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Author: Wazir1 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121217  
Subject: Foreign investors and tax Date: 3/11/1999 2:08 PM
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I have a relative who is a citizen of an Asian country and lives there permanently. He wants to know if he opens an account with a brokerage firm in the USA and invests in stocks of US companies, will he owe taxes to the US government. He thinks since he will not be living in the USA and hence not using any public facilities or benefits, but rather contributing to the US economy by his investment, he will not be taxed. Plus he will have to pay taxes on his worldwide income back home. So he should not be subject to double taxation. I will appreciate if anyone can enlighten me in this regard. Thanks.
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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 12172 of 121217
Subject: Re: Foreign investors and tax Date: 3/14/1999 11:25 PM
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[[I have a relative who is a citizen of an Asian country and lives there permanently.
He wants to know if he opens an account with a brokerage firm in the USA and
invests in stocks of US companies, will he owe taxes to the US government.]]

Generally on any interest or dividends earned, the answer would be yes. But there would generally be no US tax on capital gains.

[[ He
thinks since he will not be living in the USA and hence not using any public
facilities or benefits, but rather contributing to the US economy by his
investment, he will not be taxed.]]

That is very prudent thinking...but Uncle Sammy never let prudent thinking stand in the way of collecting taxes.

[[ Plus he will have to pay taxes on his worldwide
income back home. So he should not be subject to double taxation.]]

It is possible that he will receive a CREDIT against his "home" taxes for the US taxes that he may be charged. But that will be up to the laws of his "home" country.

[[ I will
appreciate if anyone can enlighten me in this regard. Thanks.]]

For additional reading, go to the IRS web site and download/read IRS Publications 519 and 901. That'll give you a LOT of information on this very issue.

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Roy

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