My client is a US actor that did work in Canada through her S-Corp. The S-Corp received the acting income and residuals. I have questions as to filing requirements in CA, the CA withholding tax, and US foreign tax credit. If you have experience, I hope you can help.
Based upon my research, I appears that CA generally withholds 23% but that the S-Corp could apply for a lower withholding amount. It also appears that the withholding amount may be applied to the income less manager & agent fees. In my client's case, manager & agent fees are 20% leaving a net of 80%. If the standard 23% were applied against the 80% net, the withholding would be 18.4%. In my client's case, CA withheld was actually 18.02% if gross income.
Questions:
1. How can I determine if the client applied for a reduced withholding rate?
2. Do you think the actual withholding of 18.02% was a reduced rate?
3. Do you think the actual withholding of 18.02% was the standard rate applied on income after commissions?
4. To claim a US foreign tax credit, are the S-corp and individual required to file CA returns?
5. Canadian returns are optional for non-resident actor when withholding is at 23%. Is this true when withholding is at a lower rate?
5. Can the individual claim a FTC based upon the withholding?
6. It appears that Canadian returns would be late if filed now. Does that prevent or negate filing CA returns?
7. If filing CA returns, does the US citizen have to report all US income to CA? Is tax payable to CA on all US income?
8. If client cannot claim a FTC, can S-Corp claim Canadian withholding as a business expense?
Any assistance is greatly appreciated.
Thanks.