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Subject:  Re: MLP taxes for non-resident aliens Date:  6/13/2013  9:30 AM
Author:  irasmilo Number:  118676 of 121333

Does anyone know how taxes on MLPs work for non-resident aliens?

My understanding is that the US will withhold 35% of the dividends and that's it, as long as your home country has a tax treaty with the US (no US taxes on capital gains). I recently bough an MLP and I'm ok with paying 35% on the dividends (it's credited to my home taxes), but I don't want to have to deal with tax fillings in the US (too much complexity to make it worthwhile).


Your understanding is wrong because MLPs do not pay dividends, they make distributions. The cash distribution is technically a return of capital. Separately, you get allocated a percentage of all of the tax related components of the MLPs business. A very small portion of that may be dividends, most will be income from operations and various deductions/credits. How they are treated for an non-resident alien will depend on the tax treaty (if there is one) between the US and your country.

I don't have any direct experience in this area, but I would expect that MLP income from operations will trigger the need for a US tax filing.

Ira
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