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Author: kolia Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 443  
Subject: Tax question Date: 3/24/2008 1:08 PM
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Dear Fools, please help me

I am a non-resident alien for the purposes of US taxation. I regard the present market conditions as favorable and would like to invest a considerable amount (over US$ 100,000) in the US stock market. Of course I would like to avoid excessive taxation.

Filing form W-8 as a non-resident alien with the broker leads to (1) 30% tax on dividends and interest income (2) 0% tax on capital gains (3) 55% estate tax on amounts in excess of US$ 60,000

30% tax on dividends seems more or less fair, zero tax on capital gains looks like a nice present from the legislators and 55% estate tax suggests that I should not invest as a non-resident alien at all.

Really, since I am planning to die someday, I regard the estate tax as a bit too heavy (in fact if I die the day I move funds in excess of US$60,000 into the account they will be subject to estate tax immedeately).

I wonder if there is a better tax strategy for a non-resident alien to invest in the US market? Maybe some type of joint account for the family or corporate account of family-owned venture?

Thank you in advance.
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Author: peterxyz Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 440 of 443
Subject: Re: Tax question Date: 3/25/2008 3:37 PM
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dividends check your local double-tax agreement, you may find that US withholding will be lower

capital gains read your local rules carefully to see whether you might be taxed on unrealised capital gains (incl. from currency appreciation

estate tax are US shares/index funds bought on your local exchange captured? Local companies with large US exposures might be an alternative?

peter xyz

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Author: kolia Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 441 of 443
Subject: Re: Tax question Date: 3/27/2008 6:28 PM
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Thanks peter xyz,

Yes, here in Russia local tax schedule is much more bearable: 0% estate tax and flat 13% on dividends and capital gains. Unfortunately, one cannot buy US stocks via local brokers, no such thing as ADRs here.

It seems, to buy stock of specific companies one has no other option but to use a US brokerage.

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