8805 withheld 37% for Non-Resident

[HOPE2]

Hi to all and thanks for help.

My non-resident client received a Schedule k1 ($10000 ordinary income) , 8805, section 199A information code Z and k-3 from a partnership. Partnership withheld 37% ($3700) of his ordinary income. I filed 1040NR and based on all docs which I have, he will get a refund around $2747. IRS says 37% is highest tax rate for individual. But I confused if non-resident suppose to pay 37% why he will get a refund? On 1040 NR a kind of 10% tax rate been calculated and QBI caused to lower 10%

[sjrcpa]

 On page 4 of the 1040NR you have it in Column (a)? Or is it on Schedule E page 2?

If there is an income treaty with taxpayer's country of residence, does it provide for a specific rate?

What kind of income is on the K-1?

Is this the only income on the 1040NR?

Also, this might be timely:

The IRS webinar Taxation of Nonresident Alien Individuals takes place on Thursday, Aug. 17 at 2 p.m. ET. Participants will be eligible to earn up to 2 continuing education credits for this webinar. For more information about the webinar and to register, visit the Webinars for Tax Practitioners webpage.

[HOPE2]

He invested in a partnership EB5 and partnership sent him a Schedule K1 (1065) box 1 has $10000 ordinary income that is the only income, 8805 which has on box 9 same amount $10000 and box 10 has $3700 as withheld, and K3. 

[TaxGuyBill · Accepted solution]

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@HOPE2 wrote:

IRS says 37% is highest tax rate for individual. But I confused if non-resident suppose to pay 37% why he will get a refund? On 1040 NR a kind of 10% tax rate been calculated

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The 37% is merely the WITHHOLDING rate, not the actual tax rate.

So yes, $10,000 of ordinary income with no other income would be about 10%.

[HOPE2]

Hi TaxGuyBill. You made my day. Thanks a lot.