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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15610
Experience:  15years with H & R Block. Divisional leader, Instructor
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i am not a US citizen nor do i have resedency in the US, i

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i am not a US citizen nor do i have resedency in the US, i have been trading on line via a brokrage company that is based in the US and i received recently notification for tax filing from the IRS !! what should i do ?

Robin D :

Hello and thank you for using Just Answer,
Depending on the type of income, the brokerage account my be liable to withhold US tax even thoughyou are a non US person.
Generally, a foreign person is subject to U.S. tax on its U.S. source income. Most types of U.S. source income received by a foreign person are subject to U.S. tax of 30%. A reduced rate, including exemption, may apply if an Internal Revenue Code Section provides for a lower rate, or there is a tax treaty between the foreign person's country of residence and the United States (there is not a tax treaty at this time) . The tax is generally withheld (NRA withholding) from the payment made to the foreign person.
Interest and original issue discount that qualifies as portfolio interest is not subject to NRA withholding. A non resident alien will not be treated as engaged in a trade or business by trading US stocks or securities.


For U.S. nonresidents, dividend income received with respect to stock issued by a U.S. corporation is subject to a 30 percent.



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. The exemption applies equally to long-term (assets held for more than one year) capital gains and short-term capital gains. Losses from the sale of investment securities cannot be used by a nonresident to offset other types of income that are subject to U.S. tax.


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


If you keep this account and you are receiving dividends they will be subject to withholding if you sale the stock, as long as you are not in the US for 183 days you will not be taxed on the gain.



 


 

Robin D :

The company may be requesting that you complete a W8 form, do this, because the company is required to have this on hand by US tax law.

Customer:

i was requested to submit a 1099 form, who can do this for me since i do not live in the US and dont know where or how to do this.

Robin D :

Do you mean a 1040NR?

Customer:

yes it is tax form 1040

Robin D :

Ok

Robin D :

You can use an online service (TurboTax, Taxslayer) their programs allow this

Robin D :

Would you like me to give you a link to the US 1040NR

Customer:

yes please.

Robin D :

One sec

Robin D :

Let me get you the instructions too

Customer:

thank you

Robin D :

You will be better prepared with all

Robin D :

Speak with the broker, sometimes they offer the service

Robin D :

I thnak you in advance for a positive rating

Customer:

my broker just gave me the last 3 years of trading info

Customer:

and that is it

Robin D :

If you were not in the US you are not required to pay tax on the sales.

Robin D :

If they paid you dividends, they should have withheld

Customer:

ok

Customer:

got it

Customer:

thank you very much

Customer:

this is great

Robin D :

Best wishes

Customer:

take care

Robin D. and 4 other Tax Specialists are ready to help you