Hello!
I left the states in 2017 and am now back in the UK.
I recently got paid out for a class action lawsuit I was a part of but I have had $1990.05 held back in Federal, Social & Medicare taxes. Do I still need to pay these?
I've consistently tried to contact the IRS and have had no luck whatsoever.
Would anyone know how I'm best to go about this, please?
Many thanks,
Nikki
It depends. In cases of a lawsuit, the reason behind the settlement determines its taxability. If the settlement is related to US source income, then it is taxable to the US.
Private Letter Ruling 150182-05 states: "With regard to the taxation of a settlement payment made to a nonresident alien individual, the nature of the item for which the settlement payment is substituted controls the characterization of the payment."
26 U.S. Code § 862 - Income from sources without the United States defines US source income and includes as US source income "compensation for labor or personal services performed without the United States."
The fact that federal and employment tax was withheld suggests your payment is US source income and taxable.
You can file a nonresident income tax return using our partner Sprintax.com.