- You were paid for work done in the U.S. and are not a U.S. resident
- The payer withheld 30% and gave you a Form 1042-S
- Your country has a tax treaty and you have no U.S. office
The situation
“I assumed the 30% was just the cost of working in America. It was all refundable.”
Daniel is a self-employed supply-chain consultant based in Manchester. In spring 2024 he spent six weeks on site at a manufacturer in Chicago for a fixed fee of $48,000.
The client had no Form 8233 from him and no taxpayer number, so it withheld 30%, $14,400, and issued a Form 1042-S the next March.
Application path
- W-7 reason
- Reason b — nonresident alien filing a U.S. federal tax return
- Filed with
- Form 1040-NR for tax year 2024 with Form 8833 and the Form 1042-S
Under the UK–U.S. treaty, business profits of a UK resident are taxable only in the UK unless they come through a permanent establishment in the U.S. Daniel had none. The treaty exemption is claimed on a 1040-NR with Form 8833, which needs an ITIN.
Documents
- Valid UK passport
- Consulting agreement and invoices
- Form 1042-S from the client
- UK certificate of tax residence
- Form W-7 with Reason b
- Form 1040-NR reporting the fee as exempt under the treaty
- Form 8833 treaty-based return position disclosure
- Form W-7 (COA) Certificate of Accuracy
Timeline
- March 2025Daniel received the Form 1042-S.
- Day 1Treaty review and document list.
- Day 4Video interview; passport certified.
- Day 6W-7, 1040-NR and Form 8833 mailed.
- Week 9ITIN issued.
- Month 5Full $14,400 refund received.
Issues we solved
Daniel was worried his visit made him a U.S. tax resident.
He was present 42 days in 2024, well under the 183-day substantial presence threshold, so he remained a nonresident.
The same client wanted him back for a second engagement.
With his new ITIN, Daniel gave the client Form 8233 before the work started, so the second fee was paid without withholding.
The numbers
| Fee for U.S. work | $48,000 |
| Withheld at 30% | $14,400 |
| U.S. tax under the treaty | $0 |
| Refund | $14,400 |
The fee is still reported and taxed in the UK.
Outcome
The full amount was refunded five months after filing. Daniel’s next U.S. engagement was paid in full at source.
If he had been an employee rather than an independent contractor, he would have needed an SSN instead of an ITIN.
Questions people in this situation ask
Wages mean you were employed, and employees must apply for an SSN. An ITIN application with a W-2 needs a denial letter from the Social Security Administration.
Give the payer Form 8233 with your ITIN before you are paid, claiming the treaty exemption.
You need it when a treaty exempts business profits or personal services income on your return. It is not required for reduced treaty rates on dividends.
IRS sources
- Instructions for Form W-7 (Rev. December 2024)
- Publication 519 — U.S. Tax Guide for Aliens
- Publication 515 — Withholding of Tax on Nonresident Aliens
This is a representative case. Names and personal details are illustrative; the IRS rules, forms and calculations reflect tax year 2024. It is general information, not tax advice for your situation.