US taxes for non-US traders trading US instruments

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STaRGaZeR

Hi guys,

just seeking some help with this one.

I am an European citizen. Never been to the US. I use IB UK as my broker. I am about to go live with a strategy involving SPX options and ES futures, both 1256 contracts if I'm not mistaken.
  1. I'd be classified as a non-resident alien, right?
  2. Non-resident aliens are not subject to capital gains tax, right? Does this mean that after the year I don't have to do anything regarding taxes if I only trade the aforementioned instruments?
  3. If I were to trade SPY (or any other stock instead of 1256 contracts), would it change anything regarding taxes? AFAIK, dividends are taxed at 30% for non-resident aliens, but capital gains would still not be taxed. Assuming that I receive no dividends during the year, should I do anything after the year? What if I receive dividends?
These questions are regarding US taxation only, I know that all capital gains are to be declared and taxed appropiately in my country of residence.

Thanks in advance.
 
STaRGaZeR said:
Hi guys,

just seeking some help with this one.

I am an European citizen. Never been to the US. I use IB UK as my broker. I am about to go live with a strategy involving SPX options and ES futures, both 1256 contracts if I'm not mistaken.
  1. I'd be classified as a non-resident alien, right?
  2. Non-resident aliens are not subject to capital gains tax, right? Does this mean that after the year I don't have to do anything regarding taxes if I only trade the aforementioned instruments?
  3. If I were to trade SPY (or any other stock instead of 1256 contracts), would it change anything regarding taxes? AFAIK, dividends are taxed at 30% for non-resident aliens, but capital gains would still not be taxed. Assuming that I receive no dividends during the year, should I do anything after the year? What if I receive dividends?
These questions are regarding US taxation only, I know that all capital gains are to be declared and taxed appropiately in my country of residence.

Thanks in advance.
More...

1256 ES future is a lot of money
 
For 2 and 3, no capital gain taxes in the US, and the witholding tax depends on your country of residence and its tax treaty with the US. I've experienced from 10 to 30%

With IB you don't need to declare anything to the US tax authorities AFAIK, IB will withold the dividends at the proper rate, and if you think something is wrong with the rate, you should contact IB first.

This is if your paperwork is in good order to trade, but IB will lock you of your account management until everything is in order, than will lock you out again when they need an update.
 
luisHK said:
, but IB will lock you of your account management until everything is in order, than will lock you out again when they need an update.
More...

I mean when you log in account management, you first have to fill the required information before accessing it, it happens once ina while, a little more often in corporate accounts than personal accounts ime.
 
luisHK said:
For 2 and 3, no capital gain taxes in the US, and the witholding tax depends on your country of residence and its tax treaty with the US. I've experienced from 10 to 30%

With IB you don't need to declare anything to the US tax authorities AFAIK, IB will withold the dividends at the proper rate, and if you think something is wrong with the rate, you should contact IB first.

This is if your paperwork is in good order to trade, but IB will lock you of your account management until everything is in order, than will lock you out again when they need an update.
More...

So even If a foreigner like me buy US stock, I dont need to pay profit tax if the stock price go up and i sell it as long as my country doesnt charge it, but there is dividen tax? how much % is the dividen tax for foreigner?
 
Yes, no cap gain tax due to the US, neither to HK usually if you are a resident there - which seems to be the case.
Witholding tax depends on your country of residence, without tax treaty with the US it is 30%, and it is 30% for HK residents afaik.
 
luisHK said:
Yes, no cap gain tax due to the US, neither to HK usually if you are a resident there - which seems to be the case.
Witholding tax depends on your country of residence, without tax treaty with the US it is 30%, and it is 30% for HK residents afaik.
More...

Yeah I live in hk, but I never heard of withholding tax so no idea what is it.
 
There is no witholding tax in HK, so indeed you won't be annoyed by it when investing in local stocks.
You can Google for the exact definition, as it involves other payments than dividends , but if you invest in US or European stocks, you will encounter it as the tax witheld from your dividend payments, IB witholds it automatically and you receive the net dividend payment only, but witholding details are given in the activity report.
Ime it is also deducted from capital gain payments ETFs hand out sometimes, short and long term.
 
luisHK said:
There is no witholding tax in HK, so indeed you won't be annoyed by it when investing in local stocks.
You can Google for the exact definition, as it involves other payments than dividends , but if you invest in US or European stocks, you will encounter it as the tax witheld from your dividend payments, IB witholds it automatically and you receive the net dividend payment only, but witholding details are given in the activity report.
Ime it is also deducted from capital gain payments ETFs hand out sometimes, short and long term.
More...

Thx. So as long as I trade stock snd future in usa exchanges without receiving dividens, i dont pay tax to us gov?
 
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