the past five years.

Richard

 

Expert:  Lev replied 3 years ago.

Hi Richard.

 

Yes - that is mandatory withholding and will be taken from each payment.

Please be aware that is not actual tax liability - that is withholding to cover possible tax liability.

Your actual tax liability is determined when you file the tax return.

The IRS currently working to improve tax compliances - and most likely the administrator started withholding to avoid possible issues with the IRS. You need to discuss that with the administator.

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23191
Experience: Taxes, Immigration, Labor Relations
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