I probably owe IRS tens of thousands of dollars in taxes without stepping on the US soil

[schizo]

If it means a passport ID number, then it could mean NRAs.

You mean a Nigerian traveler, who is coming here for just 2 weeks to scam his lonely Instagram followers, can open an account with Interactive Brokers with just his passport number? Geez, I hope not. I still think only resident aliens who are living here are allowed to open an account. If anyone knows, let me know.

 

[Overnight]

You mean a Nigerian traveler, who is coming here for just 2 weeks to scam his lonely Instagram followers, can open an account with Interactive Brokers with just his passport number?

Oh blah, now you're being facetious. Besides, he's a prince and doesn't need an IBKR account.

 

[newwurldmn]

Troll thread.

 

[Robert Morse]

Everyday we open foreign accounts for those that are citizens of many counties. Instead of a W9, they fill out a W8BEN. The only withholding is what the IRS calls NRA-on Dividend Income only and varies based on treaties with the USA. The base rate is 30%. The customer is responsible for reporting their gains and losses with their country they pay taxes in.

Excuse this idiot for the asking, but just how did you manage to open a US brokerage account without ever setting foot here? I thought they verify your social security and residential address, among other things, before giving you the green light to trade.

 

[Robert Weinstein]

Breathe easier, as you should be exempt from all tax obligations.

"Note: If your only U.S. business activity is trading in stocks, securities, or commodities (including hedging transactions) through a U.S. resident broker or other agent, you are NOT engaged in a trade or business in the United States."

That rider obviates your gains as ECI.

Effectively Connected Income (ECI) | Internal Revenue Service (irs.gov)

Just trying to be helpful here because many others do the same thing. First, you didn't actually "cite a source" or what's technically known as an "authority."
Unfortunately, the general information on the IRS website, such as the url you provided doesn't actually "mean anything" (same is largely true when a rank and file IRS staff member gives advice, it doesn't "bind" the agency, although it can sometimes be used persuasively to reduce penalties and or interest).
Second and perhaps MORE important, being able to cite a regulation doesn't mean it applies as the final rule to any given taxpayer. In other words, under one IRS code a certain set of facts may equal no tax obligation, while another IRS code may say something very different, as well as 'overrule' the first code.

 

[Robert Weinstein]

Hi. First up, I’ll definitely contact a tax attorney with this but thought asking the Internet won’t hurt either. A numbskull idiot who has nothing to do with the United States (no citizenship, never a resident), not having once stepped foot on the US soil, has been investing with a US broker for the past 5 years or so. This idiot has a child, and the latter also has an account opened at a US brokerage and also has nothing to do with the United States. Throwing all caution to the wind, the idiot gifts a sum of money to their child by way of transferring it directly from their brokerage account to that of their child without even a slightest clue of potential tax implications in the United States. After a month or so, the idiot accidentally stumbles upon an article which in eloquent terms explains how f’d they are since transfers of cash between two non- resident aliens through American financial institutions are taxed in full amount without any right to use gargantuan life-time exemptions (which only apply to US residents). Mastering all 2 brain cells in their head, the idiot calculates that they basically owe IRS tens of thousands of dollars on the gift made. Henceforth, I will refer to myself in the usual manner. I’m at a loss of what to do. All the articles which I’ve found mostly state that such transfers are definitely taxed in the US. I’m so reluctant to do anything to attract attention from the IRS on the other hand, since I’ve also read that the chances of them finding out themselves are slim to none since they don't monitor NRA's at all. However, I’ve also read up on penalties for late filing and tax evasion and the situation can potentially get uglier by orders of magnitude. I’m sure the IRS won’t be contacting me and letting me know whether the tax is due or not. Therefore, I’m left with a simple choice-either contact them myself like a sucker with the question and incurring their taxing wrath, even though they might not have found out at all, or hold my tongue and pretend that nothing happened with the risk of having to be contacted by the IRS years later with huge penalties as a cherry on top. It is my choice to make, I do realise that, but what would you do/advise to do in such a case?

The only way you will receive an answer to this question is to obtain an answer from a qualified Tax attorney, CPA, or EA (in that order of preference). The biggest problem I see with your question is in the first sentence, namely asking the internet won't hurt either as I have many clients that found out the hard way how discussing a matter without attorney-client privilege was harmful. Regardless of the jurisdiction, get the answers to all the questions, including the ones you haven't even thought of, answered ahead of time.

 

[p0box4]

It's very likely that your country has a tax treaty with the USA, so that's something you'll have to figure out. I would contact an accountant or tax attorney in both the USA and in the country you are living in.

What i am wondering about, how did you get a withdrawal straight from your brokerage account to your childs bank account? I was under the impression you could only withdraw to accounts in your own name and sometimes even only to the account you made a deposit with.