US taxes for non-US traders trading US instruments

[luisHK]

Yes, that's both my understanding and experience, bar some minimal transaction taxes (I think the main one goes to fund the SEC, and we are talking less than 0.01% on the sales proceed ).

 

[ELo]

Capital Gain tax <> Income Tax

 

[luisHK]

there is no income tax to pay in the US either in the cases discussed above.

 

[STaRGaZeR]

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.

Thanks for the info! So to summarize:

• Nothing to declare to the IRS (US tax authority) about any capital gains obtained by trading US stocks, ETFs, futures or options.
• If I ever receive any dividends, there is a withholding tax and it'll be deducted directly by IB. The amount depends on the tax treaty between countries.
  
• This is supposing the paperwork is all done with IB, including proper filling of the W-8BEN form.

Do I have to fill any document in any of the cases above and send it to the IRS? Or does IB do all the necessary paperwork?

Feel free to correct me if something is wrong.

https://www.irs.gov/individuals/international-taxpayers/tax-treaties

Thanks. I'll re-read the corresponding treaty in detail.

1256 ES future is a lot of money

https://en.wikipedia.org/wiki/1256_Contract . I'll not be trading 1256 (one thousand...) ES contracts

 

[luisHK]

Thanks for the info! So to summarize:

• Nothing to declare to the IRS (US tax authority) about any capital gains obtained by trading US stocks, ETFs, futures or options.
• If I ever receive any dividends, there is a withholding tax and it'll be deducted directly by IB. The amount depends on the tax treaty between countries.
  
• This is supposing the paperwork is all done with IB, including proper filling of the W-8BEN form.

Do I have to fill any document in any of the cases above and send it to the IRS? Or does IB do all the necessary paperwork?

Exactly, and there's no need to send any document to the IRS.

 

[Reed664]

You should ask to a tax expert,because i recall reading that the loophole of non-residents
not paying taxes on the US is closed they have to pay 30% on income i think.
I think the senate close the loophole. I don't have the link sorry.

 

[HappyTrader]

I always recommend you check with your local tax authority/accountant if in doubt but:

1) The US does not tax non-resident aliens living abroad
(If you spend enough time in the US to be classified as Tax Resident than you are viable. For the US this is I believe about 6 months).

2) Income you generate from capital gains will be subject to taxation in the region that you are tax liable to. If you live in the EU you'll be taxed by them on all your global income.

3) Dividends are collected by the US at the rate of 30%, however you may be able to reclaim some of this if you have a tax treaty. If you are registered with IB as being in a tax-treatied area with favourable tax conditions I think this gets reduced to 15% for the EU.

 

[GloriaBrown]

I always recommend you check with your local tax authority/accountant if in doubt but:

1) The US does not tax non-resident aliens living abroad
(If you spend enough time in the US to be classified as Tax Resident than you are viable. For the US this is I believe about 6 months).

2) Income you generate from capital gains will be subject to taxation in the region that you are tax liable to. If you live in the EU you'll be taxed by them on all your global income.

3) Dividends are collected by the US at the rate of 30%, however you may be able to reclaim some of this if you have a tax treaty. If you are registered with IB as being in a tax-treatied area with favourable tax conditions I think this gets reduced to 15% for the EU.

tax treaty is an agreement between my country and US?

 

[TraDaToR]

Yes. European as well trading futures full time for 10 years. Never paid anything to the US( and I am grateful to your country, guys ).

 

[STaRGaZeR]

Exactly, and there's no need to send any document to the IRS.

Thanks again!

I always recommend you check with your local tax authority/accountant if in doubt but:

1) The US does not tax non-resident aliens living abroad
(If you spend enough time in the US to be classified as Tax Resident than you are viable. For the US this is I believe about 6 months).

2) Income you generate from capital gains will be subject to taxation in the region that you are tax liable to. If you live in the EU you'll be taxed by them on all your global income.

3) Dividends are collected by the US at the rate of 30%, however you may be able to reclaim some of this if you have a tax treaty. If you are registered with IB as being in a tax-treatied area with favourable tax conditions I think this gets reduced to 15% for the EU.

Yep, I have to look again at the treaty but I remember 10 or 20% percent on the dividends. Everything would be easier if the local authorities weren't complete incompetents...