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Tax on Dividends

What is tax on dividends?

When a person pays tax on dividend payments to a stockholder, then this is considered to be dividend tax. In a lot of places, the government has it to where the company will withhold at least the standard tax and then paying what they withhold to the national revenue authorities and the remaining balance to the shareholders. Dividend payments are considered to be regular income in a lot of pages. In other places the dividend is considered to be separate income and is subject to different taxes if any at all. Read below for more questions and answers given by the Experts.

What country has a tax treaty with the US where a direct investment in a US company by a corporation in their home country is not taxed in the US?

There are many countries that the US has an agreement with that there are no taxes to pay on the dividends. In some cases the dividends may be subject to certain US taxes if the country is not in a treaty with the US. If someone wanted to know what countries are included in the treaty they can follow this link http://www.irs.gov/publications/p515/ar02.html#en_US_2012_publink1000225129.

Can a person who has never been to USA can open a brokerage account in USA and would they is subject the pay capital gains tax?

If the person is a non-residential alien, then they would need to fill out form 1040 NR instead of the normal 1040 and would need to pay taxes on the income according to the rules of the taxes. There will be no tax charged on bank interest, no tax on short or long term capital gains from selling stocks, no tax on portfolio interest, and no tax on dividends.

If a person who lives in Indonesia would want to start investing in stocks in the US would they be liable for capital gains tax, would they have to pay a withholding tax, and would they need to pay tax on dividends?

If the person is not a resident of the US then they would not be liable to pay taxes on the sale of stocks within the US. If the stocks that the person buys pays out dividends, then they person would have to pay taxes at 30% on the dividends. The person will receive form W-8BEN which will let the investor know to withhold the dividend tax of 15%.

If a person is a United Kingdom citizen and has an on-line trading account with a US company over which they trade stocks on the New York Stock Exchange (NYSE), what tax is due?

The person would not owe taxes on bank accounts or interest, no tax on portfolio interest, no tax on capital gain, and the person would only be charged a flat rate of 30% on any dividends that they collect from the stocks that they have and are invested in.

When a person lives outside the United States and they invest in stocks or companies here in the United States, then they may have to pay a tax on dividends that they receive from the investments. When a person I thinking about investing, then they may have questions regarding what the tax rates are, what the laws or rules are, what and who they need to pay regarding dividend taxes. When these questions arise, then the person would need to seek an Experts answers before investing.
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