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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Hi, I am an indian citizen. I trade in US using online Brokers.

Resolved Question:

Hi,
I am an indian citizen. I trade in US using online Brokers. From IRS and other websites I understand I don't have to pay capital gains tax. do I still need to declare my earnings etc to IRS.

Thanks
kam
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
If you are neither US citizen nor a resident of the US - for income tax purposes - you are a nonresident alien.
If you are a nonresident alien - you are taxed ONLY on income from US sources.

LEV :

There are some complex rules to determine the source of income. You may take a look - page 12 IRS publication 519 - http://www.irs.gov/pub/irs-pdf/p519.pdf - Table 2-1. Summary of Source Rules for Income of Nonresident Aliens.

Customer:

it does not say anything about sale of shares etc so should I Presume I don't have to fill any form for IRS if I make Money from selling shares. However it does mention Dividend. But I think My broker deduct tax for any dividend paid.

LEV :

Thus if you have a gain from sale shares of US corporation - that is income from US sources and is taxable in the US. If however - that is the gain from the same of foreign (not US corporation) - the gain is not from US sources and is not taxable for nonresident aliens.

LEV :

Similarly are taxed dividends - however the US-India tax treaty will apply. See page 13 - http://www.irs.gov/pub/irs-trty/india.pdf - ARTICLE 10 Dividends.
According to that article - dividends generally may not be taxed more than 15%.

Customer:

Thanks

LEV :

Also the tax treaty allows each country to tax gains of nonresidents - see page 18 - ARTICLE 13 Gains -- Except as provided in Article 8 (Shipping and Air Transport) of this Convention, each Contracting State may tax capital gain in accordance with the provisions of its domestic law.

LEV :

To claim any tax treaty benefits - you need to provide a signed form W8BEN to your broker.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22961
Experience: Taxes, Immigration, Labor Relations
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Lev
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Taxes, Immigration, Labor Relations