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  • Daniel Gray CPA US Tax Services Toronto Canada

What to do with 1042-S withholding tax credit slip you received


If all of your earnings are from treaty zero-rated withholding such as royalties from US publishers:

  • You should claim a zero rate by providing W-8BEN to all (say, publisher) payers to prevent withholding from occurring at the get-go.

  • Meanwhile to get back the money they withheld by claiming it back as refund by filing a tax return.

  • Check that preparer fee versus refund will be cost beneficial.

If you earning other US source income that is subject to withholding:

  • See if that income is exempt from withholding, or if a reduced tax rate applies, under treaty

  • Compare the amount withheld to the amount owed in withholding

  • If correct, generally there’s no action to take or required (unless received as rent income from a US property – as more favorable outcomes can be put into place)

  • If over-withheld, see above for refund claim options.


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