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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7313
Experience:  15years with H & R Block. Divisional leader, Instructor
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I bought shares on nasdaq and then sold them. The company holdting

Resolved Question:

I bought shares on nasdaq and then sold them. The company holdting the the shares say that i must pay capital gains tax up front to release the profits.!!!!!!!!!
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income paid to a foreign person are subject to a U.S. withholding tax of 30 percent. A reduced rate, including exemption from tax, may apply by virtue of an Internal Revenue Code section or a provision of a tax treaty between the foreign person's country of residence and the United States. The NRA withholding tax is generally withheld from the payment made to the foreign person.
Generally if a nonresident alien is not engages in a trade or business in the US they are taxed on their dividends (this is withheld at source) but where a corporation retains earnings and profits and the investor realizes his or her pro rata share of earnings indirectly by selling the stock, any gain on the sale of the stock is treated as a capital gain not subject to withholding.


When a nonresident sells investment stocks or securities at a gain, that gain is exempt from U.S. tax unless the foreign investor is an individual present in the U.S. at least 183 days during the year.


An exception to this general tax exemption are gains from the disposition of stock in companies with substantial U.S. real property holdings may be subject to U.S. tax.

If you were directed to pay the tax on teh sale you can file a US 1040NR return to report the sale and the tax you paid. You will want to make sure you include the document that shows the US tax you paid on the sale.

Customer:

The whole page is not visible.

Customer:

From the prts i could read. it seams that dedution of capital gains is not co

Customer:

I COULD NOT SEE THE WHOLE PAGE

Robin D :

I will change to Reg Q & A

Robin D :

One sec then check your question list again

Expert:  Robin D. replied 1 year ago.
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Expert:  Robin D. replied 1 year ago.
Robin D :

Hello and thank you for using Just Answer,
Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income paid to a foreign person are subject to a U.S. withholding tax of 30 percent. A reduced rate, including exemption from tax, may apply by virtue of an Internal Revenue Code section or a provision of a tax treaty between the foreign person's country of residence and the United States. The NRA withholding tax is generally withheld from the payment made to the foreign person.
Generally if a nonresident alien is not engages in a trade or business in the US they are taxed on their dividends (this is withheld at source) but where a corporation retains earnings and profits and the investor realizes his or her pro rata share of earnings indirectly by selling the stock, any gain on the sale of the stock is treated as a capital gain not subject to withholding.


When a nonresident sells investment stocks or securities at a gain, that gain is exempt from U.S. tax unless the foreign investor is an individual present in the U.S. at least 183 days during the year.


An exception to this general tax exemption are gains from the disposition of stock in companies with substantial U.S. real property holdings may be subject to U.S. tax.

If you were directed to pay the tax on the sale you can file a US 1040NR return to report the sale and the tax you paid. You will want to make sure you include the document that shows the US tax you paid on the sale.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7313
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you
Expert:  Robin D. replied 1 year ago.

<strongCustomerLast Viewed on 10/27/2012 at 10:37 AM

Glad you were able to see the post and hope you were able to view the entire answer this time.

Customer: replied 1 year ago.

Perfect on the page. What concerned me was that it seemed you gave two answers. 1 exemption and one at source could you clarify.

Expert:  Robin D. replied 1 year ago.
Sorry if it appeared to have to answers but the exact sale would dictate what you were taxed on.
Us source income to a nonresident alien is taxable to the US. The tax is normally withheld at the source (the payer). Tax treaties though between the US and other countries can dictate either a no tax liability or a lesser rate of tax than is generally applied. Dividends paid to Nonresident aliens are taxable but when a Nonresident alien sales stock they are not taxed. The exception to this is if the stock was in a company that held substantial US real estate.
Normally a Nonresident alien is asked to complete a form W8 BEN to show that they are a Nonresident alien and are covered by a tax treaty (such as UK resident and not in the US for more than 183 days). The holder of the stock would then keep the W8 pay the nonresident alien and then be able to show the US that they were not required to withhold tax on the payment.
If you just owned stock and had a broker sale the stock for you there should not have been any withholding (or tax liability) on the gain you realized from the sale. The fact that you were asked to pay this tax up front is not usual for US tax situations. Make sure it was a US income tax you paid. Ask for proof of the reporting to the IRS on the amount form the broker.
Customer: replied 1 year ago.

I do not have a tax payment receipt. I-have a W-8ben form which was sent to the broker with a payment request but no mention of tax. I have also been verbally asked for a further sum re tax. This I have refused. Thankyou for your diligence.

Expert:  Robin D. replied 1 year ago.
The W8 BEN is not to collect tax but to show that you are a nonresident alien and have no tax owed on this sale of stock to the US.
A W8 BEN does not require that you pay tax but shows that you do not owe any. The form is kept by the broker to show that they were not required to withhold tax on your payment. If they are asking you to fill out the W8 BEN , that is correct BUT, if they are also saying that you must pay tax as well that is not correct.

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