Have a Tax Question? Ask a Tax Expert
Welcome and thank you for giving me the opportunity to assist you with your tax question
Foreign persons are generally subject to U.S. tax at a 30% rate on income they receive from U.S. sources. However, no withholding under section 1441 or 1442 is required on income that is, or is deemed to be, effectively connected with the conduct of a trade or business in the United States and is includible in the beneficial owner's gross income for the tax year.
You will complete Form W-8ECI to treat the payment resulting from the withdrawal of your 401K and present it to Wells Fargo to show that you are exempt from the 30% withholding.
The following are links to the actual form and its instructions:
Please let me know if I can assist you further.
Thank you and best regards,
Thank you Barb,
Let me then ask you couple things:
- Under point 9 of the W8 form(Specify each item of income that is, or is expected to be, received from the payer that is effectively connected with the conduct of a trade or business in the United States) - what would be appropriate to write?
- and, does it mean that since i am a resident of france, i would then put this amount in my tax declaration here in france?
On Line 9, I would write something like "total 401K distribution from Wells Fargo Bank."
I am not a France tax expert, but I can research this further for you to see if the 401K distribution would have to be included on your tax declaration in France. May I respond to you later today after I do my research. I realize there is a time difference as I am in the US (Florida) and you are in France.
It would be great if you could give me more info on the second part whenever today or tomorrow
Not a problem, Patrice. I'll get back to you later today.
Hello again, Patrice.In France, you are taxed on your worldwide income. Based upon my research, it would initially seem that you would fall into the 41% tax bracket, but that is not the case. First, you are immediately given an allowance of 10% that is NOT subject to tax. Second, the taxable income to be assessed is the total income of the household.
To avoid the higher rates of tax where there is a high income, but more than one household member, the family is divided into a number of "parts familiales." The total income is divided by the number of parts. The income tax scale rates arethen applied to this lower figure, and having computed the income tax due, itis multiplied back up by the number of parts.
My points of reference are the following which contain excellent information:
Please review this information and let me know if I can assist you further.
Thanks and best regards,
It's been my pleasure, Patrice. Thank you very much for the "excellent" rating of my answers to you. It is most appreciated.