this is a USA tax law question
what is the tax brackets for non resident alien never had a green card and was outside the states for more than 6 years , although filed for tax before that, trading only in stock options -selling and buying puts and calls and making profit - through an American internet brokerage firm
Hi and welcome to Just Answer!Nonresident aliens are taxed ONLY on income from US sources.There are two types of income - effectively connected income and not effectively connected income.If you are engaged in a U.S. trade or business, all income, gain, or loss for the tax year that you get from sources within the United States (other than certain investment income) is treated as effectively connected income. Effectively connected income is taxed at same tax rates as for US residents - see the tax rate schedule on the last page of this publication - www.irs.gov/pub/irs-pdf/i1040tt.pdf Not effectively connected income is generally taxed at flat rate 30% unless the tax treaty provides reduced rate.When you are trading stock or option which are related to US companies - the gain is considered from US sources, but if these are foreign companies - the gain is not from US sources and not taxable in the US.
i did read that in the tax bulletin : U.S. Tax Guidefor Aliens For use in preparing 2012Returns
but i still do not fully understand , if the company is a usa company then making money trading on an option with that company stock as the Underlying ?
is taxable ?
Based on your information - that is NOT effectively connected income - and the gain realized from trading US stocks is taxed at 30% flat rate unless you are eligible to claim any tax treaty benefits.The gain of trading foreign companies is not taxable for nonresident aliens.
am not trading stocks am trading options on these stocks , and what if the options Underlying is an index like S&P ? it is not a company share
please explain more
When you are trading an "an index like S&P" - that is actually shares of the fund registered in the US - and it is considered US company - thus the gain is taxable in the US.
i still have a followup questionso trading in stock optios but not options ,and only buying and selling options not excersizing them, is considered NOT effectively connected income for tax perposes and taxed on 30% rate ????
and i need to seperate usa companies from non usa companies ???