Foreigner trading stocks - Tax implications

V

VictoryShallBeMine

Hi,
I'm going offshore next year and giving up the Green Card.
I'll hold dividend-paying stocks at IB, and will trade infrequently.
I think dividends is the kind of passive income that gets taxed at 30% flat rate to foreigners, at least if I hold stocks in a US-based account. Cap gains seem to be 0% for some reason...? There are tax treaties, but you still pay 30%. On the other hand I read on this forum how foreigners (from tax-friendly jurisdictions like Dubai) open US stock accounts and have no problems:

https://www.elitetrader.com/et/threads/offshore-brokers.212358/

Is anyone in the same boat? IB is international firm, if I open an account as a nonresident, and hold dividend-paying stocks there, will I have to file US tax return and pay flat rate tax? If so, is there a way to make this a "trade" income and enjoy the same tax rates as US residents?
 
Your assumption is not entirely correct. Based on your question I assume that you are not an USA citizen and in the future will not be living in the USA.
After you have moved to another country you should inform IB (and any other bank in the USA where you have an account) that you have moved. IB (and any other USA bank) will then ask you to fill out a so-called W8BEN form. For a lot of countries will the result be that they will withhold 30% tax on dividend. But for certain countries will a reduced tax rate apply. The tax rate depends on which country you are living in. A lot is written on the internet about W8BEN, when it applies and how to go about it. For example here: https://www.artiopartners.com/nonresident/w8ben-form-us-tax-return-foreign/
 
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