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My dad lives abroad. I was talking to him the other day about how I had recently started buying stocks for the first time (he has been investing for quite some time). After a while, the subject of capital gains tax was brought up. This is what he told me:

"Nah... I don't pay those because I don't live there. I only pay taxes on dividends".

Is that the way it is? Do you just don't pay capital gains tax if you live abroad? Would it make sense to open a brokerage account from an address abroad and avoid paying C.G. taxes?

Ander
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[[My dad lives abroad. I was talking to him the other day about how I had recently started buying
stocks for the first time (he has been investing for quite some time). After a while, the subject of
capital gains tax was brought up. This is what he told me:

"Nah... I don't pay those because I don't live there. I only pay taxes on dividends".

Is that the way it is? Do you just don't pay capital gains tax if you live abroad? Would it make sense
to open a brokerage account from an address abroad and avoid paying C.G. taxes?]]

Nope. That is NOT the way it is. If dad is a US citizen, he is required to file and pay taxes on worldwide income from all sources. If he is a NON US citizen, the rules change. But from the sound of your post, he sounds like a citizen.

Looks like dad is a tax cheat, making me pay more than my "fair share". I'll forward this post to the IRS CID division so they can track down your entire famly (just kidding...don't panic).

TMF Taxes
Roy
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<<Nope. That is NOT the way it is. If dad is a US citizen, he is required to file and pay taxes on worldwide income from all sources. If he is a NON US citizen, the rules change. But from the sound of your post, he sounds like a citizen.

Looks like dad is a tax cheat, making me pay more than my "fair share". I'll forward this post to the IRS CID division so they can track down your entire famly (just kidding...don't panic).>>

Nope. My dad is NOT a US citizen, he is a Spanish citizen living in Colombia. How does it work for him in this case?

I'm not a US citizen either, but I do work and reside in the US.

Thanks in advance for your help,

Ander
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[[Nope. My dad is NOT a US citizen, he is a Spanish citizen living in Colombia. How does it work
for him in this case?

I'm not a US citizen either, but I do work and reside in the US.]]

Generally, for non-citizens and non-residents, they will pay a flat 30% tax (or lower treaty rate...withheld at the source) on interest and dividends. But, generally, capital gains will not be subject to US taxes.

His situation may be different from yours, since you may be a resident. As a resident alien, you are generally required to pay taxes on all worldwide income in the same manner and fashion as a US citizen.

For additional information on these issues, check out IRS Publications 519 and 901.

TMF Taxes
Roy

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