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Financial Planning / Tax Strategies
|Subject: Re: Withholding tax UK /US residence||Date: 12/22/2000 4:02 PM|
|Author: WeeBeastie||Number: 43297 of 119643|
Answers (and my apology for not checking in for a couple of days):
1)Would he have 31% of the $4,500 sale proceeds withheld immediately, or does he, as in this country have until the end of the tax year to work out any taxable gain and pay the tax , or alternatively claim a loss.
I do not have any withholding taken on my proceeds. The tax system in the US is nowhere near as efficient as in the U.K. Even employment taxes are a crap-shoot. However, although I don't have withholding taken from my proceeds, it doesn't mean that other brokerages won't withhold. Yes, I settle up at year end when I submit my tax return.
2)Also in the UK there is a flexible tax shelter vehicle called an ISA. It is not aimed simply at retirement as the common US tax shelters seem to be. Is there anything like this in the US?
There are no tax efficient savings vehicles in the U.S. with the exeption of retirement accounts. Even those are really stingy. Hey, this is the US! We want people to spend, spend, spend!! You can't be encouraging saving, y'know! Every single cent earned in interest, dividends and capital gains is taxed. Even worse, there is no cost indexing so they'll even tax inflation!
3)Also is it possible, as here, to sell shares outside a tax shelter and thereby crystallize a gain/loss, and then buy back inside an ISA tax shelter without involving any 30 day 'tax wash' rules.
Doesn't apply - there are no tax efficient vehicles.
4) is no specific tax exeption for capital gains (like the $10.000 pa allowance in the UK). But $3.000 can effectively be ignored by setting it against income tax.
$3,000 of the loss can only be ignored here because it will be set against current year income. This is only available in the year of sale. If carried forward, the remainder of the loss will be netted against capital gains only. It's not the same as getting tax-free gains every year. There are no tax-free gains here :(
And as a P.S.: let your friend know that s/he will likely pay more tax here than in the U.K. despite what popular opinion may be. People here state the highest tax rate of 39% and the average of 31%. It is....for Federal tax only. Then there's State Tax and FICA and Medicare and Social Security and State Disability. Just a wee FYI. I got a big surprise when I realized what my net was!
Best of luck to your buddy.
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