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Financial Planning / Tax Strategies


Subject:  Re: Tax for foreigners? Date:  2/5/1999  2:11 PM
Author:  1000nam Number:  9578 of 127753

You are not likely to find any tax guides for non-residents as it is a very small market and probably not profitable. Your best source is to obtain the following publications from the IRS Web site

Pub 519 US tax Guide for Aliens
Pub 525 Taxable and Non Taxable Income
Pub 901 US Tax Treaties
Form 1040 NR and its Instructions
Form W8
Form 1001

Much of the tax guide and the form is devoted to people who are in US for less than 180 days/yr and who have earned income. If you are not physically present in the US and have only investment income not effectively connected to a trade/business, you are taxed only on dividends and interest. Interest on deposit accounts at banks, credit unions and portfolio interest on some kinds of bonds are tax exempt, but interest earned from mutual funds is taxed. You are not taxed on any capital gains.

The tax rate on "not Effectively Connected" income is 30%, unless your country has a treaty with US to reduce the rate. You are also subject to withholding and you have to submit Forms W-8 or 1001 to certify your foreign status to the payer.

Publication 519 is not easy reading, but you are unlikely to get anything more comprehensive than that for free.

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