Received a 1042-S form for foreign income - can I claim tax back from the IRS?

Thanks for the explanation! So if I understand correctly, as a US citizen I shouldn't be using W-8BEN at all? I thought that was specifically for reducing withholding on foreign investments. Also, would filing the 1116 get me back the full 30% or just a portion? My company's HR department wasn't very helpful when I asked them about this.

You're right to question this. As a US citizen, the W-8BEN isn't appropriate for you - that's for non-US persons to claim treaty benefits. Form 1116 is the correct form for US citizens to claim credit for foreign taxes already paid. The Form 1116 would potentially allow you to claim a credit for the taxes withheld, up to the amount of US tax you would owe on that same income. It may not be a full 30% recovery, as it depends on your overall tax situation and the specific provisions of the tax treaty between the US and UK. The credit is designed to prevent double taxation rather than eliminate taxation completely.

Did they help with amending previous years' returns too? I've had this same issue for 3 years now and just realized I could have been claiming this back. Wondering if it's worth trying to amend my past returns or just move forward correctly from here.

I'm skeptical about these online tax services for international stuff. How do you know they got it right? Did you double-check with an actual accountant? My experience with automated tax systems is they miss nuances, especially with foreign income reporting.

They absolutely helped with amending my previous returns. They identified I could go back three years and provided specific instructions for each year since the forms and rules had some slight differences. The amendment process was straightforward with their guidance. As for accuracy concerns, I was skeptical too initially. What convinced me was that they provide detailed explanations citing specific tax code sections and treaty provisions, not just generic advice. I did consult with a CPA friend who confirmed their recommendations were correct. The difference is they specialize specifically in these cross-border tax situations rather than being general tax software.

How does this service actually work? I don't understand how they can get through when regular people can't. Is this just paying someone to wait on hold for you?

This sounds fishy. Why would the IRS give preferential treatment to calls from some service? And direct extensions? IRS agents don't give out direct lines. I'm calling BS on this one.

It's not magic - they use technology that continuously redials the IRS using multiple lines to find the shortest wait time, then connect you once they get through. It's basically like having several people calling for you simultaneously instead of just you making one call at a time. They don't get preferential treatment from the IRS - they're just more efficient at getting into the queue during less busy periods. And you're right that most IRS agents don't give direct extensions, but in the international tax department, specialists sometimes do provide follow-up contact information for complex cases that need continuity. This isn't typical for regular tax questions, but for international treaty issues, it can happen.

Thanks for explaining this! So I need to submit the W-8BEN to my company directly, not to the IRS? That makes much more sense now. Does this mean I can potentially get back that extra 15% that was withheld this year? And just to be clear, this is something I could do on my own without an accountant?

Yes, the W-8BEN goes to your company or their stock administrator, not the IRS. This form tells them you're eligible for the reduced treaty rate going forward. For getting back the extra 15% that was already withheld, you'll claim that on your US tax return using Form 1116 (Foreign Tax Credit). This essentially gives you credit for those foreign taxes paid against your US tax liability. You can absolutely do this yourself, especially if this is your only foreign income. Most tax software can handle Form 1116, though you'll want to make sure you're selecting the right category for the income (typically "passive" for dividends). Just have your 1042-S handy when you prepare your return.

This is so helpful! Mine says Code 06, so I'm guessing that's dividend income from the shares. I've been getting these forms for years but never knew I could reduce the withholding. Is there any downside to claiming this credit? Will it trigger any kind of audit or review?

Code 06 is definitely dividend income, so you're eligible for the reduced 15% treaty rate. There's really no downside to claiming the foreign tax credit - it's a legitimate credit that prevents double taxation, which is exactly what the tax treaty is designed to do. As for audits, claiming foreign tax credits doesn't typically trigger additional scrutiny by itself, especially for straightforward cases like employer stock dividends. The IRS expects US citizens with foreign income to claim these credits. Just make sure you keep your 1042-S forms and any correspondence with your company about the withholding - good documentation is always your best protection. The bigger risk is actually NOT claiming the credit and essentially overpaying your taxes year after year. Since you mentioned you've been getting these forms for years, you might want to look into amending your past returns to recover those overpayments.

This is really helpful - thank you for breaking it down so clearly! I had no idea I could go back 3 years with amended returns. That could definitely add up to a significant amount over 12 years of withholding. One question though - when you submitted the W-8BEN to your company's stock administrator, did they apply the reduced rate immediately or did it take a while to process? I'm wondering if I should submit it now or wait until closer to the next dividend payment.

In my experience, the W-8BEN processing time varies by company, but most stock administrators update their systems within 1-2 payroll cycles once they receive the form. I'd recommend submitting it as soon as possible since there's really no downside - even if it doesn't take effect for your next dividend, it will be in place for subsequent ones. When I submitted mine, it took about 6 weeks to see the reduced withholding rate applied, but that was partly because I submitted it right after a dividend payment. The administrator told me they typically process these forms monthly, so timing can affect when you see the change. Also, make sure to keep a copy of your submitted W-8BEN and any confirmation from your company - you'll want that documentation when you file your amended returns for the previous years. Some companies will even provide a letter confirming the new withholding rate once it's processed.