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Author: arlindofool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 744938  
Subject: Tax Matters - Foreigner investment in the US Date: 8/30/2000 5:04 AM
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Hy ER community,

Only recently have I been introduced to the Fool site and specially to the Retire Early Home Page.

For a couple of months now I have been reading the postings in the REHP, as well as studying the Fool investing guidelines, and I am definitely convinced that the ideas proposed by you guys are worth pursuing.

Not being an american or american resident, I have no access to 401´s or other tax deferred investments.

I´m convinced that investing my savings in stocks would be the main instrument to achieve my retire early goals.

I would like to invest my savings in the US stock markets but I´m not sure as to whether this is possible, or what would be the impact of Income Tax rules regarding the earnings.

I was wondering if any of you would have info or could point me to a site that could clarify my basic questions : a) can you as a foreigner, invest in Stocks in the US?
b)what sorts of taxes would be applicable to the related earnings?

Thanks to all in advance

Rgds
Arlindofool
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Author: v10mark Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16608 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/30/2000 5:15 AM
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Arlindofool,

Welcome, and though I cannot any more than guess what sort of tax liabilities you might have, I'll relate one similar situation.

I'm an American, and visit the great country of Canada frequently to go on vacation. There is a tax refund that one may obtain from purchases made in Canada upon return to the US. I'm not sure how this works, but I would see a similar situation in your case. Our tax system is for American citizens, so your burden would not be the same...I think!

Anyone out there who is good w/ international investments? Arlindo's question certainly is relevant for those of us considering foreign exchanges, as I do, living in Korea on my current duty assignment. Take Hyundai-they're a huge, GE like conglomerate in Korea-they don't just make small cars ;-)

TMFer types...this would be an excellent topic for the Fool to cover in more detail.

Mark

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Author: ohayoG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16610 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/30/2000 5:49 AM
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Arlindofool,

As long as the country you stay in does not have any objection, you can invest in US stocks. Many brokers allow that e.g. etrade, suretrade, datek.

You will have to pay taxes on dividends but there are no taxes payable in US on capital gains. You might have to pay capital gains taxes of the country you are resident of.

In short, much depends upon the country you are resident of and its tax laws. There is no problem from US side.

Cheers,
OhayoG!

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Author: RonBass Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16630 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/30/2000 12:21 PM
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ohayoG wrote:
You will have to pay taxes on dividends but there are no taxes payable in US on capital gains.

Excuse me? When did they change that law? Back when I was still required to file a 1040NR (the income tax return for non-resident aliens) we nost certainly did pay taxes on all income from US sources. Including capital gains from trades on US exchanges.


The original poster might find some usefull information on the page "Buying Shares in the USA" in the "Fool's School UK" at http://www.fool.co.uk/school/investusa.htm. How to open a U.S. online discount brokerage account from a foreign country and the various US tax consequences is discussed there.


-Ron

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Author: eWhartHog One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16643 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/30/2000 3:32 PM
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Excuse me? When did they change that law? Back when I was still required to file a 1040NR (the income tax return for non-resident aliens) we nost certainly did pay taxes on all income from US sources. Including capital gains from trades on US exchanges.

Ron,

Claim a refund if you still can. Generally, nonresident aliens owe capital gains tax on publicly traded stocks only if they are effectively connected with a US trade or business, or represent a US real property interest. Even if the US had such a tax, most tax treaties exempt nonresident aliens from capital gains taxes on security trades.

As far as I know, most other developed nations exempt foreign investors from capital gains taxes on securities.

Cheers,
John



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Author: ohayoG Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16675 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/30/2000 10:24 PM
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Ron,

This issue has been discussed many times on the Tax Strategies board. Search for something like 'capital gains non-resident alien' and a number of posts will come up.

There are many kind souls on that board who will offer further help if you need.

Cheers,
OhayoG!

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Author: RonBass Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16739 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 8/31/2000 2:27 PM
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ohayoG wrote:
Ron,

This issue has been discussed many times on the Tax Strategies board. Search for something like 'capital gains non-resident alien' and a number of posts will come up.

There are many kind souls on that board who will offer further help if you need.


Thanks for the feedback. It is, however, many, many years since I last filed a 1040NR. (I was a student then, I'm ER'd now.) So the issue is moot for me.<smile>

-Ron

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Author: arlindofool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16819 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 9/1/2000 5:05 AM
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I want to thank you all for the feedback. They were all very educational.

The article on Fool School UK pointed to very good references which will keep me busy studying for a while. I´m also doing some research on the Tax Strategies Board.

I guess that once I get all the IRS info sorted out it will be time do look for a broker.

Thanks again,
Arlindofool


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Author: galeno Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16845 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 9/1/2000 11:18 AM
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I'm a "non-USA person" meaning I'm not a US citizen nor resident and I do not live in the USA. I'm visiting right now as a tourist.

I've been investing in US securities for over a decade. In summary, you can use any of the US discount or full service brokers (onshore route). You can also invest thru an offshore broker.

If you go the onshore route as an individual, you will pay taxes on dividend and interest income. You do not pay capital gains. If your country has a tax treaty with the USA, you will pay the agreed rate. If your country does not have a tax treaty you will pay 30% on all dividend and interest income. When you die, you will get a $60K exemption and your estate will pay 55% of the rest to the US government. An American citizen or resident (green card holder) gets a $640K exemption. That is why we foreigners invest via a corporation.

If you invest as an individual via the offshore route, you don't have to worry about the interest income but you may have the same estate problems regarding your US stocks. Look into opening what is known as an IBC (international business corporation) and invest thru that. The best country in the Americas do do that is Panama.

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Author: dory36 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25145 of 744938
Subject: Re: Tax Matters - Foreigner investment in the US Date: 11/19/2000 9:49 AM
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Galeno wrote ...I do not live in the USA. I'm visiting right now as a tourist.

When you travel to the US, does your Costa Rican insurance cover you for emergency medical care?

Thanks,

Dory36

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