{"id":31306,"date":"2016-03-03T01:07:07","date_gmt":"2016-03-03T05:07:07","guid":{"rendered":"http:\/\/www.musicalamerica.com\/mablogs\/?p=31306"},"modified":"2016-03-03T01:07:07","modified_gmt":"2016-03-03T05:07:07","slug":"beware-of-wolves-in-expert-clothing","status":"publish","type":"post","link":"http:\/\/www.musicalamerica.com\/mablogs\/?p=31306","title":{"rendered":"Beware of Wolves In Expert Clothing!"},"content":{"rendered":"

By Robyn Guilliams, Esq. \u00a0\u00a0<\/span><\/p>\n

Dear Law & Disorder,<\/i><\/p>\n

I am a member of a band in Canada, and we do quite a few performances in the U.S. each year.\u00a0 Our accountant has always told us that we don\u2019t need to file income tax returns in the U.S., because the band is incorporated, and also because our U.S. fees are exempt from tax in the U.S. under the U.S. \/ Canada tax treaty.\u00a0 We haven\u2019t had any problems for the past four years, but now the IRS is contacting each of the venues for our U.S. shows, and telling them that they have to withhold tax of 30% of our gross. \u00a0The IRS also says that each band member must file individual U.S. tax returns for the past seven years, AND that our corporation doesn\u2019t shield us from U.S. taxes.\u00a0 Help!\u00a0 Our Canadian accountant claims that he is an expert regarding U.S. taxes, but I\u2019m worried he might not be.<\/i><\/p>\n

Oh dear \u2013 I\u2019m sorry to hear about your tax mess.\u00a0 It certainly sounds as if your Canadian accountant is no expert!\u00a0 I\u2019m afraid I hear this sort of story quite often.\u00a0 Many of our clients have come to us after a so-called \u201cexpert\u201d handled their U.S. taxes (or visas) and got them into a world of trouble with the IRS (or USCIS).<\/p>\n

The IRS is correct in telling you that any nonresident individual who works in the U.S. must file an individual U.S. tax return.\u00a0 (There are a few VERY LIMITED exceptions to this rule, but none apply here.)\u00a0 You may owe no tax.\u00a0 Perhaps your net income was below a certain limit (or sadly, nonexistent), or perhaps you qualify for an exemption from U.S. tax under the U.S. tax treaty with Canada.\u00a0 Still – you must file a return to report your income!\u00a0 After a certain amount of time, you lose the right to deduct your expenses (i.e., you\u2019ll be taxed on your gross income), and you\u2019ll lose your right to claim a tax treaty exemption.<\/p>\n

U.S. tax laws and regulations are extremely complex, especially concerning taxation of nonresidents.\u00a0 As an example, this regulation<\/a><\/b> is just one of many concerning nonresident tax withholding.\u00a0Welcome to my world!<\/p>\n

A knowledgeable tax advisor can help an individual to reduce his or her tax liability, which may save a performer or group a substantial amount in U.S. taxes.\u00a0 On the other hand, an incorrectly prepared return can trigger an IRS audit! \u00a0At the moment, I\u2019m working with five \u2013 FIVE<\/strong><\/em><\/span> \u2013 nonresident clients who are being audited.\u00a0 In each case, the return was prepared a self-professed \u201cexpert\u201d, and it included numerous errors, including mischaracterizations of income and\/or expenses, claiming exemptions or deductions to which my client was not entitled, and failing to include required schedules and attachments.<\/p>\n

Here are a few helpful hints for those in search of assistance in preparing a U.S. nonresident (or any other) return:<\/p>\n